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TMI Blog2021 (7) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... al gain arising from transfer of agricultural land. The State legislatures are entitled to impose a tax on any of the categories of agricultural income which are exempted from tax under Income Tax Act. As based on the land holdings and land taken on rent basis to do agricultural activities, the farmers have justified the agricultural income earned by them by furnishing evidences such as, land holding records in the form No. 7, 12, 8-A and 6 etc. Besides, addition was sustained by the Ld. CIT(A) based on the statement of Shri Gajanand B. Patel without providing an opportunity to cross examine, wherein we noted that addition cannot be sustained only on the basis of the statement of Shri Gajanand B. Patel. We also note that CIT(A) has sustained the addition in the hands of all the eighteen farmers based on the statement of Shri Gajanand B. Patel without providing an opportunity to cross examine the said statement hence conclusion reached by the CIT(A) based on the statement of Shri Gajanand B. Patel is not acceptable. We have preceded and for the reasons alluded, we are of the opinion that addition should be deleted. - ITA Nos. 324, 329, 333, 341, 325, 330, 337, 339, 332, 334 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer on perusal of the details/information available from the records, issued a show cause notice to the assessee, on 11/01/2016, asking the assessee to furnish the books of accounts, 7/12, and 8A of the agricultural land owned by assessee. The assessing officer also asked the assessee to furnish bills of purchases of pesticides, seeds, and receipts for sale of agricultural produce. 5. However, the assessee could not furnish the documents and details before the assessing officer, therefore assessing officer made addition to the tune of ₹ 1,15,860/- under the head income from other sources. 6. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the addition made by the Assessing Officer. In the appellate proceedings, the assessee has filed various documents like land holdings and agriculture income in the form of sales of agriculture produce like mangoes, vegetables etc. That is, AR of the assessee, during the appellate proceedings has filed the land holding records in the form No. 7/12, 8-A and 6 etc. to show that the assessee had sufficient land holdings for earning agriculture income. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gricultural income, as the assessee has offered the agricultural income in the return of income, thus there is no tangible material/new material before the assessing officer to reopen the proceedings under section 147 of the Act, thirdly, the reopening is based on borrowed satisfaction. Hence, the Ld. Counsel submitted before the Bench that the proceeding initiated under section 147/148 of the Act is bad in law, hence it may be quashed. 9. On merits, Shri Upadhyay, submits before the Bench, that all the farmers have agricultural income in the range of ₹ 1,15,860/- to 1,50,000/-. It is not feasible to maintain books of accounts for such a small agricultural income. The Farmer who is earning agricultural income at ₹ 1,15,860/- is considered a poor farmer. Indian Farmers are by and large illiterate and they do not know the importance of income tax proceedings. Therefore, they do not keep with them purchase bills of seeds fertilizers and labour expenses etc. The labour, who works in agricultural sector accepts only cash payment. Therefore, from a small farmer, who is earning agricultural income at ₹ 1,15,860/-, and who is below the poverty line, cannot be expected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer therefore, addition made by the assessing officer may be sustained. 12. We have given our thoughtful consideration to rival contention. We have perused case file as well as paper books furnished by assessee with the able assistance of Shri Rajesh M. Upadhyay, representing the assessee and Ms. Anupama Singla, Learned Sr. (DR), representing the Revenue. Before the Bench, Ld. Counsel for the assessee argued by taking two stand to defend the case of these eighteen small farmers, viz: (i) Reopening of assessment under section 147 of the Act is bad in law therefore, the reassessment proceedings initiated against these eighteen farmers should be quashed, and (ii) All the farmers have produced evidence of land holding and land taken on rent, to do agricultural activities therefore, (being poor and small farmers), they have substantiated their claim of earning agricultural income, hence addition may be deleted. We note that a common issue in all the eighteen appeals is the challenge to the correctness of agricultural income earned by farmers taking into account their land holdings and land taken by them on rent basis to do agricultural activities. We will begin by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... labour expenses etc can be maintained by them, as the big farmers have necessary infrastructure facilities and large revenue income. Therefore, the option available to estimate the income of a small farmer, (whose income by way of agricultural activities is ₹ 1,15,860/-), is to examine the sufficient land holding by her. 14. Shri Upadhyay, Learned Counsel, has furnished before the Bench the agricultural land holding by the assessee and family members, which is reproduced below: TEJALBEN BHARATBHAI PATEL OTHERS Agricultural Land Hold by Assessee their Family Members [A] OWN AGRICULTURAL LAND : Sr. No. Village S.No./ Block No. Area Ht.- Acr.- Sqmts. Crop Grown Value in Rs. Remark 1 Mo Je Dungari, Dist. Valsad 1688 0-02-03 Grass f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Area Ht.- Acr.- Sqmts. Crop Grown 1 Moje Sonwada Dict. Valsad 634 0-46-36 Paddy, Mangoes, Vegetables and Sugarcane 2 Moje Sonwada Dict. Valsad 592/A 1-61-88 3 Moje Sonwada Dict. Valsad 592/B 0-36-42 4 Moje Sonwada Dict. Valsad 566 1-00-16 5 Moje Sonwada Dict. Valsad 569 0-93-07 6 Moje Sonwada Dict. Valsad 653 3-40-95 7 Moje Sonwada Dict. Valsad 677 0-32-37 [C] AGRICULTURAL LAND TAKEN ON GANOT: Sr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A). We note that assessee has challenged the addition of agriculture income of ₹ 1,15,860/- shown in the return of income as unexplained cash credit u/s. 68 of the Act. In the assessment order, the AO noted that the assessee did not file any details to substantiate agriculture income of ₹ 1,15,860/- therefore, assessing officer treated ₹ 1,15,860/- as unexplained cash credit u/s. 68 of the Act. However, we note that in the appellate proceedings, the assessee has filed various land holding of the assessee and his family members and agriculture income in the form of sales of agriculture produce like mangoes, vegetables etc. The assessee has also filed before the Ld. CIT(A), the land holding records in the form No. 7/12, 8-A and 6 etc. to show that the assessee and her family members had sufficient land holding for earning agriculture income. The Ld. CIT(A) did not bring any cogent evidence on record to show that these holding records in the form No. 7/12, 8-A and 6 etc, are false and untrue. We note that Ld. CIT(A) has co-terminus power as that of assessing officer, that is, what the assessing officer can do, can be done by Ld. CIT(A). During the appellate pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement under section 131 of the Act of Shri Gajanand B. Patel. We note that opportunity to cross examine, the statement under section 131 of the Act of Shri Gajanand B. Patel, has not been provided to the assessee, which is against the principle of natural justice. We note that, the CBDT's circular dated 12-03-2003 on this issue which was relied upon by the Hon'ble Madras High Court in the cases of M Narayanan Bros vs. ACIT [2011]13 taxmann.com, and CIT vs. Khader Khan Son [2008] 300 ITR 157 and the Gujarat High Court in the case of Chetnaben Shah vs. ITO [order dt. 14-07-2016 in Tax Appeal No. 1437 of 2007], wherein the CBDT has clearly instructed that the AO should rely on credible evidence and that the material gathered in search should form the basis for framing the assessment order. We note that not allowing the assessee to cross examine the witness by the adjudicating authority though the statements of those witness were made the basis of the impugned order is a serious flaw which makes the order nullity. We note that same view expressed by the Hon'ble Calcutta High Court in the case of Eastern Commercial Enterprises 210 ITR 103 (Cal), wherein it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) has sustained the addition in the hands of all the eighteen farmers based on the statement of Shri Gajanand B. Patel (supra), without providing an opportunity to cross examine the said statement hence conclusion reached by the Ld. CIT(A) based on the statement of Shri Gajanand B. Patel (supra), is not acceptable. In the light of the discussions that we have preceded and for the reasons alluded, we are of the opinion that addition of ₹ 1,15,860/- should be deleted. Therefore, we delete the addition of ₹ 1,15,860/-. 18. However, before parting with the matter, we also make it clear that since we have adjudicated the instant appeal of the assessee, in her favour, on merits, therefore, we do not deal with the arguments of the Ld. Counsel and Ld. DR on the technical issue of reopening the assessment under section 147/148 of the Act. 19. We have adjudicated these eighteen appeals of farmers, taking into account the peculiar facts, as narrated above, therefore, we state that instant adjudication shall not be treated as a precedent in any preceding or succeeding assessment year. 20. Similar issues towards whether assessee has justified the earning of agricult ..... X X X X Extracts X X X X X X X X Extracts X X X X
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