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TMI Blog2015 (11) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 lakhs. However, the same cannot be sacrosanct. From the order of the AO we find the assessee has also obtained a certificate from the Tahsildar for A.Y. 2008-09 at ₹ 15 lakhs as agricultural income whereas he had declared the agricultural income in his return of income at ₹ 3,63,000/-. Further, the assessee has obtained the certificate from a Talati who is not the Talati for the land situated at Dugaon Therefore, when in his own admission the assessee declared agricultural income at ₹ 3,63,000/- in A.Y. 2008-09 as against the agricultural income certificate of ₹ 15 lakhs obtained from the Talsildar, therefore, in absence of any increase in land holding and pattern of cropping the agricultural income at ₹ 17 lakhs by no stretch of imagination can be accepted. Therefore, the CIT(A) in our opinion was not justified in accepting the submissions made by the assessee regarding the extent of agricultural income declared by the assessee. We accordingly set aside the order of the CIT(A). However, considering the totality of the facts of the case, determination of net agricultural income of ₹ 4 lakhs under the facts and circumstances of the case in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, the assessee has stated before Ld.CIT(A) that he was also doing milk business from the said premises. In any case the amount being very negligible under the facts and circumstances of the case and the payment of rent is not in dispute, therefore, we find no infirmity in the order of the CIT(A) deleting the addition. - Decided against revenue Addition on account of Fuel expenditure - CIT(A) deleted addition - Held that:- From the order of the AO we find the AO merely states that assessee has not voluntarily disallowed any expenses for personal element in the same. Considering the huge volume of business the fuel expenses at ₹ 65,664/- is very reasonable. Therefore, in our opinion, no disallowance is called for. We accordingly uphold the order of the CIT(A) on this issue and the ground raised by the Revenue is dismissed. - Decided against revenue - ITA No. 68/PN/2013 - - - Dated:- 11-9-2015 - Sushma Chowla, JM And R. K. Panda, AM For the Appellant : Mrs Sunita Billa For the Respondent : Shri Pramod Shingte ORDER Per R K Panda, AM This appeal filed by the Revenue is directed against the order dated 12-10-2012 of the CIT(A)-I, Nashik relatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the applicants. 6. The AO noted from the certificate that the same mentions the date of the affidavit of the applicant. The AO in his question No.15 of the statement recorded u/s.131 asked the assessee as to what are the records produced before Tahsildar on the basis of which he has certified the agricultural income. It was explained by the assessee that 7/12 abstract of the agricultural land held by the assessee was provided to the Tahsildar. On the basis of the area under cultivation, the crops cultivated and after personal inspection by the Talathi the amount of agricultural income has been certified. 7. From the various details furnished by the assessee the AO noted that the certificate issued by the Tahsildar refers to the opinion given by the Talati at Nashik whereas the assessee is located at Dugaon where there is separate Talati. The Talati of Nashik is in no way concerned with the Dugaon land. Further, in the A.Y. 2008-09 the assessee has declared agricultural income of ₹ 3,63,000/- which is considered in the capital account as well as while computing the tax liability. As against this in the certificate issued by the Tahsildar the agricultural income was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months can be expected from these 98 livestock which comes to 2,11,680 litres. Considering the average selling price of ₹ 27.50 per litre the realization from sales works out to ₹ 58,21,200/-. Further, the AO noted that the assessee had purchased 4 buffaloes on 30-06-2008, 9 buffaloes on 27-10-2008, 10 buffaloes on 30-11-2008, 4 buffaloes on 15-03-2009, 10 buffaloes on 17-03-2009. The AO also considered the milk output from these buffaloes during the year under consideration and worked out the sale figure of ₹ 68,07,289/-. Considering the sale of milk at ₹ 35,59,446/- computed by the assessee the AO held that assessee has suppressed receipt from sale of milk by ₹ 32,47,843/-, (i.e., ₹ 68,07,289 (-) ₹ 35,59,446/-). Since part of the agricultural income was treated by the AO as non-agricultural income the AO made addition of ₹ 18,97,843/- being the difference between ₹ 32,47,843/- and ₹ 13,50,000/-. 10. Before CIT(A) it was submitted that the assessee is having approximately 8.38 acres of land in which he has grown rich crops such as Tomato and Grapes. As per accepted trade practice agricultural produce was sold on as-is- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale rate was ₹ 23.25 per litre was brought to the notice of the CIT(A). It was submitted that in the present case the income per cattle assessed by the AO comes to ₹ 49,307/-. It was argued that if the rate of return in case of dairy farm as determined by the AO is accepted, then everybody would start dairy farming business. It was argued that the assessee in the instant case has disclosed income at ₹ 4,824/- per cattle per year which is more than reasonable. It was accordingly argued that the addition of ₹ 18,97,843/- made by the AO on account of suppression of receipts from sale of milk should be deleted. 12. Based on the arguments advanced by the assessee the Ld.CIT(A) deleted the addition on account of agricultural income at ₹ 13,50,000/- by observing as under: 6.2 I have carefully considered the facts of the case, the assessment order and submissions on behalf of the appellant. It is undisputed fact that the appellant is having agricultural land under cultivation and he has taken rich crops therein. The appellant has disclosed higher agricultural income at ₹ 17,00,000/- as against the same at ₹ 3,63,000/- in the preceding year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered the facts of the case, the assessment order and the submissions of the appellant. The action of the AO. in taxing the sale proceeds of Sale of milk instead of profit thereon is prima facie incorrect. The contentions of the Ld. AR. as regards mistakes on the part of the A.O. in not considering the customary distribution of milk to the labourers working in the dairy of the appellant, the wastage of milk because of many reasons, the consumption of milk by the calves, home consumption of milk by the appellant. Further, the assumption of the AO. that every cattle is yielding even milk throughout the period of eight months of lactation is also wrong because the yield of milk at the end of lactation gets reduced. The output of milk as considered by the AO. at 9 Ltrs. is in respect of professional dairies where the cattle at the end of lactation are replaced by milch cattle. It is also accepted fact that the appellant has not maintained proper record of production of milk, expenses, etc. In such circumstances there is no alternative other than to fairly estimate the income from dairy business. It is also pertinent that the A.O. has not correlated the impugned addition with any unacc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me which is exempt from tax and part of the income has been suppressed by reducing the sale proceeds. He accordingly submitted that the order of the AO be restored and that of the order of the CIT(A) be reversed. 16. The Ld. Counsel for the assessee on the other hand heavily relied on the order of the CIT(A). Referring to the ground taken by the revenue he submitted that the department has not taken any specific ground on account of agricultural income. He submitted that the order of the CIT(A) is justified since he has accepted the certificate issued by Tahsildar who is an expert in giving opinion about the agricultural income based on the verification by the Talati. So far as the income from sale of milk is concerned he submitted that there are various reasons for which the estimation made by the AO cannot be accepted. He submitted that the labourers are provided with one litre of milk per day. There is wastage of milk due to various reasons and consumption of milk by the calves as well as by the family members has been completely ignored by the AO. He submitted that the order of the CIT(A) is a reasoned one, therefore, the same should be upheld. 17. The Ld. Departmental Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at an astronomically high figure of ₹ 17 lakhs during the impugned assessment year. The land holding of 8.5 acres has not undergone any change. Since there is no addition to the agricultural land during the year, therefore, we find merit in the submission of the Ld. Departmental Representative that when there is no change in the cropping pattern or no increase in the holding of the agricultural land, the amount of agricultural income declared at ₹ 17 lakhs cannot be accepted. No doubt the assessee has filed a certificate from the Tahsildar for the impugned assessment year showing the agricultural income at ₹ 17 lakhs. However, the same cannot be sacrosanct. From the order of the AO we find the assessee has also obtained a certificate from the Tahsildar for A.Y. 2008-09 at ₹ 15 lakhs as agricultural income whereas he had declared the agricultural income in his return of income at ₹ 3,63,000/-. Further, the assessee has obtained the certificate from a Talati who is not the Talati for the land situated at Dugaon. The relevant observation of the AO in the body of the assessment order read as under: On perusal of the information contained in the certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered the buffaloes purchased during the year numbering to 37. The whole exercise in our opinion is based on assumptions and surmises. Although as per the statement of the Assistant Commissioner of Animal Husbandry, Nashik, the average daily output is assessed as 9 liters per day, however, it cannot be uniformly adopted for all the buffaloes for a continuous period of 8 months. Considering the rate of milk at ₹ 27.50 per litre and other surrounding circumstances net income of ₹ 6,000/- per cattle per year in our opinion in the given facts and circumstances of the case will be reasonable. Since the assessee had 98 live stock at the beginning of the year and had purchased 4 buffaloes on 30-06-2008, 9 buffaloes on 27-10-2008, 10 buffaloes on 30-11-2008, 4 buffaloes on 15-03-2009 and 10 buffaloes on 17-03-2009 net income of ₹ 6,52,000/- in our opinion will be reasonable under the facts and circumstances of the case. The above figure is determined as under : 98 buffaloes at the beginning @ ₹ 6000/- per buffalo Rs.5,88,000 4 buffaloes purchased on 30-06-2008 (6000/12x9x4) Rs.18,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 40A(3) disallowed an amount of ₹ 6,53,970/-. Before CIT(A) it was submitted that no payment of cash in excess of ₹ 20,000/- was made. Further, the supplier is also cultivator of sugarcane and therefore the provisions of section 40A(3) are not applicable. 26. Based on the arguments advanced by the assessee the Ld.CIT(A) deleted the addition. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 27. We have considered the rival arguments made by both the sides. Admittedly, there is no finding given by the AO that the assessee has made payment in cash exceeding ₹ 20,0000/- at any time. Further, we also find merit in the submission of the Ld. Counsel for the asssessee that when income is estimated the provisions of section 40A(3) cannot be applicable. Since in the instant case there is no evidence brought on record by the AO that the assessee had made payment in cash at any time exceeding ₹ 20,000/- per day and since the income has been estimated, therefore, in our opinion the AO was not justified in invoking the provisions of section 40A(3). We accordingly uphold the order of the CIT(A) on this issue and the ground raised by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue reads as under : 4) Whether on the facts and in the circumstances of the case, the Ld. CIT (A)-l, Nashik was justified in deleting the addition of ₹ 13,133/- on account of Fuel expenditure by not appreciating the fact that the said expenditure being considered as personal in nature. 33. After hearing both the sides, we find the AO disallowed an amount of ₹ 13,133/- being 20% of the fuel expenses in respect of vehicles claimed at ₹ 65,664/-. In appeal the Ld.CIT(A) deleted the addition holding that the AO has made the disallowance in routine manner without bringing any instance or evidence in respect of the impugned disallowance. From the order of the AO we find the AO merely states that assessee has not voluntarily disallowed any expenses for personal element in the same. Considering the huge volume of business the fuel expenses at ₹ 65,664/- is very reasonable. Therefore, in our opinion, no disallowance is called for. We accordingly uphold the order of the CIT(A) on this issue and the ground raised by the Revenue is dismissed. 34. In the result, the appeal filed by the Revenue is partly allowed. Order pronounced in the open court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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