TMI Blog2018 (7) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee is accepted as one of the opinion, then every businessman in the India, who buys crops from farmer, would become eligible for earning agriculture income by way of getting same lease agreements signed from the farmers and making accounting entries in their books of account to bifurcate the part of procurement price paid to farmer towards lease rent, fertilizer & chemical, labour & service charges. The assessee has made claim of agricultural income in malafide manner and in gross abuse of the provisions of the Act. We hold the assessee liable for concealment of particulars of income. Accordingly, we reverse the finding of the Ld. CIT(A) and uphold the finding of the Assessing Officer on the issue in dispute. - Decided in favour of revenue. - ITA No. 6622/Del/2013 ITA No. 6645/Del/2013, ITA No. 4366/Del/2015 - - - Dated:- 29-6-2018 - Sh. O. P. Kant, Accountant Member And Ms. Suchitra Kamble, Judicial Member Department by : Ms. Paramita Tripathi, CIT ( DR ) Assessee by : Sh. Ajay Vohra, Sr. Adv. Sh. Aditya Vohra, Adv ORDER Per O. P. Kant, A. M. These three appeals filed by the Revenue are directed against three separate orders dated 30/09/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure income under section 10(1) of the Act and same was held as business income from sale/purchase of the hybrid seeds, following the finding of the Assessing Officer in earlier years. The Assessing Officer also issued penalty proceedings under section 271(1)(c) of the Act. On further appeal, against the quantum proceedings, the Ld. CIT(A) vide his order dated 20/03/2009 upheld the finding of the Assessing Officer. Consequent to the order of the Ld. CIT(A), the Assessing Officer again issued a notice to the assessee to show cause as why the penalty under section 271(1)(c) of the Act may not be levied. After considering the submission of the assessee and taking into account various judicial precedents on the issue in dispute, he levied penalty at the rate of 200% of the tax sought to be evaded, which was worked out to ₹ 1,64,80,374/-. On further appeal against the said penalty, the Ld. CIT(A) allowed the appeal of the assessee holding that assessee has not concealed particulars of income or not furnished any inaccurate particulars of the income and there was just a difference of opinion as to whether the income returned was agriculture income or non-agriculture income. The Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When AO issues to an assessee a notice under section 271, he makes the assessee aware that the provisions thereof are to be used against him. These provisions include the Explanation. By reason of the Explanation where the total income returned by the assessee is less than 80 per cent of the total income assessed under section 143 or 144 or 147, reduced to the extent therein provided, the assessee is deemed to have concealed the particulars of his income or furnished inaccurate particulars thereof, unless he proves that the failure to return the correct income did not arise from any fraud or neglect on his part. The assessee is, therefore, by virtue of the notice under section 271 put to notice that if he does not prove, in the circumstances stated in the Explanation that his fan, to return his correct income was not due to fraud or neglect, he shall be deemed U. have concealed the particulars of his income or furnished inaccurate particulars thereof and, consequently, be liable to the penalty provided by that section. No express invocation of the Explanation to section 271 in the notice under section 271 is necessary before the provisions of the Explanation therein are applied. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely claim not accepted by the Tribunal, the assessee cannot be held for furnishing inaccurate particulars income or concealment of particular of income unless the claim is found to be false or the explanation is not bona fide. In support of the contention, he relied on the decision of the Hon ble Supreme Court in the case of CIT Vs. Reliance Petroproducts (P) Ltd., 322 ITR 158 (SC). 5.2 He submitted that the claim of the assessee that income from sale of hybrid seeds is agriculture income and hence eligible for exemption under section 10(1) of the Act was based on facts, statutory provisions and the rulings of the Hon ble Supreme Courts including that of CIT Vs Raja Benoy Kumar Sahas Roy ( 32 ITR 460)(SC). 5.3 The Ld. Senior Counsel further submitted that in the case of Namdhari Seeds P. Ltd ITA No. 75/2007 passed by the Hon ble Bombay High Court and relied upon by the revenue in quantum proceedings, leasing of the land was prohibited under the Karnataka land reforms Act and therefore income from such land has been held as not agriculture income. 5.4 Further, he submitted that in quantum proceeding before the Tribunal, the assessee has relied on the decision of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f inaccurate particulars of income was raised by the assessee before the Ld. CIT(A). She submitted that no ground was decided by the Ld. CIT(A) against the assessee and therefore no application under Rule 27 could have been filed. Without prejudice to her objections on maintainability of application under Rule 27, she submitted that when the assessee has understood purported import of the notice, no prejudice was caused to the assessee and such circumstances penalty cannot be vitiated. In support of her contention she relied on the decision of the Hon ble Madras High Court in the case of Sundaram Finance Ltd versus CIT (2018) 403 ITR 407 ( Madras). The Ld. DR also placed reliance on the decision of the Hon ble Bombay High Court in the case of CIT Vs. Smt Kaushlya (1995) 216 ITR 660 (Bombay) and decision of the Tribunal Mumbai bench in the case of DCIT Vs. Shah Rukh Khan (2018) 93 taxmann.com 320. 7. We have heard the rival submissions and perused the relevant material on record. In the instant case the main issue in dispute involved around Explanation-1 of section 271(1)(c) of the Act. For ready reference, said explanation is reproduced as under: [Explanation 1.-Where in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word inaccurate has been defined as:- not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript . We have already seen the meaning of the word particulars in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. 10. It was tried to be suggested that Section 14A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was totally irrelevant. 7.6 In the case of Proagro Seeds Co. Ltd (supra) also the assessee claimed exemption under section 10(1) of the Act on the ground that income derived by the assessee was from agriculture activities. The Assessing Officer rejected the claim and brought to tax the amount of income disclosed by the assessee and levied penalty under section 271(1)(c) of the Act. The Tribunal held that upon application of the facts and circumstances of the case the department had not alleged any concealment or inaccurate furnishing of particulars of the income. The Tribunal further observed that in the earlier years the department had accepted the same activity as agriculture and granted exemption. In view of the above finding of the Tribunal, the Hon ble Delhi High Court held that there was no deliberate concealment of the income nor any accurate furnishing of particular sub income and that the assessee s perception that such activities were agriculture in nature, which had been treated by the Department to be so in previous years, no question of law arises. 7.7 Thus, in the above case Hon ble High Court found difference of opinion in the view of the Department in current ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by all the farmers), claimed the activity of purchase of the seeds from the farmers as agriculture activity in fraudulent manner. 9. In view of the arguments of the parties, in the instant case we are required to examine whether there was a difference of opinion on the activities of the assessee as agriculture income. We have observed from the order of the Tribunal dated 18/12/2017 in ITA No. 1988/Del/2006, 4383/Del/2006, 443/Del/2010, 5285/Del/2012, 3670/Del/2013, 1903/Del/2014, 4269/Del/2014 and 2223/Del / 2014, that the Ld. AR relied on the decision of the Hon ble Bombay High Court in the case of Monsanto India Ltd (supra), however the Tribunal in Para 20 has held that the reliance placed by the Ld. AR is misplaced inasmuch as even in the said judgment the Hon ble High Bombay Court in para 3 has clearly observed that agriculture operations ought to have been actually carried out by the assessee. Thus, the Tribunal has clearly distinguished the applicability of the decision of the Hon ble Bombay High Court in the case of Monsanto India Ltd (supra) and rejected the claim of agriculture income, relying on the decision of the Karnataka High Court in the case of Namdhari Seeds P L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and the farmer but the said arrangement only gives rise to business income in the hands of the assessee and not agricultural income. The leave and license agreement as well as the service provider agreement read along with the statements of the farmers also show that the agricultural operations are carried out by the farmers only. 11. The Assessing Officer in the assessment order based on the relevant extract of the assessment order for assessment year 2001-02, has observed as under: (i) The lease agreements have not even been filled up completely; they do not mention lease rent to be paid; they are not signed on behalf of the company.(Page -2 of the Assessment Order) (ii) There is no single instance when the land claimd to have been taken on lease by the company from a farmer was handed over to another farmer for cultivation. (Pg. -6 of the Assessment Order) (iii) The assessee settled account of all the farmers on the basis of the procurement price mentioned and payment of lease rent, fertilizer and chemical charges and labour and service charges adjusted by way of a composite rate, which is unusual as labour and service charges have not paid on actual ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumed that the procurement cost is arrived at only after taking into account the impact of the cost incurred of parent seeds in overall business scenario of the assessee. (Pg. -5 of the Assessment Order) 12. On perusal of the above observation of the Assessing Officer, other paragraphs of the assessment order and arguments of the Ld. DR, we are of the opinion that the assessee company has actually purchased seeds from the farmers and claimed the said activity as agriculture income by way of creating a chain of documents or papers of lease agreements etc and thus the explanations furnished by the assessee are not found to be bonafide. The assessee has claimed its activity of purchase of the seeds from the farmers as agriculture income in a fraudulent manner to evade the taxes, which it was liable for carrying its business activity. It is not the simple case of disallowance of expenditure as in the case of reliance Petro products Private Limited(supra). In the instant case the real activity of purchase of the seeds has been planned and arranged in such a way as it look like the agricultural activity but the assessee has not succeeded in camouflaging its real activity. One of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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