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TMI Blog2014 (2) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 10,03,600/- 2009-10 Rs. 10,56,500/-. 3. Brief facts are - Search and seizure operations were carried out on Gupta and company Pvt. Ltd. Group of cases on 10-2-2009, assessee is claimed to be one of the related entities. All the cases of group entities were centralized with Central Circle 9 - New Delhi. Consequent thereto notices for filing returns of income of the assessee for the impugned years were issued by AO u/s 153A on 11-1-2010. In response thereto assessee by letter dtd.15-12-2010 requested the AO to treat his regular returns already filed u/s 139(1) for AYs 2003-04 to 08-09 as filed in response to notices u/s 153A. 3.1. It appears that AO issued notices u/s 143(2) along with a questionnaire at a very late stage on 22-12-10. It shall be pertinent to mention that assessments u/s 153A read with sec 143(3) have been framed on 31-12-2010 only. AO has alleged that at the time of hearing on 27-12-10 assessee's counsel expressed his inability to furnish any information. AO mode the impugned additions as mentioned above in respect of each assessment year holding that assessee could not substantiate that agricultural income declared in the regular returns of income was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r-sheets show only three entries as follows: "11-01-2010 Issued notice u/s 153A. Sd/- AO. 22-12-2010 Issued notice u/s 143(2) fixing the hearing for 27-12-2010. Also issued questionnaire. 27-12-2010 Shri Rakesh Aggarwal CA & AR of the assessee, Attends. No information filed. Case discussed. AO Sd/- AR Sd/- It is clear from above that the assessment proceedings were effectively started on 22-12-2010 when notice u/s 143(2) as well as the questionnaire was issued fixing hearing on 27/12/2010 and the same was completed on 27/12/2010 when the AR of the appellant attended and showed his inability to furnish the necessary evidence as called for due to paucity of time available for compliance. The AO's argument that sufficient opportunity was afforded to the appellant to comply with the notice and the questionnaire cannot be accepted in the face of the facts emerging from the assessment record. The notice u/s 143(2) was issued on 22- 12-2010 and a general questionnaire was also issued on the same date in which it is mentioned that the reply to the same should be filed by "23-09-2010 at 11.30 AM/PM". In this questionnaire there are no specific questions about agricultural income bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n qua the agricultural income earned by the assessee and declared in the regular returns of income: (i) It was submitted that the appellant is son-in -law of Mr. V. K. Gupta and has no ownership stake 1 business links 1 commercial dealings with Gupta & Co. Group . whatsoever. While Mr. V. K. Gupta is the 1/3 owner of Gupta & Co Group. (ii) It was further submitted that the impugned addition for Agriculture Income, in the case of. appellant was neither, formed a part of surrendered income nor generated from any seized incriminating document. The appellant furnished copies of his earlier tax returns filed u/s 139 in the normal course before search as returns u/s 153A. (iii) The appellant produced the documents proving his ownership of agriculture land to the extent of 946 acre. Copies of Memorandum of Family Settlement filed in Supreme Court of India & Copies of Khatoni issued by local revenue authorities were filed to support the ownership of land by the appellant. (iv) The appellant also furnished proof w.r.t. sale of sugar cane to sugar mills during the years 2002-03 to 2009-10 by 'Prag Agriculture Farm'. It is to be noted that 50% of the entire land of the family commonly kno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July 200o to June 2008, it was seen that the land owned by the appellant was continuously used for agricultural purposes and* different types of crops including sugarcane, wheat, soyabean, lahi, matar etc. were produced during the said period. 4.3.5 Agricultural income has been defined under section 2(1A) of the Income-tax Act. It is this definition, which has relevance even as regards the power of the State to tax agricultural income under the Constitution of India. All that the definition requires is that there should be income by way of rent or revenue or' income from agricultural operations from land situate in India. The immediate source should be the land. It is not necessary that the person who earns such income should own the land. It is sufficient, if he has some interest in land as had been decided in CIT Vs. Maddi Venkatasubbayya [1951] 20 ITR 151 (Mad), where the assessee was a firm, which had only purchased standing crop and therefore could not be treated as having such interest in land, so as to constitute the profits from the sale of the tobacco crop as agricultural income. This judgment of the Hon. Court, however, indicates what would constitute the requisite inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ineness of the documents furnished as additional evidence including the land ownership record as well as the confirmation from the cultivating tenant. However, in his remand report dated 04/06/2012 the AO did not raise any doubt about the genuineness of the confirmation issued by the cultivating tenant, rather he raised the issues of non- furnishing of input cost details as well as non-furnishing of land produce record as documentary evidence of actual agricultural operations on the land owned by the appellant. To my mind, since the 'appellant has only received stipulated rent from the cultivating tenant, he was not required to monitor the input cost as incurred by the cultivating tenant and therefore it would be unfair to deny his claim of agricultural income only on the basis of the argument" that no details of input cost was submitted by him. As regards the land produce record, the appellant has. produced the same before the undersigned which signifies the harvesting of crops and agriculture operations in those years -, It is, therefore, held that the appellant has furnished adequate evidence to support his claim of agricultural income during the years in question which has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53A was issued on 11-1-2010. 7.1. Further, it is pleaded that on AO's objection for admission of additional evidence CIT(A) should have decided the issue of admission of additional evidence first and thereafter the remand report should have been called. Reliance is placed on Hon'ble Delhi High Court judgment in the case of CIT Vs Manish Buildwell Pvt. Ltd. in ITA No. 928/11 dated 15/11/11. 8. Ld. Counsel for the assessee contends that there is no merit in the contention of ld. DR, the alleged first notice dated 11-1-2010 was a simple notice indicating the beginning of proceedings. In response to it the assessee vide its submission dated 15/03/10 challenged the assumption of jurisdiction u/s 153A on various counts including invalid search warrant. The AO did not proceed further qua the assessment. The first effective notice for attending assessment proceedings is dated. 22-12-2010 asking the attendance on 27-12-10. Assessee duly attended with general record available. as the very same agricultural income was already accepted by the department in regular assessments. AO during the course of hearing dated 27-12-2010 required specific information. Assessee at this juncture expressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence before CIT(A). Existence of even a single reason i.e. giving abysmally less time to file information during the course of assessment by AO, itself fully justifies the action of ld CIT(A) in admitting the additional evidence. The assessment framed by AO was in complete violation of principles of natural justice. Ld. AO without appreciating any factual or legal aspect has held the assessed agricultural income as unexplained income. Huge additions were made without giving even a semblance of adequate opportunity. As per the amended provisions of Income Tax Act CIT(A) does not have the powers of setting aside even in an ex parte assessment. In these circumstances assessee was left with no other remedy except to file additional evidence. CIT(A) before proceeding to admit the additional evidence duly forwarded it to AO giving full opportunity of enquiry, investigation and ascertainment of facts and further to file detailed observations and comments thereon. Revenue cannot adopt such a course of action i.e. neither to give proper time for assessment and frame an arbitrary assessment and not allowing the assessee to bring material on record to defend such arbitrary action. It is pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard the rival contentions on the issue of admission of additional evidence and perused the material available on record. As the facts emerge the assessments were completed in unjustifiable manner violating even the basic principles of natural justice. Neither sufficient opportunity of hearing nor time was given to the assessee to represent his case. The questionnaire issued by AO had no question about the agricultural income already assessed. This income was not being shown for the first time and has been regularly accepted year to year by department in preceding years. 9.1. In these circumstances assessee had no remedy except to file additional evidence in first appeal. Thus it is writ large on the record that assessee was prevented by sufficient cause in filing these papers during the course of 153A assessment proceedings. 9.2. Apropos CIT(A)'s action of admitting the additional evidence, in our considered view, in the given facts and circumstances the action is fully justified. AO has submitted the remand report on both counts i.e. admission thereof and on merits. Manish buildwell case was much earlier pronounced. In these circumstances AO should have requested ld. CIT(A) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MGF Automobiles Ltd. Vs. ACIT (ITA nos. 4212 & 4213/Del/2011); - Tarannum Zafar Khan Vs ACIT (ITA nos. 5888 to 5890/Mum/2009); - Vee Gee Industrial Enterprises vs. ACIT (ITA no. 1/Del/2011 & ITA no. 2/Del/2011) - ITA nos. 1153 to 1159/Hyd/2012 Mir Mazharuddin 24-1- 2013. - Asha Kataria ITA nos. 3105, 3106 & 3107/Del/2011 dated 20-5-2013. (b) From the material on record it is undisputed that the assessee's family owns 1898 acres of agriculture land in Rudrapur, Uttarakhand, which is known as 'Prag Agricultural Farms' and remained under cultivation since decades i.e. since 1933.This is evident from following documents: i. Copy of Lease Deed of Agricultural land dated 01.03.1933 (pages 6-14 Paper book); ii. Copy of Land ownership record known as 'Khatoni' dated 30/11/09 wherein the name of assessee is appearing as a joint owner being a proof of land ownership in the name of assessee (page 15 paper book); iii. Copy of Court's order & family settlement deed showing settlement of 946.50 acres of agricultural land in favor of assessee (pages 16-52 paper book); iv. Copy of confirmation issued by Sugarcane development society with respect to production of sugarcane during various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided by assessee is only a superfluous observation. It does not in any way militate against the fact of impugned income being agriculture in nature only which can not to be held as income from undisclosed sources on assumptions, surmises and conjectures. The cultivation is undertaken by the tenant and the assessee is receiving 'rent' for agricultural operations which very well qualifies as an agricultural income u/s 2(1A). 11.2. The CIT(A) vide pages 17 & 18 of its order very rightly notes the following two decisions from High Court wherein it has been held that rent received from cultivating tenant certainly qualifies as an agricultural income: i. CIT VsMaddiVenkatasubbayya 20 ITR 151(Mad.); ii. CIT Vs Associated Metal Co. 177 ITR 428 (All.) 11.3. Ld. Counsel for the assessee contends that in vie of these legal and factual submissions categorical findings of ld. CIT(A) based on evidence and remand report, the additions have been rightly deleted. Orders of CIT(A) are relied on. 12. We have considered the rival submissions and perused the material available on record and proceed to decide the appeals in following manner: Legal issue: 12.1. Ld. Counsel for the assessee has vehe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided as held by the Hon'ble Supreme Court in the case of K.P. Varghese (iv) Kusum Gupta v. DCIT, ITA Nos. 4873/Del/2009, (2005-06) 2510 (A.Y. 2003-04), 3312(A.Y. 2004-05) 2833/Del/2011 (A.Y. 2006-07) 15. Since there is no change on this material fact that during all these assessment years no incriminating material was recovered or statement was recorded during the course of search suggesting non-genuineness of the claimed gifts or expenses etc. and no such addition/disallowance was made in the original assessment which remained unabated, we following the decision on the issue hereinabove in the appeal preferred by the revenue for A. A 2002-03, hold that such addition/disallowance cannot be made in the assessment framed u/s 153A of the Act in this A. Y in appeals. In result the issue is decided in favour of the assessee and against the revenue. In view of this finding the remaining grounds questioning the merits of additions/disallowances do not need adjudication as they have become infructuous and academic only . Consequently appeals preferred by the assessee for the A.Ys. 2003-04, 2004-05, 2005-06 and 2006-07 are allowed and appeals preferred by the revenue in the A.Ys. 2002-03, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference to the seized material. He further held that it is also not the case of the AO that the seized material if any suggested inflation of agricultural income. He, therefore, concluded that such type of addition cannot be made in the assessment u/s 153A de hors the material found at the time of search (ix) Asha Kataria, I.T.A. Nos. 3105, 3106 & 3107/Del/2011 20.5.2013 52. we find that in this case the assessment was made u/s. 153A of the I.T. Act. Hence, reliance upon the decision of the Special Bench in the case of All Cargo Global Logistics Ltd. (Supra) is also germane and support the case of the assessee. As expounded in this case assessment u/s. 153A can be made only on the basis of incriminating material found during the course of search. 12.2. In our considered view this proposition is by now well settled that in 153A/C assessments additions cannot be made unless they are based on any incriminating material or inquiries based on such material. It clearly emerges from record that there is neither reference nor reliance on any incriminating material. Besides there is no reference to any inquiries conducted by AO based on any incriminating material. In these circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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