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TMI Blog2018 (1) TMI 1426X X X X Extracts X X X X X X X X Extracts X X X X ..... are Commercial crops. 3. The learned Respondent Assessing Officer has erred in law by rejecting the agricultural income to the extent of Rs. 29,32,653/-, on the ground that the sale consideration of the property was Rs. 27,00,000/-, since the land yield Agricultural receipts to the tune of Rs. 29,00,000/- cannot be imagined to be sold for Rs. 27,00,000/- by the seller. But the Assessing Officer failed to appreciate the fact that the seller is an ordinary agriculturist growing historical crops without employing much capital into the cultivation. Whereas the Appellant employed sizable amount of capital into the cultivation and grown commercial crops like banana and Ginger which are of high value crops. The yield derived from the developed land with the hightech agriculture applying professional way of cultivation cannot be compared with the consideration paid to a land which was not properly looked after. Thus the comparison is the mismatch. 4. The learned Respondent Assessing Officer has erred in the law by rejecting agricultural income based on the departmental enquiry reports, as the said report was not forth before the Appellant for rebuttal. 5. The rejection of the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madhihalli Hobli, Konayakanahalli. However, as per the RTC it was seen that the lands were transferred to the assessee during the financial year 2014-15. The RTCs declared crops grown in the said lands as Ragi and Jowar. 6. The AO conducted certain enquiries in order to verify the authenticity of the claim with regard to cultivation carried out by the assessee. Local enquiries were made and spot inspection was done by the Inspector on 27.07.2016 and 28.12.2016. It was reported by the Income-tax Inspector that not much of cultivation was there in the said lands in earlier years and only Jowar was grown during the year. Thus, the AO found that the RTCs and the Inspector's report complimented each other. The AO also doubted the claim that by purchasing lands for Rs. 27 lakhs the appellant can have agricultural produce worth more than Rs. 29 lakhs in one year. 7. On the basis of the above findings the AO concluded that the claim of the assessee with regard to the receipt of agricultural income amounting to Rs. 29,32,653/- was false. Accordingly, he treated this as income from other sources. 8. The AO also noticed that there were huge cash deposits in the bank a/c of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot bring the appellant a whopping amount of more than 29 lakhs of rupees. iii. All the transactions claimed by the appellant are in cash. So the same cannot be verified beyond reasonable doubt." 11. In view of the facts of the case and the findings of the AO, the CIT(Appeals) concluded that the AO is justified in treating the amount of Rs. 29,32,653/- as income from other source and not from agriculture and hence upheld the addition of Rs. 29,32,653/- . 12. Against the order of CIT(Appeals), the assessee is in appeal before me. 13. The ld. AR submitted that the assessee entered into agreement to purchase the agricultural landed property measuring 26 acres 9 guntas at Madhihalli Hobli, Konayakanahalli Village, Madihalli Hobli, Belur Taluk, Hassan District on 17.01.2013 for a consideration of Rs. 27 lakhs. Out of this, the assessee has paid Rs. 15 lakhs on entering into sale agreement, balance amount of Rs. 12 lakhs was paid at the time of registration. The sale deed was entered into between the assessee and seller on 24.04.2014. In the meantime, the assessee got possession of the land and cultivated the same and earned income and deposited it into bank account. According to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ragi & Jowar is the historic record that was being cultivated much earlier. The said certificate was issued without verifying the latest position modifying the record. Since the revenue record was not updated from time to time, it cannot be considered as conclusive evidence. According to the ld. AR, after taking possession of land, he changed cultivation of the crop which was not updated by the revenue authorities. 15. The ld. AR submitted that according to the revenue, enquiries were carried out. Local enquiry and spot inspection was conducted through the Income Tax Officer ward-2 Masan, on 27th and 28th December 2016, to verify the authenticity of cultivation carried during the year 2013-14. As per the said enquiry, it appears, it is reported that there was no much cultivation in the said lands in the earlier years and presently only, jowar is grown. No other details of the report are found in the impugned order. 16. He submitted that the assessee was totally unaware of the enquiry or inspection conducted by the ITO at the back of the Appellant. It is not known who are the persons who carried the local enquiry and spot inspection. The details of local enquiry, such as the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has paid advance of Rs. 15 lakhs and the balance of Rs. 12 lakhs to be paid before the registering authority. However, on perusal of the sale deed dated 24-4-2014 it is noticed that the purchaser i.e., assessee has purchased the property by paying sum of Rs. 27 lakhs on the date of registration, relevant extract from the sale deed is as under: " Whereas the purchaser has offered to purchase the properties for consideration Rs. 27 lakhs which is the presets mantel and reasonable fair value and the vendor has accepted the afar and agreed to sell it at the said consideration. Now this deed witnesseth that in pursuance of the same a sum of Rs. 27 lakhs paid to vendor by the purchaser in cash before undersigned witness the vendor here acknowledges receiving said amount." 18.1.2 Though the assessee states that the agreement is entered into on 17-1-2-13 and advance of Rs. 15 lakhs paid and the balance of Rs. 12 lakhs to be paid before the registering authority, the registered deed dated 24-4-2014 does not mention that advance of Rs. 15 lakhs has been paid on the date of agreement, rather it only states that sale consideration of Rs. 27 lakhs is paid by the purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee during 2014-15, the assessee claims that the data of sale deed mentioned in the RM are not conclusive document to prove since the possession of the property was given to the assessee much before the sale deed and that the assessee had started cultivation during FY 2013-14. Further with regard to the crops grown were ragi and jowar as per the RTCs. The assessee claims that the Revenue authorities have not verified the latest position and modified the crop details which were cultivated by him viz., Banana and Ginger. 18.3.2 If the assessee claims that the RTCs cannot be relied upon for the date of transfer of lands to the transferee and the crops mentioned in the RTCs to be not the actual crop grown in the said lands by the assessee, then why is such a document relied upon by the assessee to prove that the lands are held by him. (iv) Quantum of agricultural income declared and the quantum of sale consideration paid. 18.4.1 As per the sale deed dated 24-4-2014, the agricultural lands have been purchased by the assessee by paying cash of Rs. 27 lakhs on the date of registration. When the assesses claims that during the FY 2013- 14, he has earned agricultural inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng into agreement of sale on 17.01.2013. He was of the opinion that possession of agricultural land was handed to assessee on 24.04.2014. According to the AO, since the agricultural land was handed over only on 24.04.2014 for the assessment year under consideration, the assessee could not have earned agricultural income for the FY 2013-14 relevant to AY 2014-15. However, the assessee filed books of account before the AO vide letter dated 07.11.2016, but there is no finding given by the AO regarding the correctness of books of account produced by the assessee. He relied only on the RTC issued by Village Accountant. 21. Further, the assessee filed affidavit dated 27.11.2016 wherein it is confirmed that handing over of possession of agricultural property to assessee as per clause (7) of the said agreement. This affidavit was filed by the assessee before the CIT(Appeals). But neither the CIT(Appeals) nor the AO verified the contents therein by examining the concerned parties. 22. It is also observed that in the subsequent assessment year, the AO himself as accepted that in the FY 2013-14 relevant to AY 2014-15, the mention of growing Plantain trees and Paddy in RTC issued by Village ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because all the steps taken as component parts of the arrangement are legally correct or valid. The right of the parties to enter into the transaction according to their free will or choice has always been protected, the only rider being that both the professed intention and the real intention should be the same. The income-tax authorities have without exception been denied the right to vary the terms of the contract between the parties merely because the agreed terms are not to their liking in the sense that they do not add to the statistics of collection of taxes. Thus, all commercial arrangements and documents or transactions have to be given effect to even though they result in a deduction of the tax liability, provided that they are genuine, bona fide and not colourable transactions. 24. In the present case, the assessee produces the agreement to sell wherein there is a clause of handing over possession of landed property to the assessee and this was confirmed by the seller that he has handed over the landed property on entering into sale agreement. There is evidence produced by the assessee before the AO in the form of estate books of account like expense bills, indent copi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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