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TMI Blog2022 (5) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... s incurred in the preceding year to arrive at a proper comparison. To this effect, he had pointed out also that there was no discrepancy in the percentage of expenditure incurred in the preceding year as compared to the income earned in the impugned year, being approximately 30 to 40% of the same, which was in accordance with the comparative figures of the preceding year and succeeding years also. All the above finds mention in the letter addressed to the Ld.Pr.CIT We find that in relation to the SAANTH earned by the assessee as stated above admittedly the Assessing Officer had conducted inquiries and asked for confirmation also from the members of the HUF who had paid the agricultural rent to the assessee HUF. Now, without pointing out any infirmity in the inquiry conducted by the Assessing Officer or any fact which the inquiry conducted revealed raising suspicion with regard to the transaction, the ld. Pr. CIT has merely stated that the issue needed to be further investigated in depth. AO therefore having examined the specific aspects of agricultural income/SAANTH pointed out by the Ld.Pr.CIT and the assessee also having addressed every discrepancy /anamoly pointed out by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,480/- which was accepted in scrutiny assessment made u/s. 143(3) of the Act vide order dated 22-11-2017. Thereafter on going through the assessment records, the ld. Pr. CIT noted the following errors in the order of the AO 1) that the Assessing Officer had failed to verify whether the claim of agricultural expenses was commensurate with the agricultural income. As per the Ld.Pr.CIT the reasonable expenses should have been to the tune of 40% of the income, as per a decision of the ITAT Ahmedabad bench referred to by him, while it was very meager in the present case. He noted that while the total agricultural receipts were Rs.62,30,167/- ,40% of the same came to Rs.24,92,067/- while the assessee had shown only Rs.7,88,687/- He noted from the records that the assessee had incurred neither irrigation expenses nor electricity expenses and labor expenses claimed were also to the extent only 6.5% of the receipts, while as per the Ld.Pr.CIT the normal labor expenses was to the tune of 25% of the receipts. He therefore was of the view that the failure of the Assessing Officer to examine the claim of expenses incurred by the assessee had led to the order passed by him being erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nother assessment year. 6.1 The officer was required to properly examine the following points to do so:- i. The land holding in of the HUF members as per 8A certificate the crops cultivated as per 7/12 extracts for the above agricultural holding for the year under consideration i.e. F.Y. 2014-15. ii. The detail of each crop cultivated on the above agricultural land in season. iii. The yield of particular crop during the year under consideration i.e. FY. 2014-15 for that specific (area wise), alongwith some corroboratory by govt. or concerned authority of that respective area. iv. The total quantity of produce of each crop in the case of assessee. v. Verification of claim of sale of agricultural produce made by the assessee. The A.O. should have enquired u/s. 133(6)/131 from the parties to whom the sales have been made by the assessee. vi. Considering huge claim of agricultural income, the AO should have asked the inspector to conduct spot enquiry on the field of the assessee to get the actual condition and genuineness of the claim made by the assessee. 6.2 On perusal of the case records it is seen that the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in the assessment order, along with any documentary evidenced at time of assessment proceedings but the Assessing Officer failed to do so and only accepted the submission. 6.4 Assessing Officer was required to examine the claim of the assessee regarding Agricultural expenses and Rent Income at the time of assessment proceedings but the Assessing Officer has failed to do so. It is thus apparent that the order of the Assessing Officer was erroneous and it was prejudicial to the interest of the revenue as the claim of the assessee was accepted without proper verification. 7. The issues in the light of the in the preceding paras need to be verified. In view of the discussion the order is to have been passed by the Officer without enquiries, verification of material on record. 8. In the of K.A. Ramaswamy Chettiar (220 ITR 657) the Hon'ble Madras Court held when the ITO is to make an enquiry of a particular item of income if he does not make an enquiry as expected, that would be a ground for the Commissioner of Income to interfere U/s.263 with the by the ITO is erroneous and prejudicial to the interest of the revenue 3.1 In the of case of Swarup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Ld.Counsel for the assesee and has not been denied by the Ld.DR that these very specific points, raised by the Ld.Pr.CIT , stood examined during assessment proceedings. Queries on all the specifically pointed out aspects of the earning of the incomes, relating to agricultural income and SAANTH, was duly raised during assessment proceedings vide notice issued u/s. 142(1) of the Act dated 28-11-2016 and 07-09-2017 requiring the assessee to furnish proof of agricultural land, sale bills of agricultural produce, copy of accounts of agricultural income earned, name of the crop cultivated, to whom the produce was sold, quantity of produce sold, gross agricultural income received on account of sales, detail of agricultural expenses incurred along with supporting evidences as also details of income received on account of land amount of SAANTH substantiated with confirmation of person to whom the land was given. Due reply vis- -vis all the above queries raised was filed by the assessee vide their letters dated 3-07-2017 and 18-09-2017 giving all the details along with supporting documents and evidences as required for. The notices issued by the Assessing Officer was placed befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring assessment proceedings itself being on account of the fact that the assessee was cultivating Raw tobacco which required very little quantity of water and also hardly any pesticide ,the crop itself being a pesticide and further that since the members of the assessee HUF were engaged in agricultural activities the labor cost also was low. The assessee also explained to the Ld.Pr.CIT that the expenses for crops sold in the year were mainly incurred in the preceding year since the crop, i.e tobacco, grown by the assessee took a particularly long time to grow and the assessee accounted for the expenses on cash basis, therefore, the expenses reflected against its income for a year did not necessarily relate entirely to the income earned in that year and the income of a year was to be compared with the expenses incurred in the preceding year to arrive at a proper comparison. To this effect, he had pointed out also that there was no discrepancy in the percentage of expenditure incurred in the preceding year as compared to the income earned in the impugned year, being approximately 30 to 40% of the same, which was in accordance with the comparative figures of the preceding year and su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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