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Shri Surender Singh Dahiya and others Versus ITO, Ward No. 3, Sonepat Haryana and others

2015 (7) TMI 527 - ITAT DELHI

Treatment to agricultural income as income from undisclosed sources - Held that:- The AO has not accepted the assessee’s claim of having earned any agricultural income contrary to his claim of earning of ₹ 1,90,500/-; and following suit, CIT (A) also had the same view of AO; and accordingly the Ld CIT(A) upheld the action of AO and treated ₹ 1,90,500/- claimed by assessee as agricultural income as income from undisclosed sources. The assessee is aggrieved by the said impugned order o .....

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g and direction, following suit, we direct the AO that after verifying the exact holding of land by assessee and the land taken on lease/rent basis, rework out the agricultural income of assessee. Accordingly, AO is directed to treat agricultural income as having been earned by the assessee, to the extent computed in terms of above direction. - Decided in favour of assessee for statistical purposes.

Addition on account of low household withdrawals - Held that:- Direct the AO to accept .....

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r under consideration (Rs 564260 opening balance shown by assessee – ₹ 82470 salary of assessee = ₹ 560117), which the AO as well as the Ld CIT(A) has treated as made on account of capital introduced from undisclosed source. Since it is the opening balance of the year as claimed by the assessee before the AO and CIT(A), which both did not accept and addition confirmed, we find this issue of amount reflected as opening balance needs to be recomputed since the Tribunal has accepted tha .....

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de by AO in respect to purchase of properties, only ₹ 7 lakhs has been found to be explained by the assessee to the satisfaction of the ld. CIT (A). The other claims of the assessee as to his source for purchasing the land costing ₹ 17.73 + stamp duty= i.e. ₹ 18,05,000/- lakhs have been arrived by the Ld CIT(A) by bringing the amount added by the AO, which in turn has been confirmed by the Ld CIT(A) for the preceding and this assessment year to justify the source for purchase o .....

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t scenario, once the AO has recasted the cash flow statement where credit for agricultural income and opening balance are taken, if there is sufficient cash to justify ₹ 11,05,000/-, then the AO is directed to delete the addition and in case there is any deficiency or difference, then that amount be confirmed as income from undisclosed source. Therefore the deletion of addition of ₹ 11, 05,000/- is set-aside, and the issues limited to this addition is remanded back to the file of AO, .....

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ppeals), Rohtak pertaining to assessment year 2003-04. 2. The assessee has raised the following grounds in its appeal :- (i). That at the very outset the impugned order dated 20.11.2008 passed by the Ld. Commissioner Rohtak confirming the addition of opening balance ₹ 5,60,117/- shown by the appellant in his balance sheet, addition of agricultural income of Rs. l,90,500/-and addition of ₹ 40,000/- on account of house-hold drawings is void and illegal in as much as the said additions .....

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ed a serious mistake in disallowing the agricultural income of ₹ 1,90,500/- declared by appellant and making the addition of the same in the income of the appellant as an income from undisclosed sources, ignoring the entire material available on record tiled by the appellant during the course of assessment proceedings in support of the claim/contention of the agricultural income such as proof of ownership of agricultural land, i.e. copy of Jama Bandi and Khasra Girdawari, affidavits and st .....

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is from a rural background and it is usual for the person from rural background having agricultural land of their native places to look after their agriculture activity although they are working with the Govt./private organizations for away from their native places, when Saturday and Sunday are holidays. It is submitted that appellant had agricultural income of ₹ 1,90,500/- for the Assessment Year 2003-04 which has been treated as income of the appellant from un-disclosed sources by the L .....

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acre which is motivated and the motive behind for estimating more income per acre is to increase his capital to justify the investment made in the purchase of agricultural land in different years while on the other hand, the Ld. Commissioner has admitted and accepted the income from agricultural land in his appellate order on the average yield to be between ₹ 7500/- to ₹ 10,000/- on normal land per acre in the cases of I.T.O. Versus S/Sh. Hanuman Singh, Gauri Shankar, Bhoop Singh, Ra .....

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8377; 10,000/- by the Commissioner on normal land is situated in Distt. Hissar . is un-irrigated and is of C and D Category of land which is not capable of producing two crops in a year while the agricultural land owned and cultivated by the appellant is situated in Village Pipli, Distt. Sonepat which is fully irrigated and is capable of producing full two crops in a year being land of A Category and full of fertility. These facts were narrated by the appellant in the letters dated 18.10.2007 wh .....

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rned and shown from 6 ½ acres agricultural land by the appellant in the light of his own observation and said finding. (viii). That the Ld.A.O. has also erred in law in making the addition of ₹ 40,000/- in the income of the appellant on account of low house- hold drawings as against the house-hold drawings of ₹ 82,470/- made by the appellant during the period under reference and the Ld.CIT{Appeals] illegally con-firmed the said addition without recording any finding supported .....

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the CIT [Appeals] are totally based on self conjectures and surmises and are without application of mind and are unwarranted and un- called for and are liable to be deleted. (x). That the additions made by the Ld.A.O. are totally erroneous and illegal due to the fact that he has already accepted the agricultural income declared by the appellant for the assessment year 2001-02 and it is not known from the orders of assessment that why the agricultural income shown and declared by the appellant du .....

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and are liable to be deleted. Copy of the written submissions enclosed. It is, therefore, prayed that since the additions of ₹ 5,60,117/- on account of opening balance shown in the balance sheet by the appellant, additions of ₹ 1,90,500/- on account of agricultural income and' additions of ₹ 40,000/- on account of low drawings made by the A.O. in the income of the appellant by his order dated 22.12.2007 as income from un-disclosed sources and confirmed by the Ld. CIT [Appea .....

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f investment by his wife before the A.O. (ii). On the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and facts in deleting the addition of ₹ 5,05,000/- (on account of genuineness of bank withdrawal by the assessee for investment in purchase of agriculture land for which he could not furnish any documentary evidence before the A.O. (iii). On the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and facts in deleting the addition of ₹ .....

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uld not furnish any documentary evidence regarding giving and accepting loan before the A.O. (v). That the applicant craves for the permission to add, delete or renamed the ground of appeal before or at the time of hearing of appeal. 4. First of all, we will deal with assessee s appeal. 5. At the outset, the ld. counsel for the assessee brought to our attention the Tribunal s order in assessee s own case dated 30.04.2010, wherein the Tribunal has partly allowed the appeal preferred by the assess .....

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agricultural income of Rs.l,90,500/- which was, treated by the AO and CIT(A) as income from other sources. The AO has also made an addition of ₹ 1,27,981/- on account of low household withdrawals. The AO has also made addition of ₹ 18,05,000/- on account of investment in property. Thus, total addition of ₹ 26,83,598/- was made. In an appeal filed by the-assessee before the CIT(A), the CIT(A) accepted the gift of ₹ 7 lakhs having been made by the mother in law of the asse .....

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ome having been earned by the assessee, we direct the AO to recast the cash flow statement and to work out the addition to be made on account of short availability of funds. On account of household expenses, we direct the AO to accept ₹ 72,000/- on account of household expenses and any shortfall out of the withdrawals shown by the assessee may be treated as income from undisclosed sources. We direct accordingly. 6. In the light of the aforesaid order pertaining to the A.Y. 2003-04 as afore .....

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r apparent on the face of the record. However, the said plea of the assessee did not find favour with the Tribunal; so the Tribunal dismissed the same vide order dated 14.12.2012 holding that since ground nos.1 & 2 relating to the addition of ₹ 5,60,117/- has not been adjudicated and decided by the Tribunal in the said order the prayer of the assessee was turned down. While passing the said order in the said M.A, the Tribunal cited the dictum of Hon ble Supreme Court in the case of CST .....

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ry from MCD, agricultural income and income from animal husbandry. For the year under consideration, we find that the assessee had purchased two agricultural lands for a consideration of ₹ 4,52,000/- on 28.02.2002 and another land for a consideration of ₹ 13,21,000/- on 25.10.2002. The AO asked the assessee to explain source of his income for purchase of the said land. So the assessee had to explain the source of ₹ 17.73 lakhs for purchase of the said two lands. The assessee ex .....

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invested ₹ 5.05 lakhs from has past savings of several years withdrawn from the saving bank account and also cash lying with the assessee in his house from his agricultural land. 9. This explanation was disbelieved by the AO and he made the addition of ₹ 18,05,000/- as assessee s income from undisclosed source. On appeal, the Ld. CIT(A) was pleased to hold that the amount for purchase of land was in assessee s hand and deleted the said addition, but confirmed certain addition made by .....

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by a common order dated 30.04.2014 (supra). A perusal of the order of the Tribunal dated 30.04.2010 (supra), we find that the Tribunal had dealt with three issues regarding (a) whether the assessee, an employee of the MCD had agricultural income which he claimed; (b) what should be the reasonable household expenses and (c) whether the opening balances reflected for each assessment year can be treated as income from undisclosed source as held by both CIT(A) and AO? 11. The issue of agricultural i .....

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income for explaining the source of investment in the land. By treating the income from agriculture as income from other sources, the CIT(A) has deleted the separate addition made on account of acquisition of land by accepting assessee's contention that this fund was available to him for making further investment. Revenue is not in appeal before us in respect of addition deleted by CIT(A). It was specifically asked during the course of hearing from the learned AR and learned DR and both decl .....

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epted the fact of assessee having ancestral land. In view of the documents placed on record, the fact of assessee being cultivating agricultural land of his own and the land taken on rent from his cousin brothers Shri Tara Chand and Shri Shamsher Singh cannot be declined. Merely because the AO found difference in the rent found to be alleged paid by the assessee on account of rent to these persons, the income declared on account of agriculture cannot be declined out rightly. The statements of th .....

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agricultural income of assessee. Accordingly, AO is directed to treat agricultural income as having been earned by the assessee, to the extent computed in terms of above direction. 12. We find that in this assessment year also, the AO has not accepted the assessee s claim of having earned any agricultural income contrary to his claim of earning of ₹ 1,90,500/-; and following suit, CIT (A) also had the same view of AO; and accordingly the Ld CIT(A) upheld the action of AO and treated ͅ .....

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the assessee. The ld DR, could not bring to our notice any change in facts during the year under consideration, so in the light of the said finding and direction, following suit, we direct the AO that after verifying the exact holding of land by assessee and the land taken on lease/rent basis, rework out the agricultural income of assessee. Accordingly, AO is directed to treat agricultural income as having been earned by the assessee, to the extent computed in terms of above direction. 13. The .....

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the year under consideration and do the recomputation accordingly. 14. Coming to the ground No.1 & 2 of the assessee s appeal i.e. with report to confirmation of addition of ₹ 5,60,117/-, we find that the Tribunal in the said order dated 30.04.2010 (supra) has not disturbed the addition of ₹ 5,60,170/- confirmed by the Ld CIT(A), though observed by the Tribunal that it is on account of deficiency in the fund required for making investment during the year under consideration, whi .....

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before the AO and CIT(A), which both did not accept and addition confirmed, we find this issue of amount reflected as opening balance needs to be recomputed since the Tribunal in para 4 (supra) has accepted that the assessee is earning agricultural income, therefore, the accumulated cash balance which it reflects in the opening balance needs to be recomputed. So this issue regarding disallowance of opening balance for the year under consideration needs to go back to the file of the AO for recas .....

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assessee by accepting the assessee s contention in respect to investment of ₹ 18,05,000/- on property purchased as stated above. Facts are repeated again for clarity. For the year under consideration, we find that the assessee has purchased two agricultural lands for a consideration of ₹ 4,52,000/- on 28.02.2002 and another land for a consideration of ₹ 13,21,000/- on 25.10.2002. The AO asked the assessee to explain source of his income for purchase of the said land. So the lan .....

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ttar Singh in cash on 16.08.2002, another friend, Shri Ganga Ram gave him a loan of ₹ 2.5 lakhs ; and assessee has invested ₹ 5.05 lakhs from his past savings of several years withdrawn from the saving bank account and also cash lying with the assessee in his house from his agricultural land. 18. The said explanation of the source of income by the assessee was not found acceptable to the AO. So he recorded a finding that the said amount as emanating from undisclosed source and treate .....

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and cash with him (assessee) as ground no.1. 19. Apropos to deletion of addition of ₹ 5,05,000/- on account of genuineness of bank withdrawal as contended by the assessee, and other deletions. It should be taken note that since there is no quarrel about the source of ₹ 7 lakhs out of ₹ 18, 05,000/=, the remaining amount which needs to be explained is ₹ 11,05,000/-(i.e. ₹ 18,05,000/- ₹ 7,00,000/-) by the assessee. In such a scenario, let us see how the ld. CIT .....

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IT (A) came to a conclusion that since the assessee was having this amount as income from undisclosed sources to the tune of ₹ 11,42,225/- (Rs.3,91,725/- + ₹ 7,50,500), which when added with the gift of ₹ 7 lakhs ( amount which is not challenged by revenue in this appeal), will come to ₹ 18,42,225/- (Rs 11,42,225 + ₹ 7,00,000). Thus, according to the ld. CIT (A), the assessee had sufficient fund in his hands to purchase the property valued at ₹ 17,73,000/-.+st .....

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proving the source of investment is on the assessee and it has to be discharged by him, and he has tried to explain the source of fund as aforestated. However, we find that AO has not accepted the version of assessee in this respect. So, what the ld CIT(A) has done was that out of the addition of ₹ 18,05,000/- made by AO in respect to purchase of properties, only ₹ 7 lakhs has been found to be explained by the assessee to the satisfaction of the ld. CIT (A). The other claims of the .....

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ut the same in the impugned order. Likewise, the other three grounds of revenue are in respect of deletion of ₹ 1.50 lakhs which the assessee s wife has given to the assessee; And deletion of ₹ 2 lakhs from Shri Attar Singh; and deletion of ₹ 2.5 lakhs from Shri Ganga Ram. Here we should note that the grounds of the revenue are misplaced. First of all, the Ld CIT(A) like AO has not accepted the version of the assessee about these sources to explain ₹ 11,05,000/- (i.e.  .....

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