TMI Blog2016 (6) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... us observation that they are not reliable, having been prepared after detection. The undisputed fact remains that these books were duly produced by the assessee before the Assessing Officer in the assessment proceedings and the Assessing Officer did not reject them. It is not a case of levy of concealment penalty, where change of stand after detection may be detrimental. Therefore, this issue is remitted to the file of the Assessing Officer to be decided afresh in accordance with law, on duly taking into consideration the books of account produced by the assessee by affording adequate opportunity to the assessee to support his case Estimation of agricultural income - Held that:- though the assessee had duly apprised the learned Commissioner of Income-tax (Appeals) of the above mistake committed by the Assessing Officer, the learned Commissioner of Income-tax (Appeals) remained in oblivion of this and merely reiterated that the assessee was having land holding of 110 acres and not 75 acres, as had also been wrongly held by the Assessing Officer. The learned Commissioner of Income-tax (Appeals) has fallen in error in upholding the Assessing Officer's action in assessing agricu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer and sustained by the Commissioner of Income-tax (Appeals) is highly excessive as per the facts of the case. 5. That the Commissioner of Income-tax (Appeals) was not justified in upholding the action of the Assessing Officer in estimating the agricultural income at ₹ 35,34,722 while sustaining this addition the Commissioner of Income-tax (Appeals) failed to appreciate and dispose of submissions made by the assessee. 2. The first issue, comprising ground Nos. 1 to 4, is the assessee's challenge to the action of the learned Commissioner of Income-tax (Appeals) in sustaining the estimation of profit at eight per cent. on the assessee's contractual receipts under the provisions of section 44AD of the Income- tax Act, 1961. 3. The assessee is a civil contractor. He filed his return of income for the year under consideration, declaring income of ₹ 1,25,870. This consisted of business income of ₹ 1,23,370 from civil contract business, arrived at by the assessee by applying a net profit rate of eight per cent. on contract receipts of ₹ 15,42,131 and ₹ 2,500 as income from other sources, being interest income. On exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act receipts of the assessee under the provisions of section 44AD of the Act, the learned Commissioner of Income-tax (Appeals) failed to appreciate that the books of account produced by the assessee before the Assessing Officer during assessment proceedings had not been examined and the income had wrongly been estimated by the Assessing Officer without pointing out any defect in the books and rejecting them. 6. On the other hand, the learned Departmental representative has strongly relied on the impugned order. It has been contended that the books have to be prepared before filing of the return and not after detection of fault by the Department. 7. Having heard the rival contentions in the light of the material available on record, it is seen that the assessee is a civil sub-contractor, carrying out the work of laying foundations for bridges. Before the Assessing Officer, in the assessment proceedings, the assessee filed his books of account. However, without rejecting the books and without pointing out any defects therein, the Assessing Officer estimated the assessee's income under the provisions of section 44AD of the Act even though the assessee's income was admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 10. According to ground No. 5, the learned Commissioner of Income-tax (Appeals) was not justified in upholding the Assessing Officer's action in estimating the agricultural income of the assessee at ₹ 35,34,722 without disposing of the submissions made by the assessee. 11. As per the Assessing Officer, it was found that the assessee was in receipt of agricultural income amounting to ₹ 34,30,758 during the year, which was not shown by the assessee in his return of income. The Assessing Officer held that this agricultural income had been earned by the assessee during the year and it had to be taxed as per the provisions of the Act. 12. Before the learned Commissioner of Income-tax (Appeals), the assessee contended that the Assessing Officer had erred in working out the agricultural income at ₹ 34,30,758 from the copies of J forms submitted by the assessee and he had failed to appreciate that the entire sale proceeds of the agricultural produce could not be considered as agricultural income ; and that the expenses, which were to the tune of 60 per cent. of the sale, should have been allowed. The assessee requested that the agricultural income be estim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee had himself admitted that he had earned agricultural income (net of expenses) at ₹ 25,000 - 30,000 per acre, i.e., ₹ 27,500 per annum, on an average ; that the assessee had also himself admitted that the agricultural income was to the extent of 60 per cent. of the gross agriculture receipts ; that this meant that the assessee had earned gross agricultural income at ₹ 68,750 per annum, which further meant that the gross agriculture income of the assessee from 110 acres of land should have been ₹ 75,62,500 (Rs. 68,750 x 110) and not ₹ 35,34,722, in respect of which, J forms had been submitted ; and that thus, it was very clear that the assessee had not submitted all the J-forms during the assessment proceedings. 15. In this regard, the learned counsel for the assessee has submitted that the learned Commissioner of Income-tax (Appeals) has clearly erred in upholding the action of the Assessing Officer since the specific written submissions filed before the learned Commissioner of Income-tax (Appeals), to the effect that 110 acres of land was the total holding of the assessee and his family, whereas in his individual capacity, the hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimating agriculture income at ₹ 27,500 per acre the total agriculture income amounts to ₹ 20,62,500, i.e., 27,500 x 75 and not ₹ 35,34,722 assessed by the Assessing Officer. The total sale proceeds of crop as per J Forms can never be the income of the assessee since expenses have not been set-off against the same. 20. Thus, though the assessee had duly apprised the learned Commissioner of Income-tax (Appeals) of the above mistake committed by the Assessing Officer, the learned Commissioner of Income-tax (Appeals) remained in oblivion of this and merely reiterated that the assessee was having land holding of 110 acres and not 75 acres, as had also been wrongly held by the Assessing Officer. The learned Commissioner of Income-tax (Appeals) has fallen in error in upholding the Assessing Officer's action in assessing agricultural income of the assessee at ₹ 34,30,758. This conclusion of the learned Commissioner of Income-tax (Appeals) is found to be a result of complete misreading and non-reading of the aforesaid contentions of the assessee before both the authorities below, which were not rejected at any stage. 21. Even before this Bench, nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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