TMI Blog2022 (1) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... come account. The assessee submitted ledger account of Chalthan Khand Ydhyog Mandali. CIT(A) has not made any adverse finding in any of these documents even, though all the details were furnished by the appellant before him. CIT(A) ought to have examined all these details and refuted / rejected them, with a cogent adverse findings and discernable line of reasoning, in order to arrive at a conclusion. On the contrary, the ld CIT(A) has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. The additions have been made purely on selective misinterpretation, without dealing with the explanations/ evidences of the assessee. Besides, no incriminating material were found by the search team, hence, no addition can be made for assessment years 2008-09 to assessment years 2010-11, without incriminating material, as the time limit for completion of assessment has already expired when the search was conducted for assessment years 2008-09 to assessment year 2010-11. Hence, we are not inclined to accept the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... joint residence of the assessee was also covered in the said action. Accordingly, notice u/s 153A was issued on 15.01.2014 and duly served upon the assessee. In response to the said notice, the assessee furnished the return of income on 22.10.2014 declaring total income at ₹ 14,63,420/- (agriculture income of ₹ 25,41,880/-). A notice u/s 143(2) was issued on 27.10.2014 and duly served upon the assessee. Subsequently, notice u/s 142(1) along with questionnaires were issued to the assessee. During the year, the assessee has shown the income from long term capital gain to the tune of ₹ 6,73,399/-, income from other sources to the tune of ₹ 7,92,525/- and agriculture income to the tune of ₹ 25,41,880/-. The assessing officer verified the details and documents submitted by the assessee and noted that out of the total agriculture income earned by the assessee to the tune of ₹ 25,41,880/- during the year under consideration, an amount of ₹ 24,36,280/- is claimed to have been received from Chalthan Khand Ydhyog Mandali Ltd. (herein after referred as Chalthan) and the balance receipts is on account of other agriculture income to the tune of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers and cousins brothers and since all of them are engaged in agricultural activities, the day-to-day details of various agricultural expenses are not systematically maintained for the reason that the assessee family is wholly and exclusively engaged in agricultural activities. The assessee s family grow different crops and the same is being taken up on seasonal basis and since all the agricultural activities on different land were carried out together from time to time, it is not practically possible to maintain details of various different natures of expenses. The assessee and his family members are showing net agricultural income which was earned by them individually after incurring different expenses. c. The assessee has sold sugar cane to Chalthan Vibhag Khand Sahkari Mandali, the details of which have been submitted. d. The labour charges were paid by time to time by cash for which no records are maintained and in respect of crops the casual laborers are employed from time to time for which no details are kept. e. Except for Shri Kiritbhai Patel, assessee and his family members have no other business activity other than agricultural activity and the same is evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this assessee and his family members is at 3,84,250.77 square meters. Further, it was also submitted by ld Counsel that nature of the crops cultivated by the family are sugar cane, jowar, tuwer, fruits, paddy, vegetables etc., and to prove his stand he submitted copies of Forms 7 x 12, which shows joint ownership of his and his family members as well as the types of crops grown in the land belonging to the assessee and his family members. The labour charges were paid from time to time by cash for which no records are maintained. The casual laborers are employed from time to time for which no details were kept by assessee, as the farmers are illiterate. A good crop is dependent on monsoon and good rainy seasons. In some years, because of monsoon and good rainy seasons, these assessees were able to get higher agricultural revenue, which has been doubted by the ld CIT(A) and therefore ld CIT(A) enhanced the addition. The ld CIT(A) ought not to have enhanced the addition without any corroborative evidence. Therefore, ld Counsel finally prays the Bench that addition made by the assessing officer and addition enhanced by the ld CIT(A) may be deleted. 11. On the other hand, Shri S.T. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 21- 31 of the paper book. The assessee has submitted for A.Y. 2008-09, the balancesheet which is placed at page 33 of the paper book, the agricultural income account, vide page no. 35 of the paper book, ledger account of Chalthan Khand Ydhyog Mandali, vide paper book page no.36 and the assessee also submitted cash book for AY 2008-09, which is placed at page no.37 to 38 of assessee s paper book. (b) For assessment year 2011-12 : The assessee submitted before the Bench balance-sheet vide paper book page no.39 to 40. The assessee submitted agricultural income account (PB-41), ledger account of Chalthan Khand Ydhyog Mandali (PB page 49), and cash book vide PB 50. (c) For assessment year 2012-13 : The assessee submitted before us balancesheet, vide PB page 47-48, agricultural income account, vide PB-49, ledger account of Chalthan Khand Ydhyog Mandali, vide PB-54 and cash book, vide PB -55. (d) For assessment year 2013-14 : The assessee submitted before us balance-sheet which is placed at paper book page no.56, agricultural income account, vide PB 56, ledger account of Chalthan Khand Ydhyog Mandali, vide PB 57, and submitted cash book, vide PB page 58. 13. Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income and in the revised return filed u/s 153A, assessee has shown the agricultural income. In the revised return filed u/s 153A for assessment years 2011-12 and 2012-13, the assessee enhanced the agricultural income, as the assessee is not having any source of income other than agricultural income. The assessee declared agricultural income in the return of income filed after the search on the basis of investment and expenditure. Accordingly, agricultural income of particular year does not necessarily represent the agricultural income earned in the same year. The assessing officer disallowed 40% of the cash agricultural income shown in the return filed u/s 153A for A.Y. 2008-09, A.Y. 2013-14, and A.Y. 2014-15 for which no return of income was filed before the date of search. However, for A.Y. 2011-12 and A.Y. 2012-13, where returns of income were filed before the date of search, the AO disallowed 40% of the agricultural income received through cash. Further, AO disallowed the whole enhanced claim of agricultural income in the revised return for A.Y. 2011-12 and A.Y. 2012-13. We note that in course of the assessment proceedings, assessee filed financial statements, agriculture inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue raised by the Ld,CIT(A) is of no consequence. The learned CIT(A) observed in Para 7(iii) of his order that assessee did not produce any evidence of growing other crops except revenue records. In this connection, ld Counsel submits that assessee sold the other produce in cash and therefore, no evidence was available. However, it is a fact that in the Government records, the other produce grown by the assessee were mentioned and therefore, the evidence cannot be discarded particularly when in the course of the search no evidence was found that assessees and his family members were engaged in other activities than agricultural activities. The CIT(A) has noted in Para 7(iv) of his order that in case of assessee for A.Y. 2009-10 and case of assessee s brother Shri Panjakbhai in A.Y. 2008-09 and A.Y. 2009-10 and other family members, Viz. Kamleshbhai, Ajaybhai and Ishwerbhai, they were having taxable non-agriculture income. In this connection, it is submitted that they had earned income from other sources and capital gain which were declared in the return of income. In no case, the income from any nonagricultural business was declared. The CIT(A), in Para 7(v) of his order, ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbers were holding agriculture land. The ld Counsel submits that there is bound to be variation in the agricultural income due to different factors like monsoon, climate conditions, nature of soil etc., as explained to the AO through various letters. The CIT(A) in Para 7.2 of his order further observed that as per average yield of sugarcane as per Gujarat State Federation of Co-operative Sugar Factory Ltd., very little land was remaining for other cultivation activities. In this connection, ld Counsel submits that CIT(A) has not given the productivity figure of South Gujarat. The average yield of Gujarat cannot be applied for South Gujarat, particularly when in South Gujarat, the irrigation facility and abundance rains were available. Further the soil of South Gujarat is also good. Regarding the agriculture income being used for repayment of loan, it is submitted that loans reflected in the balance sheet were mostly from family members. Even the CIT(A) accepted the loan when the addition was made by the assessing officer for A.Y. 2013-14. The assessee was having agricultural equipment for long. The assessee and family members and their forefathers were engaged in the agricultural a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of search to get itself abated. For this reliance can be placed on the decision of Hon ble Delhi High Court in the case of CIT vs Kabul Chawla reported in (2016) 380 ITR 573 (Del) wherein it was held as follows: 37. On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: (i) Once a search takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the LD AOs as a fresh exercise. (iii) The LD AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The LD AO has the power to assess and reassess the total income of the aforementioned six years in separate assessment orders for each of the six years. In other wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the sugarcane to Chaltha Vibhag Khand Sahakari Mandali (Sugar factory). The other products were sold in the open market. The agricultural products are sold by the assessee directly. In respect of crops, the casual labours are employed from time to time as per the requirements and no details are kept for the same. In case of sugarcane and other crops, the assessee had incurred all the expenses out of gross receipt of agricultural income and the assessee had shown net agricultural income. We note that assessee is holding substantial area of agricultural land in the name of himself as well as other family members and he also used to cultivate agricultural crops on the land of other family members as the entire family is living together. The assessee was not required to incur such a substantial portion of expenses to the tune of 40% as estimated by the learned assessing officer. The AO admitted that independent inquiries related to income earned from Chalthan Society were made and nothing adverse was found there from. It is a known fact that in agricultural operations in co-operative sector, the major care and monitoring of the sugarcane agricultural operations are being conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate parties. He also stated that he was earning about 15,00,000/- to ₹ 20,00,000/- for sale of other agricultural produce per year. In reply to question no 9, he stated that about 20 workers are employed for agricultural operations. In reply to question no 6, he stated that he is doing agricultural operations also on the lands of other persons. In reply to question no 28, he stated that he had only agricultural income and that is why books of accounts were not maintained. However, after the search, assessee prepared books of accounts and final statements were filed as promised in reply to question no 27. In reply to question no 29, assessee stated that he will furnish the details of fixed deposits, lockers and bank accounts of assessee and his family members along with furnishing of balance sheet. 22. 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. It is not necessarily the agriculture income of current year only, as the past savings of the earlier years out of agriculture income were deposited in bank accounts or applied in the current year. We note ..... 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