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TMI Blog2018 (6) TMI 1387X X X X Extracts X X X X X X X X Extracts X X X X ..... e before him and failed to discharge the powers conferred upon him. When the assessee did not produce the books of account although it is a private limited company and did not produce the relevant details as called for by the Assessing Officer, the CIT (A) should not have granted substantial relief to the assessee on account of agricultural income which under the facts and circumstances of the case appears to be abnormal - restore the issue to the file of the CIT (A) with a direction to decide the issue afresh in accordance with law after giving due opportunity of being heard to the assessee - Appeal filed by the revenue is allowed for statistical purposes. - ITA No.3928/Del/2012 - - - Dated:- 26-6-2018 - SH.R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. Atiq Ahmed, Sr. DR For The Respondent : Sh. Sanjiv Sapra, FCA ORDER PER R.K. PANDA, AM: This appeal filed by the revenue is directed against the order dated 28.03.2012 of the CIT (A)-1, New Delhi, relating to A. Y. 2007-08. 2. Facts of the case, in brief, are that the assessee is a company engaged in the business of production and trading in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in your books as on 31.03.2007. Please also furnish the confirmatory letters confirming the balances alongwith their assessment particulars including PAN. viii) Please produce all the books of account maintained by the assessee company for business activities in financial year 2006-07 alongwith supporting material, if any. ix) Please produce copies of all the bank accounts maintained by you. 4. The assessee did not produce its books of account and fasli duly certified by the Land Revenue authorities. The assessee did not produce the sale invoices/ vouchers in original. It only produced loan account with Indian Bank and Bank s letter confirming grant of subsidy. The assessee did not produce its regular bank account. The Assessing Officer, therefore, again asked the assessee to produce the details called for and justify the lemon grass claimed to have been produced is recorded in the land revenue records. He also asked the assessee to furnish the seed account and bills and invoices of seed purchased. The Assessing Officer further asked the assessee to furnish the list of debtors of ₹ 70,26,250/- and status and details of subsequent recovery of the same by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses. According to it, there were no other items of significance and, hence, the AO was not correct in drawing conclusion that the books of account were not produced. 1.4 The real issue in assessment was whether the assessee was able to substantiate the claim of agriculture. Non-production of books of account need not lead to conclusion that agricultural income was not actually earned by the assessee. If the AO doubted the assessee s claim, the best way to verify it was to do site-inspection or to collect confirmation from the third parties. The assessee had furnished the list of its sundry debtors. By the time the assessment order was made the return of income for the two subsequent assessment years would have also come on record. It should not have been difficult for him to find out how the debtors accounts were settled, if he just had a look at the balance-sheets of the subsequent years. Whether the debtors had actually purchased lemon grass from the assessee or not could be verified only if he collected information from them. It is also noticed that while the assessee had shown sale of lemon grass worth ₹ 70,76,750/, agricultural income (net of the expenses) was sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e adjusted finally against the term loan amount. This action is accorded subject to the following terms and conditions: This letter is dated November 11, 2006, i.e. in the latter half of the previous year. If the NHB, on the basis of a satisfactory joint inspection report, was satisfied about the assessee s work, it lends a certain degree of credibility to its claim. It is also noticed that the Indian bank had sanctioned term loan to the assessee for the same purpose. Unless a contrary fact comes on record, it should be understood that these institutions satisfied themselves about the assessee s work, in view of this, it cannot be said that the assessee did not carry out the agricultural operations even though the AO raised some valid question marks. The nature of his finding is not sufficient to substantiate his conclusion. 1.7 On the other hand, it also cannot be said that the assessee was able to substantiate its claim of earning agricultural income of ₹ 55,96,085/ satisfactorily. In this factual situation, a broad view has to be taken, particular considering that more than five years has passed since the previous year and, at this stage, it would be difficult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08 simply because the Turnover as well as the income was higher. With these observations, the assessee s income from unexplained sources is reduced to ₹ 18,00,000/-. 6. Aggrieved with such order of the CIT(A), the revenue is in appeal before the Tribunal by raising the following grounds :- 1. The Ld. CIT (A) has erred in law and on facts of the case accepting the claim of the assessee of agricultural income of ₹ 53,07,560/- (75% of gross receipts shown by the assessee) only on the basis of proof of agricultural land, grant of subsidy and loan, and no cross verification of any sale transaction has been done which was in incumbent in the light of the fact that Lemon Grass gives very low yield and could not have generated income of ₹ 55,96,085/- in the current year as against the income of ₹ 4,50,566/- in the A. Y. 2006-07. 2. The Order of the Ld. CIT(A) be aside and that of the Assessing Officer restored. 7. The revenue has also raised the following additional ground :- 1. The Ld. CIT (A) has erred in law and facts of the case by accepting the additional evidences during the course of hearing of appeal of the assessee in viol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultural income which under the facts and circumstances of the case appears to be abnormal. 12. Considering the totality of the facts of the case and in the interest of justice we deem it proper to restore the issue to the file of the CIT (A) with a direction to decide the issue afresh in accordance with law after giving due opportunity of being heard to the assessee. While doing so he may call for a remand report from the Assessing Officer if he so desires. He may also direct the assessee to produce the books of account either before the Assessing Officer during the remand proceedings or before him to find out as to whether books of accounts are maintained or not, how the sales are recorded etc. He may also examine the reasons for decline in the agricultural income in the two subsequent years and meager income shown in the preceding assessment year. Needless to say, the CIT (A) shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. The grounds raised by the revenue are accordingly allowed for statistical purposes. 13. In the result, the appeal filed by the revenue is allowed for statistical purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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