9911796707
TMI Blog2013 (12) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... est Department free of cost. However, vide another letter dated 02/12/2009, the assessee stated that it had purchased seeds of Prosopis Juliflora, which was used for cultivation. 3. The Assessing Officer noted that the entire claim of the assessee was based on the photo copy of a single tearoff sheet opinion given by one Sri Guru Murthy K. Etc., India for 10:879-94, 1984. As per the said opinion, the yield would be about 45 MT per acre on maturity. It was submitted by the assessee that the yield shown by the assessee comes to 40 MT per acre and that the average cost was taken by them at Rs. 950/- per MT. It was submitted that on 140 acres of land cultivated by the society, the income worked out to Rs. 53,00,000/- around [140 x 40 x 950] on the above basis. 4. It was also contended that the expenses for cutting were nil as the buyers themselves cut the plants into logs and transport the logs to their destination. It was also stated that the expenses for cultivation were capitalized. The assessee averred that the plants being used a fire wood and were therefore sold to number of persons. The assessee also filed a copy of the sales register containing some details regarding the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1.7.6 To prove the sales made to different persons with necessary evidence as the onus is upon the assessee to prove the receipts. 1.7.7 To produce copies of bank account statements maintained for the FY 2001-02 to FY 2006-07. 7. In reply, the assessee vide a letter dated 23/12/2009 averred that the earlier statement regarding free supply of plants by the Forest Department given by its accountant inadvertently, whereas it had purchased seeds from dealer viz., Raghavendra Seeds & Pesticides, Gooty, Ananthapur, in the year 2001 and used them for cultivation. It was contended that a physical inspection may also be conducted to verify the existence of trees and cutting thereof by the buyers. The assessee also averred that Sri K. Guru Murthy, is technically competent person to given such opinion. It was however admitted that it could not get the full text of the opinion. The assessee further submitted that it had taken output cost Rs. 950/- per MT on an average and that the quantity depends upon the lorry, tractor or bullock cart. The assessee pleaded that this was the first year of sale and the society did not have any expenditure in this line earlier, it did not maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d another statement from him in Telugu dated 24/12/2009 wherein the dealer stated that he is a registered dealer under VAT only from the year 2004. 10. The Assessing Officer opined that the retraction of statement obtained by the assessee from the shop owner is only a desperate attempt to substantiate the purchase of seeds. She noted that the particulars in the bills were blank and those stated the amounts paid for Juliflora seeds, they did not contain any details like quantity, date, mfg date, expire date, packing details, manufacturer's details etc. It was a blank bill stating purchase of seeds for Rs. 3,680/-, which the Assessing Officer considered had not been genuine. Besides, in the retraction statement, the shop owner had not even mentioned as to from whom he had purchased those seeds for selling them to the assessee. Therefore, she observed that the assessee had only tried to protect its subsequent explanation regarding purchase of seeds from the said dealer. 11. The Assessing Officer further noted that while the assessee was firstly uncertain about the mode of plantation, i.e. whether by saplings or by seeds, besides it had submitted conflicting evidence regarding purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on daily or on periodical basis. Rather, the bank account were opened in the months of November and December 2008, i.e. much after the alleged sale of plants in September, 2006. The Assessing Officer therefore felt that had the sales actually been made, there was no reason for not opining the bank accounts in the April, 2006 itself and crediting the sale receipts therein. In fact, she noted that the sale proceeds contentedly received had not been credited into the bank accounts even until 31/03/2007, rather the cash balances were seen periodically transferred by book entries to sister group of company, Sri Rayalaseema Green Steeloy Ltd. to the tune of Rs. 50,70,000, beginning from 10/04/2006 to 11/09/2006, which incidentally was the agricultural income claimed by the assessee. The Assessing Officer also noted that the said amount had been utilized by the sister concern and the assessee had not received those back and had not even received any interest thereon. Accordingly, she concluded that the agricultural income contentedly earned by the assessee society was only an effort to build the tax free income. She concluded that the assessee had only taken the advantage of the land a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. Besides, she noted that even if some Juliflora Plants were found scattered on the assessee's land, the income generated from the sale thereof could not be treated as agricultural income, as those had grown there spontaneously and widely in the area of 140 acre land. She noted that even in several judicial pronouncements, income from plants growing spontaneously has been held as not being agricultural income in the assessee's case, the assessee had grossly failed to show that the lands were cultivated so that the income from the same could be treated as agriculture. Accordingly, she concluded that the assessee had failed to discharge its burden of proof. 18. The Assessing Officer further noted that in the assessee's case neither the basic operations nor the subsequent operations were performed by the assessee. Enquiries had revealed that the assessee had not purchased/procured any seeds or saplings and planted the same on the land, nor any systematic plantation, tending, caring, pruning, de weeding etc. was done. Since the growths of the plants was of a wild and spontaneous nature, no basic activities requiring human skill were undertaken. Besides, no evidence of any subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire surplus cannot be distributed." 22. Before us, the learned AR filed a copy of the assessment order for the AY 2009-10 where the Assessing Officer accepted part of the agricultural income declared by the assessee as agricultural income and only treated a sum of Rs. 9 lakhs as nonagricultural income. He further submitted that as per records, the assessee grown Juliflora Plants and sold them in market. He drew our attention to the details of the sales made by him in paper book, which is kept on record. 23. The learned AR further submitted that the assessee society was formed by the members for their mutual benefits. It is pointed out that this was the first year of having such agricultural income and that the society had no other sources to earn such huge income. The AR submitted that if the Prosopis Juliflora plant grow on their own why the seeds thereof are sold in the market. The AR further submitted that there are various varieties thereof, which grow on their own also, but it could not mean all such plantation grows on its own. The AR argued that many a times even cotton grows on its own but it cannot be said that income from growing cotton is not an agricultural income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trace of any systematic plantation on the 140 acres of land, allegedly cultivated by the assessee's society, by carrying out requisite agricultural operations. Rather, it clearly appears form them that at the time of such inspection, there was scanty and scattered growth of Prosipis Juliflora trees on the said lands. The DR submitted that the pattern of growth of such trees thereon is quite similar to that seen in the Juliflora plants growing on normal barren lands, alongside the roads, railway tracks etc. The DR contended that the assessee has not maintained any records regarding expenditure incurred for carrying out the said alleged agricultural operations and there is no record for any expenses towards basic operations like cultivation, tilling, sowing, planting etc. The DR pointed out that no evidence could be produced by the assessee at any stage as to how and when any of such activities were actually done or got done and the entire claim of cultivation is based on two bills purportedly for the purchase of the seeds. The DR further pointed out that when the assessee's claim that the Prosipis Juliflora plants supplied free of cost by the Forest department for the cultivation, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d would have been deposited into a bank account. The DR pointing the claim of the assessee that the seeds were purchased for Rs. 3,680/- in the year 2001 itself, submitted that the assessee could not demonstrate with any verifiable and contemporaneous evidence as to how the payment, if at all, was made for the stated purchase. On the contrary it was found that the society opened its bank accounts with Inds Ind Bank and Syndicate Bank only 01/11/2006 and 01/12/2006 respectively. 27. The learned DR submitted that though the assessee stated that all the sales of so called produce were made during the period 03/04/2006 to 11/09/2006, the assessee did not consider it appropriate to open a bank account for the safe keep of the proceeds and besides, it is also strange as to why even after the opening of bank accounts in the months of November and December, the sale proceeds, if at all accumulated, were not deposited in the said bank accounts till 31/03/2007. 28. The learned DR submitted that it is important to consider the user/appropriation of the income contentedly earned by the society. In the assessee's case, the AR of the assessee has argued that the members of the society are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the income to be shown in its return as 'agricultural income' on a backward analysis made on the basis of the possible yield shown by some technical expert. 30. As regards the contention of the assessee that one should not brush aside the explanation of the assessee that it had utilized as huge as 140 acres of land for earning such income, the DR referred the decision of the Hon'ble Supreme Court in the case of CIT Vs. P. Mohan Kala, 291 ITR 278 wherein the Hon'ble Court opined in respect of the unexplained credits u/s 68 that the expression 'the assessee offers no explanation' must be construed to mean where the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books of account of the assessee. Referring to the said ratio, the DR submitted that in the case of the assessee the simple explanation regarding agriculture contentedly carried out on 140 acres of land is not backed by any proper, reasonable and acceptable explanation of any sort. The DR finally submitted that the findings of the Assessing Officer that the assessee only attempted to disclose income from unexplained sources to the extent of Rs. 50,70,000/- in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill be 1 to 300. If one book is over another bill book is also numbers 1 to 300. Only we printed like that only. Bills with continuity s.no's printed only in first year, later years discontinued. Q. I show you the bill no. 2369 dt. 4/12/01 and 2370 dt. 61/12/01 of bills issued by your shop to KNR Agro farming mutually aided co-op society. Please explain ? A. My shop was opened in the month of April, 2004, the bill pertains to the year 2001. The above bills do not belong to this (my) shop and we have not issued the shown bills to KNR Agro farming mutually aided co-op society." 33. Later on, the assessee filed its reply to the above statement on 29/12/2009 wherein the Proprietor of M/s Raghavendra Seeds & Pesticides stated that he has given the statement to the income-tax department in a mood of confusion and that he had procured seeds from outsiders in 2001 and sold it to the assessee and therefore furnished another statement in Telugu dated 24/12/2009. He further stated that he is a registered dealer under VAT only from the year 2004. However, the Assessing Officer as well as the CIT(A) brushed aside his retracted statement and came to the conclusion th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of giving an adverse party its privilege but a necessity of the process of testing the truth of oral evidence of a witness. Without the truth being tested no oral evidence can be admissible evidence and could not form the basis of any inference against the adverse parties. 34. In view of the said observations, we are not inclined to give any credence to the statement of the proprietor of M/s Raghavendra Seeds & Pesticides. Therefore, we are of the opinion that the claim made by the assessee in respect of agricultural income to be accepted. Moreover, before us, the learned AR filed a copy of the assessment order for the AY 2009-10 where the Assessing Officer accepted part of the agricultural income declared by the assessee as agricultural income and only treated a sum of Rs. 9 lakhs as nonagricultural income. 35. Considering the above facts, we are of the opinion that we cannot draw adverse inference on the basis of the statement of the Proprietor of M/s Raghavendra Seeds & Pesticides and the claim of the assessee has to be accepted on the basis of evidences on record brought by the assessee. Therefore, we set aside the order of the CIT(A) and allow the assessee's claim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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