TMI Blog2016 (4) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... Mehrotra, Accountant Member And Ms. Suchitra Kamble, Judicial Member For the Appellant : Sh. C. S. Aggarwal, Sr. Advocate Sh. R. P. Mall, Adv For the Respondent : Shri J. James Singh, Sr. DR ORDER Per Suchitra Kamble, JM This appeal is filed against the order dated 1/3/2013 passed by CIT (A)- XVIII, New Delhi by the assessee. 2. The grounds of appeal are follows:- 1. That the Learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in upholding the additions made in an order of assessment u/s 143(3) of the Act dated 19/12/2011 at ₹ 1,03,14,960/- as against thes income declared at ₹ 57,12,774/- 1.1 That the learned CIT(A) has failed to appreciate that, the income returned by the assessee aggregated to ₹ 57,12,774/-; whereas the A.O. while computing the total income proceeded to compute the total income by adopting the sum of ₹ 76,22,919/- being the income assessed U/S 143(1) of the Income Tax Act. 1.2 That the CIT (A) has failed to appreciate that the aforesaid difference of ₹ 19, 10,145/- represented the income declared by the assessee as an agricultural income and thus there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural land and is regularly declaring income from agriculture in preceding assessment years and agricultural income so declared by the appellant has duly been accepted by the revenue. 4.1 That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in sustaining the aforesaid addition, failing to appreciate that the appellant has produced complete information with regard to the sale of the agricultural produce i.e. bill number, date and name of the purchaser alongwith the sale slips, as such, addition sustained ignoring the evidence/material is perverse and untenable in law. 5. That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in directing the learned AO to bring to tax the capital gain on sale and purchase of the agricultural land, as such a direction under section 251 (1) of the Act is subject to the conditions under section 251(2) of the Act, and direction to enhance the income without giving any specific notice to the assessee is against the statutory provisions and is thus untenable. 5.1 Without prejudice to the aforesaid, the learned Commissioner of Income Tax (Appeals) has g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could have been issued without issuing a notice of enhancement and notice issued to the appellant cannot be regarded as notice of enhancement. 6. That the Learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in recording an erroneous finding that no purchase deed or sale deed has been furnished by the appellant either during assessment proceedings or during appellate proceedings , as such a finding recorded is perverse and contrary to facts on record. 7. That the Learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the addition of ₹ 2,51,325/-, which addition is unsustainable on the facts and in the circumstances of the case. 8. That the Learned Commissioner of Income Tax (Appeals) has erred in confirming the levy of interest of ₹ 29,232/- u/s 234A of the Act and, interest of ₹ 4,82,328/- u/s 234B of the Act and ₹ 18,426/- u/s 234C of the Act, which is not leviable at all. It is therefore, prayed that, additions/disallowances made to the income returned by the appellant along with interest levied may kindly be deleted and appeal of the appellant be allowed. 3. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the judgment of Punjab and Haryana High Court in the case of Smt. Kusum Sharma Vs. CIT(A) 158 Taxman 303. The A.O firstly added entire income by way of agricultural income of ₹ 19,10,149/- in the intimation u/s 143(1) and thereafter in the assessment order u/s 143(3) of the Act. But further added ₹ 9, 55,074/- being 50% of the total agricultural income. The Assessing Officer further disallowed one fourth of the vending machine expenses at around ₹ 10,05,299/-. The Assessing Officer observed there were no details given for vending machine expenses by the assessee. The assessee went in appeal before the CIT (A). The CIT (A) directed the Assessing Officer to tax capital gains in respect of income earn by the assessee on the sale of land at Gurgaon. Thus, he upheld the order of the assessment, when he directed the Assessing Officer to compute the commission earn by the assessee in respect of both sale as well as purchase of agricultural land carried out during the year i.e. at 5%, on ₹ 3,11,00,000/- and ₹ 4,33,85,625/-. 6. The CIT (A) held that the Assessing Officer on perusal of the assessee s bank account found that the assessee had sold land for &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The Ld. AR submitted that the Assessing Officer made no enquiry. The Assessing Officer did not allege that the assessee had derived any income by way of capital gain. The Assessing Officer never commented on the head of capital gain or the source thereof. The only finding given by the Assessing Officer was that the assessee did not produce the Purchase Deed. The same was entirely irrelevant, the A.O. could have drawn an inference the source of purchase/acquisition has since not been explained an addition could be made under section 69 of the Income Tax Act and no more. Unless the AO makes an addition or touches the source or even the head which could be subject matter of appeal or makes an enquiry about the head and source of income, the CIT(A) does not have any power under Section 251 of the Act either to make an addition or even set aside the assessment to do so. This is well settled law. In this context heavy reliance had been placed on the judgment of full Bench of Delhi High Court in the case of CIT vs. Sardari Lal Co. reported in 251 ITR 864. The Ld. AR further submitted that the direction of the CIT(A) to AO to tax capital gains alleged to have been earned by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er thus having been as submitted above, thus made no adverse comments as none of the additions made were as a result of any non- compliance of a notice warranting an assessment u/s 144 of the Act. That assessee is earning agricultural income year after year and in all preceding years, agricultural income earned by the assessee has been accepted as such, an addition made to the total income by reducing the declared income from agricultural activities from ₹ 19,10,149/- to ₹ 9,55,074/- is manifestly erroneous. The income earned and accepted was ₹ 18,62,549/- and the said income was earned in the immediately preceding year and was also accepted. That the disallowance made by the learned A.O. and sustained by CIT(A) out of the claim of expenditure incurred in respect of the business activity being vending machine expenses of ₹ 10,05,299/-, a disallowance of 25% of the total expenditure has arbitrarily been sustained as there is no basis to upheld the disallowance. The CIT(A) failed to appreciate that had disclosed a net profit of ₹ 2,96,060/- on receipt of ₹ 14,01,143/- which included vending machine expenses of ₹ 10,05,299/- and margin of prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) where as the intimation was u/s 143(1). The CIT(A) acted beyond its power by directing the Assessing Officer to tax the capital gains in respect of sale of land at Gurgaon, though, there was no addition made by the Assessing Officer in the assessment order to that respect. Capital gain is an independent and different source of income and was not the subject matter of appeal before him nor was the issue considered by the Assessing Officer by framing an assessment order. Instead, the Assessing Officer termed the same as commission on the sale of land. The Ld. AR has relied on the various case laws more preciously that of Shapoorji Pallonji Mistry Vs. CIT reported in 34 ITR 342 (confirmed by the Apex Court in 44 ITR 891) wherein the Hon ble Bombay High Court while dealing with the powers of the CIT(A) held that CIT(A) was not empower to enhance an income on an issue which was not the subject matter of the assessment. The ratio laid down in the judgment of full Bench of Delhi High Court in the case of CIT vs. Sardari Lal Co. reported in 251 ITR 864 is also relevant in assessee s case that the CIT(A) cannot touch upon an issue which does not arise from the order of the assessment a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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