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2019 (5) TMI 1002 - AT - Income TaxAddition u/s 68 - HELD THAT:- The assessee has deposited INR 1,700,000 as addition to capital in a partnership firm namely M/s M S Traders. The assessee has also deposited a sum of INR 2,200,000 in the state bank of India bank account of the assessee. From the state bank of India bank account assessee has issued cheques for deposit into the partnership firm of INR 17, 00,000. Therefore out of the deposit of INR 2,200,000 in cash in the bank account with state bank of India which is the source, the assessee after depositing the above sum in cash has issued the cheques of INR 1,700,000 in favor of the partnership firm as his capital. Therefore it is apparent that INR 2,200,000 has been added by the assessing officer as an income and once again the addition of INR 1,700,000 is also made, therefore it is apparent that there is a double addition in the hands of the assessee. For this reason we direct AO reversing the order of the CIT – A, to delete the addition of INR 1,700,000 on account of deposit in the partnership firm as his capital. In view of this ground number 1 and 2 of the appeal of the assessee are allowed. Agricultural income - HELD THAT:- Assessee is having an agricultural land which can result in to agricultural produce. Admittedly, the assessee is having the agricultural land of more than 38 acres, the documents for which have already been submitted before the learned CIT – A. As originally the assessee stated that he is having agricultural land of only 23 acres, despite the documents of the agricultural land holding produced before the learned CIT – A, only for the reason that assessee is initially not aware about the area of land, he disbelieved the holding of 38 acres of the land. As assessee has produced the documentary evidence of 38 acres of the land in the name of the assessee on which the agricultural activities are carried on, the land holding of the assessee cannot be denied. Therefore the CIT – A committed an error by not accepting the ownership of the land despite having the title deeds placed on record. Production of lemon on already planted trees - HELD THAT:- Year to year assessee is showing an agricultural land and agricultural income deriving there from. During the year the assessee produced the sale bill of 36722 kg of lemons INR 1062700. The sale bill is not disputed by the AO of CIT appeal but the original production of the lemon is disputed. When assessee has sold the lemon and produces the bills before the lower authorities without examining and proving the bill of the lemon sale falls it cannot be stated that the assessee has not sold lemon at all. This is so also because of the reason that in earlier years also the assessee has sold lemon and same have been accepted in assessment proceedings under section 143 (3) of the act for assessment year 2006 – 07. Even otherwise till to date the assessment under section 143 (3) for assessment year 2006 – 07 has not been disturbed. Expenditure on agriculture - HELD THAT:- With respect to the agricultural expenditure the assessee has stated that he has deputed the farmers who contribute for the cost of agricultural activities including seeds and they keep one third of the agricultural produce as their share for labour and expenditure. The two third of the share of the agricultural produce remains with the assessee and which has sold. The assessee submitted that this is an oral agreement and there is no written agreement with the cultivators. Just because there is no written agreement with those persons, in view of the sale bill of the lemon, consideration of which has been received by the assessee, holding of the agricultural land sufficient to generate so much of agricultural produce the claim of the assessee cannot be rejected. Agricultural income accepted by revenue in earlier years - HELD THAT:- In the earlier year the assessee has shown agricultural income of rupees 1124800/– for assessment year 2006 – 07 which has been accepted by the assessing officer, therefore the revenue has accepted the claim of the assessee that assessee is agricultural income. This year the agricultural income shown by the assessee is less than what has been shown by the assessee in earlier years despite being the same area of the agricultural land. Sale of agricultural produce to various parties from whom cash is received - CIT – A instead of making enquiries from these 4 persons, he merely referred to the various telephone numbers mentioned on those bills and held that this belongs to different locations - HELD THAT:- It is true that all these observations of the learned CIT – A on the basis of the information submitted by the assessee, however, when the learned CIT – A so much of account on the veracity of the bills, before saying that the bogus, he should have asked the assessee to either produce those parties or made independent enquiry with respect to the buyers. In absence of these it is merely an allegation is which has not substantiated. Merely on allegation and doubts the addition cannot be made. They needs to be substantiated by due enquiry. Whether provision of section 68 applies when the assessee has not maintained the book of accounts? - HELD THAT:- This issue is no more an issue of debate in view of the decision of Honourable Mumbai High court in case of Arun J Muchalla V CIT [2017 (8) TMI 1137 - BOMBAY HIGH COURT] where in it has been held that even in case of deposits in bank accounts provision of section 68 applies. The Hon Bombay High court in that case relied up on the decision of Honourable Supreme court in Sudhir Kumar Sharma (HUF) v. CIT [2016 (5) TMI 928 - SC ORDER] Therefore we reject that argument of the assessee that provision of section 68 does not apply when the amounts are credited in the bank account as assessee has not maintained the books of accounts.
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