TMI Blog2017 (2) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee. In case there is yield from fruits, then 80% of the standard yield reported by NHB should be adopted to work out the income in the hands of the assessee based on their land holding. However, in case the assessee has already shown the yield below 80% of the standard yield reported by the above said Government bodies, then the Assessing Officer is directed not to disturb the same and accept it. Expenses on contractual factor - Held that:- While estimating the agricultural income the Assessing Officer/Commissioner of Income Tax (Appeals) had taken note of the facts of Shri Badshah Bagwan, wherein the statement of one person was recorded who stated that for carrying on the agricultural activities on part of the land, he was getting batai @50% of the receipts. The said statement was withdrawn on a later stage. However, the said fact was adopted by the Assessing Officer and the Commissioner of Income Tax (Appeals) in order to estimate the income in the hands of the assessee. We have already decided the issue of estimation in the hands of the assessee in the paras hereinabove with our directions. We further hold that no further deduction is to be made on account of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of unexplained deposits has already been made in the hands of Pat Sanstha there is no merit in making any further addition in the hands of the assessee on account of same FDRs. Accordingly, we uphold the order of the CIT(A) in this regard and dismiss the grounds of appeal raised by the revenue. Consequently no addition is warranted on account of interest chargeable on the said FDRs. The revenue has failed to address the issue raised by way of grounds of appeal Nos.9 to 11 and also in the absence of any addition made by the Assessing Officer on any other account except non acceptance of agricultural income and the addition on account of FDRs there is no merit in the other grounds of appeal raised and the same are dismissed. Entitlment to deduction u/s.80P - Held that:- As in Shri Mahavir Nagari Sahakari Pat Sanstha Ltd. Vs. DCIT [2000 (2) TMI 234 - ITAT PUNE] as held that cash credits on account of various deposits in benami/bogus names, even if, taxed, would be considered as income of the same business, i.e. providing credit facilities to its members and accordingly would be entitled to deduction u/s.80P of the Act. Following the same proposition as laid down by the Pune Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok results of the appellant may kindly be approved . Non Sugarcane sales for Vegetable / Fruit s etc are e stimat e d @ 150 % o f notional income from Sugarcane Sale. From said Gross r e ceipts , 50% is deducted towards agr i cultur e expenses and amount paid tow a rd s c ontr a ctual f a rming [Batai] , under th e follo w ing caption mentioned in the tabulation - T a ble II [P a r a 30 of the order ] L . Less: Expenses Contractual Farming factor @ 50 % For arrivin g at this con c lusion , Hon CIT[ A ] h as tot a lly r e li e d on the fa ct s of c ase of Badshah Bagwan , and referring the facts of B a dshah B a g wa n ' s case , the formula o f 50 % d e du c tion is applied. Wh e reas , in ca se o f app e llant , n o t a single document h as been found and seized to establish and sub s tantiate that , a pp e llant had given hi s land on contractual [Batai] farming . Further, in para 25 of the order, Hon CIT[A] ha s mentioned that, It is also well-known that, normally vegetables are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant prays that , the order of the Ld. CIT(A) be vacated and that of the AO's order may be restored . 7 . The appellant craves leave to add, alter, amend, modify any of the above grounds raised, any other grounds at the time of proceedings before the Hon'ble Tribunal which may please be granted . 5. Similar grounds have been raised by the Revenue in ITA No.467/PUN/2013, relating to assessment year 1999-2000. 6. Briefly, in the facts of the case, search and seizure action under section 132 of the Act was conducted at the residential as well as business premises of Bagwan Group on 18.05.2006. The assessee being one of the group was also covered under search and certain incriminating documents were found and seized. Consequent thereto, the Assessing Officer issued notice under section 153A of the Act requiring the assessee to furnish the return of income. In response thereto, the assessee had filed the return of income declaring total income of ₹ 75,670/- and agricultural income of ₹ 5,20,315/-. The said income was also declared by the assessee in the return of income filed under section 139(1) of the Act. The assessee had bifurcated the agri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r books of account for expenses were being kept and the details of expenses could be verified. The observation of agricultural expenses at about 40% of the receipts was in connection with field size of 1-5 acres, whereas field size of agricultural lands owned by the assessee was big i.e. ranging between 25-60 acres. The assessee also pointed out that multiple and sub-crops were regularly taken and hence, the yield ratio was high. The assessee also claimed that its irrigation facility was unique and also huge water storage capacities were created on field for constant water supply and hence, extraordinary results of output. The Assessing Officer however, did not accept the contention of assessee, where the assessee himself had agreed that in normal course the agricultural expenses for crop were atleast 40%. The Assessing Officer thus, re-computed net sugarcane receipts in assessee s family case by allowing 40% of agricultural expenses. In respect of agricultural income from vegetables, the Assessing Officer noted that the assessee had shown gross receipts from vegetables on very high side as compared to normal agriculturists. The Assessing Officer has tabulated the average gross rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the absence of any evidence filed by the assessee with regard to transport for input or output, weigh bill expenses and in the absence of narration on 7/12 extract amongst other reasons establishes that the assessee had inflated his agricultural income from non-sugarcane crops as per his convenience. The assessee again was asked to furnish the details crop-wise area under cultivation which the assessee had failed to furnish and in the absence of the same, since the assessee was having agricultural income from vegetables, the same was estimated at ₹ 6,000/- per acre and rejecting the contention of assessee of paying 50% of the agricultural receipts to the farmers, the agricultural income of the assessee was worked out under para 20 of the assessment order at pages 12 and 13 of the assessment order. The Assessing Officer thus, computed the agricultural income in the hands of assessee in each of the years and worked out the excess agricultural income shown by the assessee year-wise. The Assessing Officer also noted that the capital of assessee as shown in the balance sheet was inclusive of agricultural income and where the assessee had inflated the agricultural income, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of Shri Namdeo Buva was also applied by the Assessing Officer in the remand proceedings. The CIT(A) noted that though elaborate submissions were made by the assessee in respect of agricultural income, it was a fact that there was no details of inputs for conducting agricultural activity and there were no details of daily expenses incurred on agricultural activity in the form of labour, power, water or of seeds and fertilizers etc. Further areawise land cultivation details were not available, sales of vegetables were all in cash and the sale bills were not serially numbered and were sometimes without dates etc. The CIT(A) was of the view that in the above said circumstances there were not sufficient reasons to estimate the agricultural income in the manner that the Assessing Officer has done. However, in the absence of reliable data maintained by the assessee the income has to be estimated in the hands of the assessee. The CIT(A) considered the land holdings of the assessee group and observed that the land holding had increased more than 3 fold during the period 1999-2000 to 2005-06. Further, the entire land holding had increased in rural agricultural areas. The CIT(A) thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ganized vendors and in view thereof the contention of the assessee was accepted. However, the observations made by the Assessing Officer in respect of sale bills, statements given by persons including Shri Harunbhai Abdulgani Bagwan, Shri Zakhir Hussein, Abdulhaq Abdulhameed Bagwan and Shri Namdeo Buva as per the CIT(A) appears to be in order. Therefore, the books of account maintained were held to be unreliable and inaccurate. Further the income was estimated in the hands of the assessee by applying ratio as in the case of assessee s brother Shri Badshah A. Bagwan and the average agricultural income per acre was computed as per Table No.2 at page 25 of the appellate order. The CIT(A) accordingly estimated the yield of sugarcane per acre and also the total acreage was determined. The CIT(A) also determined total acreage under the vegetables and flowers and rejecting the claim of the assessee and did not accept the Assessing Officer s view that under the batai system, gross produce is divided between the owner of the land and the tenant. The CIT(A) acknowledged that in respect of gross income from sugarcane cultivation there was no dispute as the same was obtained from sugar mills. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd was wholetime engaged in agricultural activities. Multiple and subcrops were regularly taken and consequently the income in the form of gross receipts was higher and in proportion to the low percentage of expenditure. He further pointed out that where continuous water supply was available to the farm of the assessee from Panchganga river with separate pipeline and higher water storage capacities were created for constant water supply to fields, resulted in giving extraordinary profits which merits to be accepted. The assessee claims that it was maintaining proper books of account in respect of the expenses. The assessee pointed out that there was no merit in the orders of the authorities below in making the estimation wherein the Assessing Officer had estimated yield @ ₹ 6,000/- per acre wherein the CIT(A) had increased the yield per acre to ₹ 25,605/-. 15. The Ld. Authorised Representative for the assessee pointed out that in the agricultural operations carried out by the assessee the yield could not be constant because it depends on various factors, i.e. water supply, weather, nature of seeds etc. Our attention was drawn to the tabulated details filed in this re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les, flowers/fruits through cash but no sale has been made through Agricultural Produce Market Committee (in short APMC ) or commission agent. He referred to the various defects pointed out by the Assessing Officer in the claim of the assessee and the documentation maintained by the assessee but he fairly agreed that the reasonable estimate merits to be made in the case of assessee. 19. The Ld. Authorised Representative for the assessee pointed out that the Hon ble Supreme Court in the case of Dhakeswari Cotton Mills Vs. CIT reported in 26 ITR 775 held that even when estimation is to be made, no guess working could be applied and the estimation should be on some basis. Our attention was further drawn to the decision in the case of Sujan Singh Bundela Vs. ACIT reported in 3 SOT 0491 and the decision in the case of Late S.M. Bashir Vs. ITO reported in 13 TTJ 0236 wherein Assessing Officer estimated the income in the hands of the assessee. 20. The Ld. Authorised Representative for the assessee pointed out that the estimation made by the Assessing Officer was purely on guess work and the same could not have been applied. He also referred to the copy of 7/12 extracts filed wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the services of experts for optimized agricultural activity where the assessee has undertaken systematic and scientific procedures to carry out the agricultural activities on its land holding. We find merit in the claim of the assessee that it would yield higher results. In such circumstances the yield from such big farms would be more than the yield of an ordinary farmer who operates on a smaller field. The CIT(A) had acknowledged that the assessee s family is known in the area to be engaged in the cultivation of vegetables and fruits and where the assessee is undertaking such activity on a large piece of land and where the assessee is aggregating the agricultural land from year to year. Until and unless the said activity was giving good returns or yields the assessee would not continuously be engaged in such operation. Accordingly, the estimation made by the Assessing Officer by adopting the yield @ ₹ 6,000/- per acre is definitely on the lower side. The Assessing Officer had rejected the claim of the assessee as no organized sales activity was undertaken by the assessee. The assessee claimed that it was selling the agricultural produce in cash to various persons and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.89 225,549.00 684,911.00 4 2002-03 970,490.00 3.17 30,789.00 22.60 219,375.00 939,701.00 5 2003-04 615,345.00 7.91 48,648.00 34.63 213,075.00 566,697.00 6 2004-05 769,180.00 6.98 53,709.00 29.58 227,502.00 713,471.00 7 2005-06 950,531.00 4.80 45,638.00 34.88 331,542.00 904,983.00 8 2006-07 606,038.00 15.08 91,385.00 60.96 369,432.00 514,653.00 9 2007-08 286,826.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Agricultural Farm in ITA Nos. 386 to 390/PN/2009 (Lead Appeal being Shri Babulal Laxminarayan Malu- ITA Nos. 241 to 243/PN/2009) order dated 23-09-2011 wherein also the complete details were not being maintained and the assessee was also selling the vegetables and fruits in cash. The 7/12 extracts did not have clear mention of the vegetables and fruits but the assessee claimed to have sold the same. The Assessing Officer had estimated the income in the hands of the assessee on account of agriculture and the balance income declared by the assessee was held to be income from undisclosed sources, as in the case of the assessee. The case of the assessee before the Tribunal was that the 7/12 extracts could not decide the issue of the actual crops being grown by the assessee and simply because crops was sold in cash it could not be said that it was a bogus sale. The Tribunal accepted the plea of the assessee that the sales of agricultural produce including the vegetables and fruits were normally made in cash and such a claim of the assessee could not be totally denied. But since the books of account have not been maintained properly the Tribunal held to be a fit case to estimate the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared. We thus find that the A.O has said so in different context, firstly the assessee had not maintained books of account regarding the agricultural activities as the same was not found during the course of search/survey and secondly; even if the books were maintained it was not sufficient to accept the agricultural income declared since income in cash was not supported by evidence. The A.O accordingly concluded that the cash sales shown as agricultural income was bogus and it represented the income from undisclosed sources. The contention of the assessee before the ld CIT(A) remained that the cultivation of fruit was a fact which was duly mentioned in 7/12 extracts. However, no mention of such products cannot lead to conclusion that such products were never cultivated. It was again claimed that books have been regularly maintained and available for verification. The further contention regarding 7/12 extracts remained that on many occasions, 7/12 extracts contains the same notations from year to year as information is simply copied from year to year without actual verification. It was further contended that simply because crops are sold in cash, it cannot be said that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in one lumpsum. Secondly, the deposits are well placed which lays support to the assessees' contention that the amount do not represent each and every sale but consolidated figures of sale over a certain number of days. It was also stated that certain cash expenses are also incurred from the cash receipts and only the net amount remaining is deposited in the account. The distribution of the cash deposits, the magnitude of the deposit do not appear to be such as to conclude that these are not amounts received by way of cash sales but unaccounted income introduced into the books. The Ld CIT(A) has also noted in para No. 11 that assessee has maintained books of account where each and every items of purchase and sale and other expenses were recorded. We do not agree with this noting of the ld CIT(A) as nowhere in the assessment order nor it is the case of the Ld CIT(A) that books of accounts were found available during the course of search or survey operation. No plausible reasons has been assigned by the assessee regarding the non-availability of books of accounts during the course of search or survey. Thus, reliability of such books of account even if furnished at later stage is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table yield be adopted to work out the income from Vegetables and flowers in the hands of the assessee on the basis of individual land holdings. Accordingly, we hold so. Necessary evidence would be furnished in this regard by the assessee. The Assessing Officer shall give reasonable opportunity of hearing to the assessee. In case there is yield from fruits, then 80% of the standard yield reported by NHB should be adopted to work out the income in the hands of the assessee based on their land holding. However, in case the assessee has already shown the yield below 80% of the standard yield reported by the above said Government bodies, then the Assessing Officer is directed not to disturb the same and accept it. 25. Another issue which was considered by both the Assessing Officer and the CIT(A) was the expenses on contractual factor. While estimating the agricultural income the Assessing Officer/Commissioner of Income Tax (Appeals) had taken note of the facts of Shri Badshah Bagwan, wherein the statement of one person was recorded who stated that for carrying on the agricultural activities on part of the land, he was getting batai @50% of the receipts. The said statement was withd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is ill-founded as the agricultural income declared by the assessee is higher than what is actually earned by the assessee. 28. The next aspect of the issue is that the assessee had declared the amount as agricultural income, part of which has been accepted as agricultural income by the authorities below and the balance amount has been assessed as income from other sources in the hands of the assessee. Once the amount has been so assessed, i.e. on account of agricultural income and/or on account of income from other sources then the source of the aforesaid assets found during the course of the search, stand explained. However, we have already adjudicated the issue of estimation of agricultural income in the hands of the assessee in the respective years in the paras hereinabove and the Assessing Officer is directed to verify as to where the said agricultural income assessed in the hands of the assessee justifies the source of acquisition of the assets found during the course of search. Once the income is estimated in the hands of the assessee the same is presumably held to have been utilized for the acquisition of the assets and there is no merit in any other addition in the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of search at the residence of the assessee, a notebook was found and seized. On its verification, it was noted that there were details of FDRs made in various banks and Pat Sanstha. From the notings, it was seen that the FDRs were kept with various different entities and from the details, the name of the person through whom the deposit was prepared was also written. However, no such deposits in the name of Anjum Shoukat Bagwan or his family members was made in the said Pat Sanstha/banks on the respective dates. The details of FDRs as per the seized inventory No.11 are tabulated under para 22 at page 15 of the assessment order. The assessee was asked to explain as to why the said investment in the FDR should not be added as undisclosed income in the hands of the assessee. The explanation of the assessee was group of persons had planned to bid for Octoroi contract of Sangli Municipal Corporation, which required bank carrying on a substantial amount of more than ₹ 400 lakhs. In view thereof, an attempt was made to note down the investments held by each of the group which can be utilized for securing bank guarantee. The assessee further explained that due to di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction was not proved. The CIT(A) thus observed that the contents of the loose sheet showing deposits in various Pat Sanstha were not substantive proof of the fact that the amounts mentioned in the said page belongs to the assessee and in any case if the said FDRs were unexplained then they would constitute the business income in the hands of the respective Pat Sanstha or the Cooperative Banks and the assessee would not be liable to be held as owner of these amounts. The CIT(A) also noted that the amounts mentioned against Soniya Nagari Vinkar Vinkat Vyavsaik Sahakari Pat Sanstha has already been added in the assessment of the said concern and hence no merit in making any addition in the hands of the assessee. Further, the addition made on account of interest on FDRs was also deleted by the CIT(A). 34. The revenue is in appeal against the aforesaid finding of the CIT(A). 35. The Ld. Authorised Representative for the assessee pointed out that the aforesaid FDRs are not in the name of the assessee but belong to the Pat Sanstha and is to be included in the hands of Pat Sanstha. The Ld. Authorised Representative for the assessee while arguing the appeals of the Pat Sanstha, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the appeals filed by the assessee in the case of Shahanaz Shoukat Bagwan and Kaish Shoukat Bagwan are identical to the issues raised in the case of Anjum Shoukat Bagwan and also addition made on account of notings made of investment in FDRs in assessment year 2005-06, is same and our decision in Anjum Shoukat Bagwan on all issues would apply mutatis mutandis. 40. Now coming to the appeals filed by the Pat Sanstha Soniya Nagari Vinkar and Vinkar Vyavsaik Sahakari Pat Sanstha Ltd. the assessee is in appeal for assessments years 2004-05 and 2005-06 against the order passed under section143(3) r.w.s. 153A of the Act. 41. The assessee has raised common grounds in both the appeals in ITA Nos. 226 227/PUN/2013 relating to assessment years 2004-05 and 2005-06 and grounds in ITA No.226/PUN/2013 read as under : Under facts under the circumstances of the case - 1. Ld.CIT(A) has erred in confirming the addition made on account of unexplained cash credits in the form of FDRs lying in various individual names u/s.68 of the I.T. Act, 1961. The requisite details and documents as required to substantiate the credit worthiness of the deposit were duly submitted. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as rule of sub-silentio is applicable (Shanmugvel nadir Vs. Tamil Nadu another 263 ITR 658 (SC). 5. Without prejudice to the above grounds Ld CIT(A) should have relied on the judicial precedents mentioned at Ground No.3 Supra and by not doing so he has erred in not exercising his plenary powers which are conterminous with that of Assessing Officer as per the ratio laid down by CIT Vs. Kanpur Coal Syndicate (1964) 53 ITR 225, 229 (SC). 6. The appellant prays that he order of the Ld CIT(A) be vacated and that of the AO's order may be restored. 7. The appellant craves leave to add, alter, amend, modify any of the above grounds raised, any other grounds at the time of proceedings before the Hon 'ble which may please be granted. 43. The Ld. Authorised Representative for the assessee pointed out that the only addition made was on account of unexplained cash credits in the form of FDRs lying in various names in the premises of the Pat Sanstha, which was made under section 68 of the Act. The Ld. Authorised Representative for the assessee pointed out that the assessee wants to withdraw the appeals filed against the aforesaid additions made under section 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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