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TMI Blog2017 (2) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Vegetable yield be adopted to work out the income from Vegetables and flowers in the hands of the assessee on the basis of individual land holdings. Accordingly, we hold so. Necessary evidence would be furnished in this regard by the assessee. The Assessing Officer shall give reasonable opportunity of hearing to the assessee. In case there is yield from fruits, then 80% of the standard yield reported by NHB should be adopted to work out the income in the hands of the assessee based on their land holding. However, in case the assessee has already shown the yield below 80% of the standard yield reported by the above said Government bodies, then the Assessing Officer is directed not to disturb the same and accept it. Expenses on contractual factor - Held that:- While estimating the agricultural income the Assessing Officer/Commissioner of Income Tax (Appeals) had taken note of the facts of Shri Badshah Bagwan, wherein the statement of one person was recorded who stated that for carrying on the agricultural activities on part of the land, he was getting batai @50% of the receipts. The said statement was withdrawn on a later stage. However, the said fact was adopted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the acquisition of the assets and there is no merit in any other addition in the hands of the assessee on account of unexplained investment in assets found during the course of search. We hold so Addition made towards investment in benami FDRs and interest charged - Held that:- Where the addition on account of unexplained deposits has already been made in the hands of Pat Sanstha there is no merit in making any further addition in the hands of the assessee on account of same FDRs. Accordingly, we uphold the order of the CIT(A) in this regard and dismiss the grounds of appeal raised by the revenue. Consequently no addition is warranted on account of interest chargeable on the said FDRs. The revenue has failed to address the issue raised by way of grounds of appeal Nos.9 to 11 and also in the absence of any addition made by the Assessing Officer on any other account except non acceptance of agricultural income and the addition on account of FDRs there is no merit in the other grounds of appeal raised and the same are dismissed. Entitlment to deduction u/s.80P - Held that:- As in Shri Mahavir Nagari Sahakari Pat Sanstha Ltd. Vs. DCIT [2000 (2) TMI 234 - ITAT PUNE] as held that cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50% is deducted towards agriculture expenses and amount paid towards contractual farming [Batai], under the following caption" mentioned in the tabulation - Table II [Para 30 of the order]" L. Less: Expenses & Contractual Farming factor @ 50% For arriving at this conclusion, Hon CIT[A] has totally relied on the facts of case of Badshah Bagwan, and referring the facts of Badshah Bagwan' s case, the formula of 50% deduction is applied. Whereas, in case of appellant, not a single document has been found and seized to establish and substantiate that, appellant had given his land on contractual [Batai] farming. • Further, in para 25 of the order, Hon CIT[A] has mentioned that, "It is also well-known that, normally vegetables are not grown on sharing system or batai basis" In view of the remarks mentioned above, the disallowance made on account of Contractual Farming [Batai] is uncalled for and needs to be disapproved. Hence, deduction on account of estimated expenditure and contractual farming is purely on assumption and presumption, hence needs to be disapproved. It is humbly prayed that, the book results of the appellant may kindly be appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 132 of the Act was conducted at the residential as well as business premises of Bagwan Group on 18.05.2006. The assessee being one of the group was also covered under search and certain incriminating documents were found and seized. Consequent thereto, the Assessing Officer issued notice under section 153A of the Act requiring the assessee to furnish the return of income. In response thereto, the assessee had filed the return of income declaring total income of ₹ 75,670/- and agricultural income of ₹ 5,20,315/-. The said income was also declared by the assessee in the return of income filed under section 139(1) of the Act. The assessee had bifurcated the agricultural income as under:- Sugarcane proceeds -- Non-sugarcane proceeds (vegetables, flowers, fruits, coconut) 681058 TOTAL 681058 Less Agricultural expenses 160743 Net Agricultural income 520315 7. The assessee was asked to furnish the details of agricultural expenses along with bills, sale bills of crops, details of agricultural operations, 7/12 extract of the agricultural land owned by the assessee, crop-wise area of land under cultivation and the average yield of all the crops. The assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in normal course the agricultural expenses for crop were atleast 40%. The Assessing Officer thus, re-computed net sugarcane receipts in assessee's family case by allowing 40% of agricultural expenses. In respect of agricultural income from vegetables, the Assessing Officer noted that the assessee had shown gross receipts from vegetables on very high side as compared to normal agriculturists. The Assessing Officer has tabulated the average gross receipts per acre vis-à-vis area under vegetables as per 7/12 extract, which reads as under:- Asst. Year Average gross receipts per acre Area under vegetables as per 7/12 extracts 2000-01 ₹ 1,81,639/- 28.13 acres 2001-02 ₹ 91,110/- 57.31 acres 2002-03 ₹ 1,43,372/- 74.29 acres 2003-04 ₹ 1,24,428/- 77.05 acres 2004-05 ₹ 1,89,337/- 80.21 acres 2005-06 ₹ 1,69,684/- 87.05 acres 2006-07 ₹ 55,280/- 112.19 acres 9. The Assessing Officer further noted certain discrepancies as regards the receipts from vegetables which are summed up at pages 5 and 6 of the assessment order. In view of the said facts, the Assessing Officer was of the view that the agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in turn, the assets shown through balance sheet to that extent became unexplained and addition of the said amount was made to the taxable income of the assessee. The Assessing Officer year-wise has worked out the quantum of unexplained assets and made the addition accordingly. 10. Before the CIT(A) the assessee made elaborate submissions, vis-à-vis its land holdings and the income generated from agricultural operations. The Ld. Authorised Representative for the assessee also pointed out that there was no merit in the order of the Assessing Officer to estimate the agricultural income in the hands of the assessee whereas the said income was correctly shown by the assessee in the respective hands in the respective years. The assessee also agitated the order of Assessing Officer in estimating that 50% of the agricultural receipts were given to the farmers because of the statement of one Shri Namdeo Buva who in his statement recorded on 18-05-2005 had stated that he cultivated sugarcane on 9 acres of assessee's land for 1/4th share. The Assessing Officer applied the said proposition to the whole land holding of the assessee and estimated the income in the hands of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red that the agricultural activity had been adopted by the assessee and family members as prime earning activity of the group. Another point noted by the CIT(A) as per Table No.1 of page 13 of the appellate order was that the assessee had always utilized more land for cultivation and growing of vegetables than the land utilized for cultivation and growth of sugarcane. 12. The CIT(A) under para 26 noted the contention of the assessee in support of its income from agricultural activities by creating elaborate infrastructure by way of laying of direct pipelines of 8 and 6 inches from the Panchganga river and creation of huge water storage facilities in their farm, which was capable of storing few lakhs of litres of water. The assessee had also introduced drip irrigation facilities for irrigation of vegetables and flowers. Further the assessee used mechanized and automated farming equipments for sowing, cutting spraying of pesticides etc. The CIT(A) also noted the contention of the assessee that the assessee had undertaken systematic and scientific procedures to select the crop pattern and also employed the services of experts for optimized agricultural activity. Since the piece of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the methodology of allocation of expenses as held in Shri Badshah Bagwan's case was adopted in the instant case also in respect of the income from vegetables and fruits etc. The quantum of income determined by the Assessing Officer @ ₹ 6000/- per acre was held to be abysmally low and the CIT(A) held it reasonable and estimated the gross yield from the sale of vegetables, fruits, flowers in the rupee terms at 150% of the yield of monetary terms of sugarcane cultivation. From this figure of gross yield, the CIT(A) held that 50% had to be reduced to account for expenses and consequent thereof the income per acre for non sugarcane produce was tabulated in Table No.3. Accordingly, the income of the assessee for agricultural activities, i.e. holding of 9 acres was computed in Table No.4 at page 27 of the appellate order and the Assessing Officer was directed to adopt the figures in the column 'Agricultural income' and tax the difference between the agricultural income worked out above and the income declared in the return of income, if any, as assessee's unexplained income during the respective assessment years. 13. The assessee is in appeal against the order of CIT(A) in estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as pointed out by the assessee that where the assessee has been showing the results which vary from year to year, the same should be accepted. The Ld. Authorised Representative for the assessee further fairly admitted that it was not maintaining proper vouchers and because of the huge land holding exact details in respect of each co-owner were not available. He fairly agreed that some estimation has to be made, however, the estimation made by the revenue authorities was on lower side. 16. In respect of the sugarcane produce, the Ld. Authorised Representative for the assessee pointed out that there was no merit in estimating the expenditure at 40%. He also pointed out that the Assessing Officer had relied on the order of Shri Badshah Bagwan to estimate expenditure at 40% which was never confronted to the assessee and the same could not be relied upon. He pointed out that in the case of Anjum Shoukat Bagwan there was only income from sale of vegetables and flowers and for yield in vegetable activities ICAR had laid down various norms. In this regard, he placed reliance on the ratio laid down by the Pune Bench of the Tribunal in the case of Venkateshwara Agricultural Farm in ITA Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Bhaggi palla, i.e.vegetables. He stressed that when there is large land holding, then many a times the revenue authorities make general reference but do not mention the crop particularly and especially in the case of vegetables where overlapping crops are grown, then it is difficult to keep track of the vegetables grown by the owner off the agricultural land and hence no mention in the 7/12 extract. However, he pointed out that it does not mean that the assessee is not engaged in carrying on the agricultural activities on the said land. 21. We have heard rival contentions and perused the record. The dispute which arises in the present bunch of appeals are against the estimation of agricultural income in the hands of the assessee. The family of the assessee is engaged in agricultural operations on the agricultural land which is jointly owned by the family members. Undoubtedly, the family members are aware of the percentage of their land holding but since the agricultural operations are being carried out jointly on the said piece of land which ranges between 25 to 60 acres over the period of years and where multiple and sub-crops of vegetables were regularly undertaken, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... griculture Produce Market Committee or any brokers. It is not relevant and not necessary for a farmer to compulsorily sell his produce through the broker or the marketing committee especially in today's scenario where the agricultural commodities are being directly sold in the dedicated markets or to organized vendors. Since the assessee is engaged in the said activity on a large scale and where his relatives are also engaged in similar activity, the option is available to the assessee to sell the said produce directly in the market and save the cost of commission when sold through brokers and also negotiate the rates of produce sold by it. The direct marketing approach adopted by the assessee cannot be faulted with especially where the assessee and his family owns such a large area of land for cultivation. It is not the case of the revenue authorities that the assessee is not engaged in agricultural activities on its land holding. The dispute which has arisen in the present appeals is the yield from the agricultural activity undertaken by the assessee where the Assessing Officer has estimated the yield at ₹ 6,000/- per acre and the CIT(A) has enhanced the same to ₹ 25, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements recorded during the course of search and thereafter. Since the income has been estimated in the hands of the assessee no relevance is to be attached to the said statements. One of the person Shri Namdeo Buva during the assessment proceedings had withdrawn his statement that he was being paid 50% of the agricultural produce for sowing the land. In the said contradiction in the statements recorded in the case, cannot be relied upon to estimate the income in the hands of the assessee. In any case agricultural expense @50% is high. 24. We find similar issue of estimation of agricultural income arose before the Pune Bench of the Tribunal in the case of Venkateshwara Agricultural Farm in ITA Nos. 386 to 390/PN/2009 (Lead Appeal being Shri Babulal Laxminarayan Malu- ITA Nos. 241 to 243/PN/2009) order dated 23-09-2011 wherein also the complete details were not being maintained and the assessee was also selling the vegetables and fruits in cash. The 7/12 extracts did not have clear mention of the vegetables and fruits but the assessee claimed to have sold the same. The Assessing Officer had estimated the income in the hands of the assessee on account of agriculture and the balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come, it was seen that while part of agricultural produce was properly billed, some of vegetables and fruits were shown to have been sold in cash, these sales were not supported by third party evidence. Other sales of Soyabeen, Onion, rice, sugarcane etc., were supported by third party evidence. Vegetables and fruits which were sold in cash were not mentioned in 7/12 extracts. The A.O. accepted only those sales which were supported by evidence as genuine sales of agricultural produce. The A.O noted that no books were found during the course of search/survey. He also noted that the very fact that books were maintained was not sufficient to accept the agricultural income declared. We thus find that the A.O has said so in different context, firstly the assessee had not maintained books of account regarding the agricultural activities as the same was not found during the course of search/survey and secondly; even if the books were maintained it was not sufficient to accept the agricultural income declared since income in cash was not supported by evidence. The A.O accordingly concluded that the cash sales shown as agricultural income was bogus and it represented the income from undiscl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural credit. He noted that except in the case of banana the standards of yield followed by NHB are much higher than the actual yield obtained by the assessee. He has noted further that in case of banana also while assessee's yield is actually higher than the standards, the average yield over the period works out to 56 as against the standard of 65. The Ld CIT(A) has noted further that the assessee was asked to produce the cash books, sales ledger etc., examination of these documents showed that the cash deposits which have been found by the A.O vary from very small figures to little above ₹ 1,00,000/-. It is not as if the cash deposits are of large amounts in one lumpsum. Secondly, the deposits are well placed which lays support to the assessees' contention that the amount do not represent each and every sale but consolidated figures of sale over a certain number of days. It was also stated that certain cash expenses are also incurred from the cash receipts and only the net amount remaining is deposited in the account. The distribution of the cash deposits, the magnitude of the deposit do not appear to be such as to conclude that these are not amounts received by wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Venkateshwara Agricultural Farm (supra). The assessee's land holding is large and the family members of the Bagwan group are engaged in cultivation of vegetables and flowers and in some cases in fruits on the said land. Majorly the agricultural land holding is cultivated with vegetables and flowers. The assessee is not maintaining the books of account regularly. We have already held that there is need for estimation for agricultural income in the hands of the assessee. The Ld. Authorised Representative for the assessee before us agreed to the proposition laid down by the Pune Bench of the Tribunal that 80% of the standard yield reported by ICAR in the case of Vegetable yield be adopted to work out the income from Vegetables and flowers in the hands of the assessee on the basis of individual land holdings. Accordingly, we hold so. Necessary evidence would be furnished in this regard by the assessee. The Assessing Officer shall give reasonable opportunity of hearing to the assessee. In case there is yield from fruits, then 80% of the standard yield reported by NHB should be adopted to work out the income in the hands of the assessee based on their land holding. However, in case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sugarcane is sold to Mills. Necessary evidence would be furnished by the assessee to establish its case. The Assessing Officer shall give reasonable opportunity of hearing to the assessee before adjudicating the issue of income arising from sugarcane produce and also as held in the case of vegetables and flowers. 27. Before adjudicating other issues which are raised in the present bunch of appeals we may also address the issue raised by the Assessing Officer on unaccounted investment in assets found during the course of search which the assessee claims that it has sourced through agricultural income but the revenue is of the view that said claim of the assessee is ill-founded as the agricultural income declared by the assessee is higher than what is actually earned by the assessee. 28. The next aspect of the issue is that the assessee had declared the amount as agricultural income, part of which has been accepted as agricultural income by the authorities below and the balance amount has been assessed as income from other sources in the hands of the assessee. Once the amount has been so assessed, i.e. on account of agricultural income and/or on account of income from other sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in giving relief to the assessee for A.Y. 2005-06 on the issue of suo moto declaration of ₹ 15,00,000/- which was made by the assessee to cover up any discrepancies, when the A.O. has already considered while working out the total undisclosed income of the assessee.?" 30. The next issue which is raised by way of grounds of appeal No.6 to 8 in assessment year 2005-06 by revenue is against deletion of addition made towards investment in benami FDRs and interest charged thereon for assessment year 2005-06 only. 31. Briefly in the facts of the case, during the course of search at the residence of the assessee, a notebook was found and seized. On its verification, it was noted that there were details of FDRs made in various banks and Pat Sanstha. From the notings, it was seen that the FDRs were kept with various different entities and from the details, the name of the person through whom the deposit was prepared was also written. However, no such deposits in the name of Anjum Shoukat Bagwan or his family members was made in the said Pat Sanstha/banks on the respective dates. The details of FDRs as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... negative cash in hand and hence the Assessing Officer treated the said investments as unexplained, though addition was made on account of unexplained of the agricultural income declared by the assessee. 33. The CIT(A) allowed the claim of the assessee holding that the primary responsibility of proving the deposit was of the Pat Sanstha or the Cooperative banks where the deposits were found. The CIT(A) noted that the additions have been made in the case of Pat Sanstha since the initial burden has not been discharged where the Pat Sanstha was unable to establish the identity of the depositor and hence the genuineness of the transaction was not proved. The CIT(A) thus observed that the contents of the loose sheet showing deposits in various Pat Sanstha were not substantive proof of the fact that the amounts mentioned in the said page belongs to the assessee and in any case if the said FDRs were unexplained then they would constitute the business income in the hands of the respective Pat Sanstha or the Cooperative Banks and the assessee would not be liable to be held as owner of these amounts. The CIT(A) also noted that the amounts mentioned against Soniya Nagari Vinkar & Vinkat Vyavs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the issue raised in this bunch of appeals filed by the assessee and the revenue for assessment years 1999-2000 to 2009-10 are identical to the issues raised in Anjum Shoukat Bagwan and our decision on all the issues would apply mutatis mutandis. ITA Nos. 182 to 192/PUN/2013 - Shahanaz Shoukat Bagwan - (Assessee's appeal) ITA Nos. 478 to 488/PUN/2013 - Shahanaz Shoukat Bagwan - (Revenue's appeal) ITA Nos. 204 to 214/PUN/2013 - Kaish Shoukat Bagwan - (Assessee's appeal) ITA Nos. 456 to 466/PUN/2013 - Kaish Shoukat Bagwan - (Revenue's appeal) 39. Similarly the issue raised in the appeals filed by the assessee in the case of Shahanaz Shoukat Bagwan and Kaish Shoukat Bagwan are identical to the issues raised in the case of Anjum Shoukat Bagwan and also addition made on account of notings made of investment in FDRs in assessment year 2005-06, is same and our decision in Anjum Shoukat Bagwan on all issues would apply mutatis mutandis. 40. Now coming to the appeals filed by the Pat Sanstha Soniya Nagari Vinkar and Vinkar Vyavsaik Sahakari Pat Sanstha Ltd. the assessee is in appeal for assessments years 2004-05 and 2005-06 against the order passed under section143(3) r.w.s. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agari Sahakari Pat Sanstha ignoring the facts that the said decision is distinguishable on facts in as much as in the said case the unexplained deposits were owned were up by the depositors as undisclosed income whereas in the present case no one has owned up to the unexplained FDRs. (ii) Without prejudice, the ITAT, Pune while rendering the decision in the case of Shri Mahaveer Nagari Sah. Pat Sanstha did not consider the judicial precedents mentioned at Ground No.3 supra. Therefore, the said decision of ITAT is not binding on CIT(A) as rule of sub-silentio is applicable (Shanmugvel nadir Vs. Tamil Nadu & another 263 ITR 658 (SC). 5. Without prejudice to the above grounds Ld CIT(A) should have relied on the judicial precedents mentioned at Ground No.3 Supra and by not doing so he has erred in not exercising his plenary powers which are conterminous with that of Assessing Officer as per the ratio laid down by CIT Vs. Kanpur Coal Syndicate (1964) 53 ITR 225, 229 (SC). 6. The appellant prays that he order of the Ld CIT(A) be vacated and that of the AO's order may be restored. 7. The appellant craves leave to add, alter, amend, modify any of the above grounds raised, any o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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