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TMI Blog2018 (1) TMI 1426X X X X Extracts X X X X X X X X Extracts X X X X ..... per transaction or bogus. The entire evidence has to be appreciated in a wholesome manner and even where there is documentary evidence, the same can be overlooked if there are surrounding circumstances to show that the claim of the assessee is opposed to normal course of human thinking and conduct or human probabilities. Even applying this principle to the instant case, there was some difficulty in rejecting the assessee’s plea as opposed to the normal course of human conduct. The surrounding circumstances of the case were also not strong enough to justify the rejection of assessee’s plea as outrageous or fabricated one. Taking possession of land vide sale agreement and also carrying out of agricultural activities in the said land has to be accepted. However, the quantum of agricultural income declared in the impugned land is very much on the higher side which cannot be accepted to that extent. AO considered the entire amount of ₹ 29,32,653 declared by the assessee as non-agricultural income. This view of the AO is very unreasonable and vindictive in nature. As already stated, the declaration of ₹ 29,32,653 as agricultural income out of the area of land measurin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he mismatch. 4. The learned Respondent Assessing Officer has erred in the law by rejecting agricultural income based on the departmental enquiry reports, as the said report was not forth before the Appellant for rebuttal. 5. The rejection of the agricultural income by the learned Assessing Officer, advancing various other reasons enumerated in the order is not correct for the detailed explanation furnished by the Appellant, as recorded in the impugned order, itself. 6. The learned Respondent Assessing Officer has erred in law by levying penalty u/s 234A of the Act and 234B of the Act, totally ₹ 4,35,888/-. 2. The facts of the case are that the assessee filed his return of income for the A.Y 2014-15 on 09-10-2015 declaring income of ₹ 2,18,280/- under the head salary and ₹ 29,32,653/- as agricultural income. The case was taken up for scrutiny and the assessment u/s 143(3) was completed on 30-12-2016 on a total income of ₹ 31,50,933/- making disallowance of the claim of earning agricultural income amounting to ₹ 29,32,653/-. 3. The facts leading to the addition on account of rejection of the claim of earning agricultural income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. On the basis of the above findings the AO concluded that the claim of the assessee with regard to the receipt of agricultural income amounting to ₹ 29,32,653/- was false. Accordingly, he treated this as income from other sources. 8. The AO also noticed that there were huge cash deposits in the bank a/c of the assessee as follows:- ICICI Bank ₹ 4,73,500 Karnataka Bank Rs.13,12,000 Corporation Bank ₹ 8,96,500 Total ₹ 26,82,000 9. Before the AO the assessee stated that the deposits were the sale proceeds of agricultural produce. Details were requisitioned but the assessee failed to submit such details. However, as the AO treated the agricultural income as income from other sources, no further addition was made on account of cash deposits in the banks. 10. On appeal, the CIT(Appeals) observed that it cannot be brought out that the assessee has earned agricultural income to the tune of ₹ 29,32,653/-. As against this, the AO has very clearly brought out the facts of the case which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suring 26 acres 9 guntas at Madhihalli Hobli, Konayakanahalli Village, Madihalli Hobli, Belur Taluk, Hassan District on 17.01.2013 for a consideration of ₹ 27 lakhs. Out of this, the assessee has paid ₹ 15 lakhs on entering into sale agreement, balance amount of ₹ 12 lakhs was paid at the time of registration. The sale deed was entered into between the assessee and seller on 24.04.2014. In the meantime, the assessee got possession of the land and cultivated the same and earned income and deposited it into bank account. According to the ld. AR, as per clause (vii) of sale agreement, possession of land and property has been given to assessee on 17.01.2013. In support of this, he drew our attention to the copy of Affidavit dated 22.11.2016 wherein the Vendor confirming the handing over of the possession to the assessee. The said affidavit is placed on record at pages 37 38 of the PB. The ld. AR submitted that the AO drew inference that the agreement of sale is an afterthought on the reason that there was no mention of agreement of sale in the Sale Deed. According to the ld. AR, no reference of agreement of sale in the sale deed was just an error or an omission by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verify the authenticity of cultivation carried during the year 2013-14. As per the said enquiry, it appears, it is reported that there was no much cultivation in the said lands in the earlier years and presently only, jowar is grown. No other details of the report are found in the impugned order. 16. He submitted that the assessee was totally unaware of the enquiry or inspection conducted by the ITO at the back of the Appellant. It is not known who are the persons who carried the local enquiry and spot inspection. The details of local enquiry, such as the names and addresses of the persons, with whom the enquiries were made or any statements recorded in that behalf are not specified in the assessment order. It is not known who identified the property for spot inspection. The village area is very vast. Spot inspection of the land, identifying the same with survey numbers could be possible, only, with the help of State Revenue Authorities or the Assessee himself. In this background, how the spot inspection was conducted is not ascertainable from the assessment order. Any enquiry or spot inspection, if conducted at the back of the Assessee and such report is intended to be used aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Now this deed witnesseth that in pursuance of the same a sum of ₹ 27 lakhs paid to vendor by the purchaser in cash before undersigned witness the vendor here acknowledges receiving said amount. 18.1.2 Though the assessee states that the agreement is entered into on 17-1-2-13 and advance of ₹ 15 lakhs paid and the balance of ₹ 12 lakhs to be paid before the registering authority, the registered deed dated 24-4-2014 does not mention that advance of ₹ 15 lakhs has been paid on the date of agreement, rather it only states that sale consideration of ₹ 27 lakhs is paid by the purchaser in cash before undersigned witness on the date of registration i.e., 24-4-2014 . In view of the above, it is amply clear that the assessee was not in possession of the lands during the 2013-14 to earn agricultural income of ₹ 29.32 lakhs. On the strength of the registered sale deed being the date of actual possession of the lands by the assessee, the effort made by the assessee to furnish the agreement dated 17-1-2013, affidavit by the seller dated 22-11-2016 during the course of scrutiny proceedings are all an atter-thought of the assessee to claim th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ginger. 18.3.2 If the assessee claims that the RTCs cannot be relied upon for the date of transfer of lands to the transferee and the crops mentioned in the RTCs to be not the actual crop grown in the said lands by the assessee, then why is such a document relied upon by the assessee to prove that the lands are held by him. ( iv) Quantum of agricultural income declared and the quantum of sale consideration paid. 18.4.1 As per the sale deed dated 24-4-2014, the agricultural lands have been purchased by the assessee by paying cash of ₹ 27 lakhs on the date of registration. When the assesses claims that during the FY 2013- 14, he has earned agricultural income of ₹ 29 lakhs, there is an ambiguity about the sale consideration for land purchased for sum of ₹ 27 lakhs, since the land yielding agricultural receipts to the tune of ₹ 29 lakhs cannot be imagined to be sold for ₹ 27 lakhs by the seller. 18.4.2 As per the sale deed dated 24-4-2014, dry agricultural lands at Konayakanahalli Village, Hassan District measuring 26 acres and 09 guntas etc., were purchased during the FY 2014-15. However, the assessee claims that he has taken pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the AO regarding the correctness of books of account produced by the assessee. He relied only on the RTC issued by Village Accountant. 21. Further, the assessee filed affidavit dated 27.11.2016 wherein it is confirmed that handing over of possession of agricultural property to assessee as per clause (7) of the said agreement. This affidavit was filed by the assessee before the CIT(Appeals). But neither the CIT(Appeals) nor the AO verified the contents therein by examining the concerned parties. 22. It is also observed that in the subsequent assessment year, the AO himself as accepted that in the FY 2013-14 relevant to AY 2014-15, the mention of growing Plantain trees and Paddy in RTC issued by Village Accountant vide his letter dated 14.12.2017. This goes contrary to the facts recorded by the AO in the impugned assessment order. Further, the reliance placed by the AO on the enquiry report conducted by the ITO, Ward-2, Hassan cannot be appreciated. This enquiry was made behind the back of the assessee and which was not put for comments from the assessee. Any evidence collected behind the back of a person against whom it is used, an opportunity of hearing has to be giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not to their liking in the sense that they do not add to the statistics of collection of taxes. Thus, all commercial arrangements and documents or transactions have to be given effect to even though they result in a deduction of the tax liability, provided that they are genuine, bona fide and not colourable transactions. 24. In the present case, the assessee produces the agreement to sell wherein there is a clause of handing over possession of landed property to the assessee and this was confirmed by the seller that he has handed over the landed property on entering into sale agreement. There is evidence produced by the assessee before the AO in the form of estate books of account like expense bills, indent copies. However, the lower authorities opted not to comment on these documents and went on to hold that possession of property was not at all handed over to assessee vide agreement of sale dated 17.01.2013. In my opinion, the evidence brought on record by the revenue authorities was not sufficient to establish their stand that the assessee has not taken possession of land and cultivated the same and sale agreement is only paper transaction or bogus. In my opinion, the enti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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