TaxTMI 
TaxTMI 
2018 (6) TMI 1387
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....T. Act,1961 on account of it being agricultural income. 3. During the course of assessment proceedings the Assessing Officer asked the assessee to furnish certain informations / details which are as under :- i) Please furnish the details of agricultural land on which agricultural activities resulting the agricultural income to the assessee were conducted alongwith documentary evidence in support of and certified copies of such agricultural land from Land Revenue Records evidencing that such lands were agricultural lands. ii) Please furnish details of crops grown substantiated by certificates or records of Land Revenue Authorities. Please also furnish the quantitative details of seeds sown and quantitative details of end product as well as of by product. iii) Please furnish complete names and addresses of the persons to whom such agricultural products were sold and furnish their copies of account appearing in your books of account. Please also state the modes of payments of the sale proceeds to you. iv) Please produce Memorandum and Article of Association of the assessee company. v) Please furnish the break up and details of production and trading in agricultural item....
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.... not produce even a single bill/ invoices against purchase of fertilizer and manure expenses of Rs. 3,21,200/- which has been debited to P & L account. Similarly, full details could not be produced in respect of salary expenses of Rs. 4,50,000/-and labour charges of Rs. 51,640/-. After considering the various defects in the scanty details furnished by the assessee and considering the non production of books of account, the Assessing Officer concluded that the agricultural income shown by the assessee is nothing but Sham and the entire story of agricultural operations are concocted only to provide a conduit for assessee's income from undisclosed sources. Since the assessee was holding some agricultural land the Assessing Officer considered an amount of Rs. 4,50,566/- as agricultural income and treated the balance amount of Rs. 66,26,1184/- as income from other sources. 5. In appeal the Ld. CIT (A) considered Rs. 18,00,000/- as income from other sources and treated the balance amount as income from agricultural activities by observing as under :- 1.3 The submission has been considered. The assessee owns agricultural land. As per schedule 4 to the balance sheet it also owned fix as....
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....efore the AO. These books of account would contain not only the financial transactions but also stock movement on day-to-day basis and would enable the AO in reaching a conclusion about where and how the agricultural operations were conducted. According to the assessee's own submission the management was not involved in day to day operations and the same had been left to the caretaker. These facts and circumstances raise question mark about the assessee's claim of doing agriculture and earning Rs. 55,96,085/ from the same. 1.6 It is however, noticed that the assessee received Rs. 1.596 lakh subsidy under the National Horticulture Board scheme of "Development of Commercial Horticulture through Production and PHM (post-harvesting mechanism". The relevant part of the letter, issued by the Managing Director of National Housing Board, Dehradun, conveying the sanction of subsidy reads as below: "This is with reference to the proposal where credit (Term Loan) has been provided by your Branch to M/s Explosive (Prop. Rajesh Jain), Village - Banjarawala, Tehsil - Roorkee, Distt. Hardwar, Uttaranchal for Commercial Cultivation of Aromatic Plant in an area 8.00. Acre. This proposal w....
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....In this connection, it is also relevant to note that 'fasli' which is an estimate of agricultural income made by land revenue authority and which was specifically required by the AO, was not produced by the assessee. In view of this, it is held that the claim of agricultural income of Rs. 55,96,085/ is not duly substantiated and an estimate has to be made of the same. Considering that the management of the assessee company was not involved in day-to-day operations nor was any team of experts deployed, it can be reasonably inferred that the yield would be at sub-optimal level. Accordingly, the value of the agricultural produce may reasonably be estimated at 75% of the disclosed value of Rs. 70,76,750/ i.e. Rs. 53,07,560/. The balance amount of Rs. 17,69,190/, rounded off to Rs. 18,00,000/, should be assessed as the assessee's income from unexplained sources. This will also take care of assessee's grievance that deduction for various expenses claimed in the P&L A/c was not allowed by the AO. 1.8 In this connection, it is noted that the AO, in spite of his adverse observation that the claim of agricultural income was sham, ended up accepting the claim in principle and estimated agr....
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....er :- Assessment year 2006-07 Rs.7,40,000/- 2007-08 Rs.70,76,750/- 2008-09 Rs.43,80,000/- 2009-10 Rs.30,69,250/- 10. A perusal of the above details shows that there is substantial increase in agricultural income only during the impugned assessment year. It is not known as to whether the price of lemon grass has fallen down or the quantity grown has fallen down in the preceding or subsequent years. 11. Although the Ld. CIT (A) had passed certain remark that when the Assessing Officer had passed the order the return of income for the two subsequent years would have also come on record, however, he himself has not bothered to verify the same. It is the settled proposition of law that the powers of the CIT (A) are co-terminous with that of the Assessing Officer. He can do what the Assessing Officer has failed to do. However, in the instant case it appears that the CIT (A) was carried away by the arguments advanced by the assessee before him and failed to discharge the powers conferred upon him. When the assessee did not produce the books of account although it is a private limited company and did not produce the relevant details as called for by the Assessing Officer, the CIT....