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TMI Blog2017 (8) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 153A of the Act, the assessing officer estimated the income @ Rs. 22,000/- per acre for the entire cultivated land of 86.47 acres without excluding the bund area. This issue is involved for all the assessment years of 2006-07 to 2011-12. For the sake of clarity and convenience we extract the relevant paragraph No.4 of the Assessment order for the A.Y 2006-07 as under: "During the year under consideration the assessee had declared an amount of Rs. 3,43,270/- as income from Fish Tanks. The assessee was in possession of Ac.86.47 of fish tanks and was doing pisci culture on his own. The net income offered by the assessee per acre comes to Rs. 3,970/-. But as per the information provided by the Fisheries Dept. the net income per acre was around Rs. 22,000/- for the year under consideration. The Fisheries Dept. has estimated the income by taking into consideration the purchase of seed, coolie expenses for feeding of fish, removal of wastage from fish ponds, catching the fish, sale of fish, transport expenses, salaries to staff & other Administrative expenses and all other connected expenses. The income arrived by the Fisheries Department which is net of all expenses is adopted in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount, interference of my opinion is not required in this regard. The only dispute raised by the appellant during appeal proceedings is with regard to the bund area to be allowed. The appellant submitted that as per Board's Circular vide Do. No. 225/222/93-ITA.11 dated 19/10/1993, land area has to be considered at 70% instead of 100% adopted by the Assessing Officer while estimating the income. After considering the Board's Circular, I am of the opinion that while estimating the income per acre, bund area has to be deducted from the total land area. Hence, 30% of the land area has to be reduced and 70% of land area has to be considered as water spread for estimation of income from fish culture. Accordingly, the Assessing Officer is directed to estimate the income on 70% of the total land area for each Asst. Year from 2005-06 to 2011-12." 4. Aggrieved by the order of the Ld. CIT(A), the revenue is in appeal before us. Appearing for the revenue, Ld. D.R. argued that the CIT(A) committed an error by allowing the bund area to be excluded for estimation of income since it was considered by the A.O. while estimating the income. The assessee is having fish pond in the area of 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities below. The assessee is cultivating the fish ponds in 86.47 acres and no books were maintained by the assessee and hence the assessing officer estimated the income @ Rs. 22,000/- per acre on entire 86.47 acres without giving deduction for bunds. While estimating the income, the assessing officer said to have collected the information from the Fisheries Department. The assessing officer held that as per the information collected from Fisheries Department the reasonable estimation of income would be Rs. 30,000/- per acre including the bund area and after exclusion of bunds the estimation of Rs. 22,000/- per acre is fair and reasonable. Though the A.O. stated in the assessment order that he has made enquiry with Fisheries Department and collected the information, details of the information collected from the Fisheries Department with regard to the income and expenditure, yield per acre year-wise estimated sales and the sale value per tonne, etc. was not discussed in the assessment order and not made available to the assessee. Hence the reliance placed by the AO on the information of Fisheries Department for estimation of income cannot be used against the assessee without gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1 140,000/-. When the same was questioned, the A.R. of the assessee replied that the assessee did not maintain books of account and the income was offered on estimated basis and the question of disallowance u/s.40A(3) does not arise. The main issue under question is that, whether the assessee did make the purchases by making the payments otherwise then by an account payee cheque or D.D. As the answer is affirmative, as the assessee did make cash payments for the purchases, as evident from the material found during the course of search & seizure, the provisions of Sec.40A(3) are clearly attracted. Therefore, the amount of Rs. 11,40,000/- is disallowed and is added to the income returned." 8. The Ld. CIT(A) deleted the addition as per discussion made in para 6 to 6.2 which reads as under: "6. With regard to the issue of disallowance u/s. 40A(3) of the Act for Asst. Years 2005-06, 2007-08 to 2011-12, the Assessing Officer basing on the account copy found in the name of Sri V. Radha Krishna, who is one of the partner of the appellant firm during the course of search proceedings. He made the addition of the total cash payments as evidenced by the account copy. 6.1 During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 22,000/- per acre. The assessee has not maintained the books of accounts which fact was accepted by both the parties. The purchases were made by Shri Radha Krishna but there is no evidence to show that the expenditure was debited to the P&L account and claimed as a deduction in the hands of the assessee. Therefore we are of the view that the revenue has not placed sufficient evidence to prove that the expenditure was debited by the assessee and attract the disallowance u/s 40A(3) of I.T. Act. Further, the assessment in this case was completed by estimation and once the income is estimated the entire deductions or additions from section 30 to 43D of the Act deemed to have taken care of and no further disallowance or addition required to be made. This view is upheld by Hon'ble A.P. High Court decision in the case of Indwell Constructions Vs. CIT 232 ITR 776. For ready reference, we extract the relevant paragraph of the Hon'ble High Court order as under: "The pattern of assessment under the IT Act is given by s. 29 which states that the income from profits and gains of business shall be computed in accordance with the provisions contained in ss. 30 to 43D. Sec. 40 provides for c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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