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2015 (7) TMI 247 - ITAT DELHI

2015 (7) TMI 247 - ITAT DELHI - TMI - Addition of agricultural income as undisclosed income of the assessee - comparing the total actual crop yield of the assessee with the average crop yield from the information available on the website of the Haryana Government submitted by the AO along with remand report - Held that:- The authorities below have not denied and fact that there was agriculture land of 8.32 hectare in the hands of the assessee and agricultural activities were carried on and crops .....

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ities below have not brought out any fact or allegation on record to dispute or raise any doubt regarding papers available at page no. 1 to 51 which contain land ownership proof of the assessee, Master Akhil Garg and Master Aman Garg, confirmation copy of accounts and purchase vouchers/bills for the sale of timber by Master Akhil Garg, proof of ownership of agricultural land of both minor sons of the assessee, copy of the auction (Boli) Registers of the commission agent, clarification/confirmati .....

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rop and timber. The assessee has also submitted proof of trees which were recorded in the revenue records on the agricultural land in the name of assessee and his minor sons.

CIT(A) wrongly adopted average yield and sale price of wheat and paddy as shown in the website of Government of Haryana. The CIT(A) was not correct in dismissing the claim of the asessee regarding income from sale of timber without further verification and examination. We may point out that the issue of sale of t .....

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the disallowance to ₹ 8,16,153/- without any logical basis and sustainable reasoning and by taking a hyper technical and incorrect approach and data. In this situation, we dismiss the observations of the AO that the assessee did not furnish any iota of document to support her claim about agriculture income because as we have already noted above that the assessee submitted all possible documents including revenue records, purchase bills/vouchers, bank statement and other relevant documents .....

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ld that:- If we analyse the facts, then we clearly observe that the first instalment of HDFC loan was paid by the assessee on 29.11.2007. Prior to that, there are number of transactions which are related to the agriculture and other economic activities of the assessee including amount of loan advanced to M/s Des Raj Ram Kumar and other firms. In the peculiar facts and circumstances when the interest received from M/s Des Raj Ram Kumar has been offered to tax by the assesse under the head of inco .....

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29.11.2007 to 28.3.2008 and remaining amount of interest paid by the assessee on Bank of Baroda current account deserves to be allowed and we direct the AO to allow the same accordingly. With these directions, ground no. 3 of the assessee is deemed to be allowed for statistical purposes with the limited direction to the AO as mentioned hereinabove. - Decided in favour of assessee for statistical purposes.

Addition on low household withdrawals - CIT(A) upheld the addition on the basis .....

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gnored for the purpose of calculating the total withdrawals by the joint family and its sufficiency to meet household expenses during the period under consideration. The lower authorities also ignored this very fact that the assessee is living in a joint family with her in laws without any air-conditioning, generator set facility or any domestic help/servant facility. The AO has not disputed this fact that the assessee holds agriculture land and cattle out of which maximum needs of household, gr .....

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ur of assessee. - ITA No.5899/Del/2012 - Dated:- 30-6-2015 - Shri S.V. Mehrotra and Shri Chandramohan Garg, JJ. For the Petitioner : Shri S.L. Gupta, CA For the Respondent : Shri B.R.R. Kumar Sr. DR ORDER PER C.M. GARG, JUDICIAL MEMBER This appeal by the assessee has been preferred against the order of the CIT(A)-XXVII, New Delhi dated 4.9.2012 in Appeal No.176/10-11 for AY 2008-09. The grounds raised by the assessee read as under:- 1. That the impugned order u/s 250(6) of the Income Tax Act .....

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he facts & circumstances of the case, the Ld. CIT (Appeals) XXVII, New Delhi has erred in upholding the assessment order u/s 143(3) dated 16/12/2010 for the AY 2008- 09, passed by the Ld. Assessing Officer Ward 36 (2) New Delhi for disallowance to the extent of ₹ 1,03,655/ - as interest paid on loan, taken for purchase of property, against which the rent received and shown as income by the appellant. 5. On the facts & circumstances of the case, the Ld. CIT (Appeals) XXVII New Delhi .....

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t determining total taxable income of the assessee at ₹ 21,92,670 after making various additions such as addition of ₹ 11,51,483/- by treating agricultural income shown by the assessee as undisclosed income, disallowance of internet of ₹ 78,942/-, disallowance of deduction of interest claimed u/s 24 of the Act of ₹ 4,91,761 and addition of ₹ 1,50,000 on account of low household withdrawals during the financial period under consideration. 3. The aggrieved assessee pr .....

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& 2 5. Ld. counsel of the assessee submitted that the CIT(A) has upheld the assessment order being addition of agricultural income to the tune of ₹ 8,16,153/- as undisclosed income of the assessee by simply comparing the total actual crop yield of the assessee with the average crop yield from the information available on the website of the Haryana Government submitted by the AO along with remand report but there was no reference of the information from the website of Haryana Government .....

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on agricultural land by the assessee. 6. Ld. counsel further submitted that the CIT(A) upheld the order of the AO by observing that the yield of crops of wheat and paddy shown by the assessee are on higher side in comparison to the average crop yield as a whole available on the website of the Haryana Government. Ld. counsel further pointed out that the second ground of confirmation of assessment order by the CIT(A) is that the purchase vouchers for sale/purchase of timber are neither stamped nor .....

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has further drawn our attention towards paper book page no. 15 to 22 and 31 and submitted that out of total expenditure, agriculture expenses of ₹ 2,15,000 claimed by the assessee with regard to agricultural activities include a sum of ₹ 45,000 related to the sale of timber and this fact was ignored by the CIT(A) while calculating the agriculture income on comparative basis. Ld. AR vehemently contended that the assessee had actually sold the wheat and paddy between ₹ 850/- to & .....

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g market rates and there is no excessive claim in this regard. Ld. AR has also drawn our attention towards paper book page 15 to 22 and 31 and submitted that the trees were grown on agricultural land, the timber was sold in the open market and the total agricultural expenses shown by the assessee also include a sum of ₹ 45,000 which was received by the assessee on sale of timber. 8. Ld. counsel lastly pointed out that the average yield stated by the Government of Haryana on its website inc .....

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her hands and the same is liable to be taxed as undisclosed income of the assessee. Ld. DR further contended that the CIT(A) took a very balanced approach and after consideration of average yield of crop and average sale price of wheat and paddy rightly calculated the agriculture income and reduced the addition to ₹ 8,16,153 which is sustainable. Ld. DR finally prayed that there is no reliable and cogent evidence regarding sale of timber, therefore, agriculture income in this regard cannot .....

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man 503 (P&H) and another judgement in the case of CIT vs Jarnail Singh Karta 174 Taxman 57 (P&H) and submitted that where the sale consideration was received through account payee cheques which were deposited in the regular bank account of the assessee, the assessee furnishes bills vide which the timber of trees were sold and the identity of the purchaser had been duly disclosed, then the agriculture income cannot be discarded and dismissed. 11. On careful consideration of above submiss .....

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of Haryana Government and determined the average sale rate as ₹ 800 for wheat and ₹ 1500 per qtl. for paddy. From careful reading of the assessment order and appellate order, we note that authorities below have not brought out any fact or allegation on record to dispute or raise any doubt regarding papers available at page no. 1 to 51 which contain land ownership proof of the assessee, Master Akhil Garg and Master Aman Garg, confirmation copy of accounts and purchase vouchers/bills .....

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ties below. When we analyse the contents of the said documents, we note that page no. 1 & 2 shows ownership proof of assessee Smt. Sangita. (page no. 3 to 7 shows sale of wheat to M/s Praveen Trading Co. ) and receipt of sale consideration of ₹ 1,27,921/- by cheque no. 007558 and receipt of consideration of ₹ 25,380 on 18.3.2008 which was received through cheque no. 002669. Page no. 8 to 14 show proof of agricultural income of Master Akhil which shows payment from M/s Praveen Tra .....

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o ₹ 4,50,502 and payment of which was made through demand drafts. This confirmation also contains PAN No. of purchaser firm M/s Radha Krishna Ply & Board Industries. From page no. 16 to 22, we observe that page no. 16 is a copy of statement of accounts for the financial year under consideration and at page no. 17 to 22, copies of purchase vouchers of timber from Master Akhil from 2.2.2008 to 28.2.2008 reveal that on 12 occasions, the timber was purchased from Master Akhil by M/s Radha .....

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crop which was credited to the account of Master Aman Garg. We further note that at page 30 & 31, we see the proof of ownership of agricultural land in the name of Master Aman and Master Akhil S/o Parveen which show agriculture land of 53 canal, 16 marla in their names and page 31 also reveals that there were a number of trees and agriculture crop was also exploited therefrom which brought agriculture income for the assessee. From page no. 32 to 43, we see the copies of auction register (Bo .....

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rms) issued by M/s Parveen Trading company. Paper Book page no. 46, 47 and 48 are the copies of the receipt issued by Shri Chaman Lal wherein Mr. Chaman Lal states that during FY 2007-08, he conducted work of sowing of crop and transportation of agricultural crop and timber through his tractor and receipt, freight and diesel expenses from Master Akhil s/o Parveen r/o Shabhad. Shri Chaman Lal in receipt available at page no. 48 also states that he also conducted work of crop sowing and transporta .....

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l analysis of documentary proof submitted by the assessee supporting to proof of ownership of agriculture land, proof of sale of agriculture credit and timber and receipt of consideration through banking channel, we observe that the assessee submitted all possible documentary proof supporting his claim of agriculture income from sale of agriculture crop and timber. The assessee has also submitted proof of trees which were recorded in the revenue records on the agricultural land in the name of as .....

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ls of payments made to labor. We also note that the AO after levelling aforesaid allegation proceeded to hold that the assessee failed to substantiate her claim in respect of income shown as agriculture income and also hold that a person who claimed benefit of exemption as to establish and prove it. The AO made addition treating the agriculture income as undisclosed income of the assessee by alleging that the assessee has concealed her income in the disguise of concealed income in her hands. Fro .....

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bsite and also considered rates of wheat and paddy as shown in Haryana Government website. The CIT(A) calculated the quantity and sale price of wheat and paddy as per government data which is not a proper and justified approach. On the basis of foregoing discussion and observation of the AO and the CIT(A), we note that the revenue authorities have not disputed this fact that the assessee and her minor sons hold agriculture land as per revenue record. We also observe that as per revenue records, .....

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rowing threshing and transportation of agriculture crop and timber as the number of documents were submitted before him which have not been considered and appreciated properly during the course of assessment proceedings. The first appellate authority viz. CIT(A) also did not consider these documents and merely after considering the data of agriculture department of Haryana Government the CIT(A) estimated the yield of crop and sale price and restricted the amount of agriculture income of ₹ .....

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are also signed which have been issued from printed stationery in the name of firm. We may point out that if any doubt comes into the mind of AO or first appellate authority the same can be verified by way of specific query from the assessee but the document cannot be held as bogus or unacceptable on the sole basis of the doubt on which the assessee was not allowed to explain her stand and contents of the document. 16. On the basis of foregoing discussion, we reach to an original conclusion that .....

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tion, we dismiss the observations of the AO that the assessee did not furnish any iota of document to support her claim about agriculture income because as we have already noted above that the assessee submitted all possible documents including revenue records, purchase bills/vouchers, bank statement and other relevant documents showing agriculture activities which brought agriculture income to the assessee. 17. As we have already observed that the authorities below did not properly consider cla .....

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es proper examination and verification at the end of the AO and we restore this issue to the file of AO for de novo fresh adjudication after affording due opportunity of hearing for the assessee and without being influenced by the earlier assessment order and the impugned order. The AO shall adjudicate and address all the issues and points regarding claim of agriculture income of the assessee and after giving due consideration to the supporting documents, evidence and explanation of the assessee .....

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interest remained unsubstantiated. Ld. counsel has further drawn our attention towards operative part of impugned order and submitted that the CIT(A) wrongly held that the assessee paid interest of ₹ 1,03,655 to Bank of Baroda on the cash credit loan account. The credit facility from Bank of Baroda was utilized for repayment of EMI to HDFC Bank which is not allowable as interest component in EMI payments to HDFC Bank has already been allowed. Ld. counsel further elaborated the facts on th .....

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s through copies of the bank account statement available at pages 52-55 of the paper book and submitted that the loan taken from HDFC Rohini Branch for the purpose of purchase of property at Rohini were paid through Bank of Baroda cash credit account. Ld. counsel further pointed out that the assessee has shown rental income from this property amounting to ₹ 3,22,951. Therefore, interest amount of ₹ 1,03,655 cannot be denied as the payment of interest for making EMI payments from her .....

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tion of the AO, ld. DR submitted that the assessee is not allowed to make double claim on interest once as interest component of EMI and secondly as interest paid on current account from which EMI was paid. 21. On careful consideration of above submissions, we are of the considered view that undisputedly, the assessee obtained loan of ₹ 35 lakh from HDFC Bank Rohini for purchase of 1/3rd share of property at Rohini and it is also not in dispute that the EMI of said loan was paid by the ass .....

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ee that the credit facility from Bank of Baroda was utilized for repayment of EMI to HDFC Bank and loan advanced to M/s Des Raj Ram Kumar was provided through current bank account with Bank of Baroda, therefore, interest paid thereon is allowable. 23. Ld. DR replying to the above, pointed out that when the interest component in the EMI payment against HDFC loan has already been allowed to the assessee, then the interest for making EMI payment from her current account with Bank of Baroda cannot b .....

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para 33 of the impugned order, we observe that the CIT(A) has allowed interest of ₹ 2,56,733 to the assessee which was charged on HDFC loan. In this situation, when the interest on loan has been allowed to the assessee, then if interest paid by the assessee to Bank of Baroda on current account from which instalment has been paid cannot be allowed because if the same is allowed, then it would amount to double claim. However, at this juncture, we take cognizance of the conclusion of the CIT .....

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n of the assessee is that when the interest received from M/s Des Raj Ram Kumar has been offered to tax, then the interest on current account out of which loans were advanced to M/s Des Raj Ram Kumar cannot be disallowed. The stand of department for rejection of the claim of the assessee is that the assessee had been allowed interest on loan account of HDFC Bank and EMI paid includes interest component therefore, the interest on current account of Bank of Baroda cannot be allowed. If we analyse .....

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hen the amount of entire interest paid on current account out of which loans were advanced cannot be disallowed at the threshold merely because instalment of property loan to HDFC bank approximately ₹ 3.5 lakh has been paid by the assessee and the entire interest paid on current account cannot be disallowed. However, we make it clear that the AO may disallow the interest amount which is related to the payment of EMIs on HDFC loans by the assessee between the period 29.11.2007 to 28.3.2008 .....

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household withdrawals. Ld. counsel contended that during the assessment proceedings, the AO has never asked for the family constitution and withdrawals of the appellant and other family members and in the zeal to make additions added the amount on account of low household withdrawals. Ld. counsel further pointed out that the CIT(A) upheld the assessment order on this issue to the extent of ₹ 1,08,000 on the ground that the assessee is not living in joint family along with her in laws and .....

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assessee nor any of her family members has incurred any major amount on medical expenses such as hospitalisation or any other major treatment. 26. Ld. counsel strenuously contended that the authorities below ignored some important facts that the assessee lives in a small town of Haryana (Shahbad Makranda) in her own house and all the family members have their own independent source of income. Ld. counsel also submitted that the assessee and her family is using and consuming food grains, cereals .....

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₹ 2,20,000 and confirming the addition of ₹ 1,08,000. Ld. counsel also pointed out that the authorities below ignored this very fact that the assessee lives in a small town of Haryana and major part of day to day necessities of grocery, vegetables and fruits is fulfilled from the agriculture land and cattle maintained by the assessee and the all the major family members have their own independent source of income and contributing to the household expenses of joint family. Ld. counse .....

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e cannot be held as sufficient to meet the day-to-day expenses of the assessee and, therefore, the AO was right in making addition on account of low household withdrawals. Ld. DR further pointed out that the CIT(A) also took a very balanced and justified approach by granting part relief to the assessee and confirming the addition to the extent of ₹ 1,08,000. Ld. DR further pointed out that school fee of the children was ₹ 40,000 and electricity expenses were ₹ 20,000 and after .....

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A.O. in the Assessment Order, remand report and facts of the case. The appellant's family comprises of five members out of which three children are school going. On the basis of the copies of ration card filed by the appellant in respect of her family and her in-law's family, it is seen that the two families are not living together. The school fee of the children admittedly was ₹ 40,000/- and electricity expenses were ₹ 20,000/-. After excluding this expenditure, withdrawals .....

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t of ₹ 1,08,000/-. 29. In view of above, we note that the CIT(A) upheld the addition on the basis of facts mentioned in the remand report of the AO that the address mentioned in the assessee s ration card and assessee s father-in-law s ration card were different, therefore, it cannot be said that the assessee s father-in-law and mother-in-law were sharing their withdrawals for meeting the household expenses. Undisputedly, the father-in-law of the assessee Shri R.K. Garg had made withdrawal .....

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