TMI Blog2019 (11) TMI 1732X X X X Extracts X X X X X X X X Extracts X X X X ..... of which is placed at page 1788 of the Paper Book; where four crops i.e. (i) Jawar; (ii) Wheat; (iii) Bajara; and, (iv) cotton was considered for working out the gross yield and agricultural cost for determining the net profits. We discussed the facts and arguments relating to the total agricultural income earned by the assessee for an assessment year out of 7 crops mentioned in the 7/12 extracts. For earning above income, it goes without say, the assessee were to incur certain expenditure for earning of the same. The expenditure incurred curtailing includes cost on seeds, fertilizers, labour, capital cost, lease rental, power to the bullocks etc. The assessee does not have primary evidences in support of the said expenditure. It is an agreed position the said expenditure is required to the estimated on same reliable basis. Findings of the Tribunal on Ground no.1 - Focusing on the agricultural income and agricultural expenditure of the assessee for the assessment year 2002-03, for which data is collected by the Revenue and analyzed by the assessee as mentioned in the earlier paragraphs of this order, we find the adjudication of quantification of agricultural income (on gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manure. Therefore, taxing them on other sources income is approved. In other words, the Assessing Officer s decisions so far as taxation of such livestock/manure/fodder income for the assessment years 2001-02 to 2006-07 is concerned, the Assessing Officer has rightly taxed the same under the head income from other sources . Since the taxed income is available to the assessee, the same should be considered for explaining the sources of investments/other discoveries. Thus, the said income was not considered by the Assessing Officer as agricultural income. We confirm the same. Accordingly, the ground no.3 stands dismissed. Adopting the agricultural cost/agricultural expenditure or cost figures based on MPKV data assessee s specific adjustments - HELD THAT:- As the inclusion of certain relevant expenditure to the assessee to be Maruti Nivrutti Navale, Bigger HUF and held the requirement of adjustments by way of reducing the said 9 heads of expenses from the cost estimated by the MPKV. It is an undisputed fact that the assessee never paid interest either on the working capital or on the fixed capital. The cost of depreciation is not a real cost. There is no whisper about the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets/properties. Accordingly, ground no.5 is allowed. Absence of investable surplus from agricultural income after considering the household expenses - HELD THAT:- As per estimation of the Assessing Officer, the income quantified i.e. net agricultural expenses is so meager which is not even adequate enough to meet the household expenses. Now, having dismissed the Assessing Officer s stands, there is a requirement for calculating the agricultural income and addition of other income of the assessee to the former for all the years under consideration in the light of the directions mentioned above. Accordingly, the finding of the Assessing Officer will to undergo change. It is a prayer of the assessee before us that this issue needs to be remanded to the file of the Assessing Officer for fresh consideration and decision in the matter. As discussed in the open Court, the Assessing Officer is required not only to quantify the agricultural income on one hand and other sources income (livestock income, fodder and manure income) to arrive at the total surplus. The assessee is under obligation to explain the expenditure details to the Assessing Officer in the remand proceedings. The Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the surplus income of the assessee-HUF for the purposes of explaining the sources of said properties/investments etc. Manure and Fodder Receipts : Like in case of Live-stock Receipts, for want of discharge of onus, we confirm the AO/CIT(A) s findings in matters of denying claim of exemption to these receipts. Hence, the same constitutes non-agricultural income. Consequently, the income from this source should be available to the assessee for explaining the source of investments etc. Accordingly, Assessing Officer is ordered. Additional Directions : (i) The direction relating to the addition on the protective basis stands dismissed in view of likely surplus in HUF hands. (ii) The Assessing Officer is directed to undertake the exercise of quantifying required withdrawals for meeting the personal/domestic needs of the coparcenaries of the HUF. Assessee is directed to provide specific needs of all the members of HUF too. The Assessing Officer is directed to grant reasonable opportunity of being heard to the assessee while doing this exercise of quantification. (iii) In the result, surplus is quantified after aggregating all receipts [para 51 (A)+(B)+(C)], after reducing pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52 leaving behind his wife Smt. Kashibai Navale, five sons and one daughter. All the properties owned by the deceased father of Karta of the Bigger HUF, became HUF property and the HUF was naturally formed. As per assessee, the corpus of the HUF started from the time of Late Babaji Navale, the grand-father of Karta. The income generated out of the said properties was recycled for acquisition of many other properties of the HUF in the name of the members of the HUF. Shri Sadashiv Navle is elder brother of Shri M.N. Navale (Maruti M. Navale). Shri Sadashiv Navale wanted partition of the said HUF and which resulted into the claim of total partition as per section 171 of the IT Act. A. FIRST ROUND 5. Order of the Assessing Officer u/s 171 of the Act : Acting on the said application for partition and after considering the facts and submissions of the assessee, the AO passed an order u/s.171 of the Act on 06.12.2007, rejecting the partition claim of the Hindu Family. In this order, the Assessing Officer held that there was no existence of HUF of M. N. Navale, Bigger HUF. 6. In that order, the Assessing Officer pointed out that the assessee never filed the returns of income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... others (supra) that section 293 of the I.T.Act does not permit filing of such a suit in a civil court, which has the affect of even indirectly setting aside or modifying any proceedings under the Act or order made thereafter; and therefore such a civil suit was barred by section 293. This makes it abundantly clear that this judgment of the Hon'ble Apex Court was directly applicable in the facts of the appellant's case; and the Hon'ble Bombay High Court decision relied upon by the appellant was distinguishable on facts. 8. Before the ITAT in first round : Thereafter, being further aggrieved with the said order of the CIT(A), the assessee filed appeal before the Income Tax Appellate Tribunal and the Tribunal vide order dated 07.02.2012 had observed as follows: 44. .. In our opinion a primary /secondary/tertiary evidences furnished by the assessee must be accepted considering the legislative intent in matters of partition and also the conduct of the assessee. The AO has never doubted or not disputed the veracity of aforementioned documents furnished by the assessee in the form of additional evidences. But, they were not admitted by the CIT(A) for frivolous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome is available. Alternatively, he shall arrive at the reasonable estimate of agricultural income and examine if such funds are adequate to account for further acquisition of land i.e. from 60.40 acres to 188 acres on one side and the cash and jewellery seizures on the other. Fourthly, In any case of jewellery, considering the lack of direct evidence to demonstrate that it has origin with either Geeta Bunkar or Mrs Nivruti B Navale, the assessee substantially admitted to the conclusion that the seized jewellery constitutes a non-HUF assets AO shall exclude the same from the hotpotch of the HUF properties and however, the same is subjected to the discussion given above and contingent on the outcome of the applicability of provisions of sec. 64(2) 8i 64(2)(b) of the Act as indicated in the preceding paragraph Fifthly, regarding the relevance of the Consent Decree, as slated above, In our opinion, the same is certainly sacrosanct and binding on Income tax matters so far as the quantity allocated by the Hon ble Court, Pandarpur are concerned and for this we rely on the citation discussed above. However, regarding the existence of the HUF its properties and agricultural income, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stimation must have some sustainable basis and the data of the Mahatma Phule Agricultural University (MPAU) with necessary changes specific to the assessee may constitute a reasonable basis. The Assessing Officer was therefore directed to re-examine the issue after reconsidering the MPKV data. Another thing which the Tribunal settled was that, so far as 60.40 acres land is concerned, there should not be any dispute. There exists direct evidence in favour of land holding by the grandparents in 1950s. However, from 60.40 acres, how the land holding by HUF grew to further holding upto 188 acres or so was to be explained by the assessee before the Assessing Officer in remand proceedings and through corroborative evidences. Regarding the seized cash and jewellary seized during search action u/s 132 of the Act, the question that needs to be analyzed, as per observation of the Tribunal, was whether the same were earned out of the exploitation of the HUF assets or otherwise. These questions can only be answered if it is determined what exactly the extent of HUF properties and the estimation of the related agricultural income. Since the said issues were set aside to the file of Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dance with section 131 of the Act, they were not utilized by the Assessing Officer in this proceedings. Further, the Assessing Officer further noticed that all the transactions done by HUF were in cash only and no transactions involving the banking channels were reported. That further, the brothers of Shri M.N. Navale (Karta of Bigger HUF) have borrowed various loans of small amounts from different Co-operative Banks and Co-operative Societies for their personal needs. The question arises that when the said HUF was claiming to be in possession of such huge agricultural income and cash in hand what was the need for the other brothers of Shri M.N. Navale to borrow such loans, when they were also the members of the said HUF and had equal rights over the income and assets of the said HUF. The Assessing Officer also noticed that whatever figures and amounts quoted by the assessee, they cannot be called reliable since the assessee has not bothered to verify whether some of the claims made by him are factually correct or not. It was seen by the Assessing Officer that the assessee had shown agricultural income from some pieces of lands when the said land was not even owned by him/HUF du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from MPKV, Rahuri, the Assessing Officer attempted to make an estimation of the agricultural income at least for one year i.e. financial year 2001-02 as a base year. Assessing Officer is of the opinion, based on the estimation, a formula of gross agricultural income, agricultural expenditure, surplus of agricultural income can be worked out. However, Assessing Officer dropped this idea prematurely. Assessing Officer faced the irreconcilable problem with MPKV data, which suggest the agricultural losses only. In the process, the Assessing Officer lost sight of the fact on the direction of the Tribunal for adopting/making necessary assessee-specific changes to the said MPKV data before adopting that data only. Instead, the Assessing Officer relied on the returns of income of the HUF-assessee, the agricultural income claims made in the return of income and quantified the surplus agricultural income of the assessee for various assessment years since the assessment year 1953-54 till assessment year 2006-07. Thus, the Assessing Officer goes on to estimate the agricultural income of the assessee HUF adopting the ad-hoc rate 10% of the claimed agricultural income by the assessee HUF for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8634 3 1954-55 109026 26270 82756 8276 4 1955-56 125879 30350 95529 9553 5 1956-57 125622 29550 96072 9607 6 1957-58 118734 32400 86334 8633 7 1958-59 118601 33200 85401 8540 8 1959-60 174737 46700 128037 12804 9 1960-61 202825 55800 147025 14702 10 1961-62 192965 58150 134815 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97900 252073 25207 27 1978-79 407264 103200 304064 30406 28 1979-80 408538 104700 303838 30384 29 1980-81 423671 105600 318071 31807 30 1981-82 472286 114650 357636 35764 31 1982-83 596788 122400 474388 47439 32 1983-84 600161 134400 465761 46576 33 1984-85 463324 135100 328224 32822 34 1985-8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1446377 144638 50 2001-02 2586300 1147500 1438800 143880 51 2002-03 2826450 1171900 1654550 165455 52 2003-04 2772630 1245700 1526930 152693 53 2004-05 4390424 1841800 2548624 254862 54 2005-06 6220295 2728600 3491695 349169 TOTAL 50333244 17307131 33026113 3302611 Thus, the total net agriculture income of the HUF for the period from F.Y. 1952-53 to 2005-06 is fairly estimated at Rs.33,02,611/-, out which the assessee HUF s members could spend for their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhoc opinion, the estimate needs to be made applying the rate of 15% instead of 10% adopted by the Assessing Officer. CIT(A) confirmed other findings of the Assessing Officer on livestock, manure, fodder etc. 17. Before the Tribunal 2nd Round : Aggrieved with the finding of the Assessing Officer/CIT(A), the assessee filed the present appeal before the Tribunal with the following original/concise/revised grounds. The final set of grounds are extracted as under :- 1. The learned Commissioner of Income Tax (Appeals) and the learned Assessing Officer erred in estimating agricultural income @ 15% of agricultural income declared by the asseessee and the same is erroneous and in violation of guidance provided by the Hon ble Income Tax Appellate Tribunal while setting aside the earlier order u/s 171. 2. The learned Commissioner of Income Tax (Appeals) and the learned Assessing Officer erred in ignoring yield from crops which are not recorded in 7/12 extracts. 3. The learned Commissioner of Income Tax (Appeals) and the learned Assessing Officer erred in ignoring sale proceeds of fodder and manure in determining agricultural income. 4. The learned Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, net agricultural income, surplus agricultural income available with the assessee. Otherwise, this is a case where the Assessing Officer out-rightly rejected the assessee s estimate and the data maintained by the MPKV. Addressing to the core issues decided by the Assessing Officer against the assessee, ld. Counsel for the assessee highlighted the same and requested for undoing the unfairness in the decisions of the I.T. Authorities. Ld. AR addressed to some of these decisions which are separately discussed in the following paragraphs. A. Assessing Officer s finding on the extent of the agricultural holding of HUF - the generation of agricultural income: After discussing the agricultural holding properties of Bigger HUF, the Assessing Officer gave a categorical finding that the said HUF is certainly left with properties of the grandparents amounting to 60.40 acres of land and the same is the basis for generation of agricultural income since 1952. Further, in quantifying the agricultural income in the assessments since 1952 @ 10% of the reported agricultural income in return of income as the net agricultural income (after substracting the livestock income) of the assessee, Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee before us. It is also to be mentioned that out of the 7 crops which were considered in the 7/12 extracts of four of the crops have a regular data and rest of the crops had to be worked out with support of the said data for the said crops or the data of the other years. Otherwise, the 7/12 extracts reports the said 3 crops in other financial years. Particular reference was given to the gross yield figures for the assessment year 2002-03 as done by the Assessing Officer in the assessment/remand proceedings. The figures for the assessment year 2002-03 are considered, and therefore, the gross agricultural income works out to Rs.8,41,537/- for the assessment year 2002-03. About this finding both the parties submitted for considering the same as a gross agricultural income before the said agricultural expenses is considered. The livestock, fodder and manure receipts are discussed separately. In this regard, ld. Counsel for the assessee furnished the following written submissions :- 63.1 In its submissions in para xix(b), the learned DR has objected to considering receipts for crops other than 7 crops considered in working for A Y 2002-03. 63.2 The assessee submits that in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fertilizers, labour, working capital cost, lease rental, bullock power etc. MPKV data charts reflect such a cost for an agricultural activity. However, in the second round of the proceedings, the Assessing Officer considered 90% of the gross agricultural income constitutes the agricultural expenses and allowed only 10% as the net agricultural income. In the process, the formula of 90:10 (agricultural expenses : agricultural income) is followed. Commenting on the above method/formula, ld. Counsel for the assessee submitted that there are already existing decisions of this Tribunal in favour of various formulas 85:15, 75:25 etc. The case laws relating to Shri Dattatraya Waman Patil (supra) and Shri Patil Dilip Baburao (supra) were cited. However, there is no case mentioned by both parties about the relevant formula for cereal/millet. It is the submission of the assessee that this cereal/millet does not involved much the expenditure as they are dry land crops. Therefore, the formula of 65:35 ratio (agricultural income : agricultural expenditure) was proposed. This request is made notwithstanding the MPKV data with adjustments, if any. When reference is made by the Tribunal of its exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following written submissions :- 51. The assessee has prepared reworked cost sheets for four crops being Jawar, Wheat, Bajra and Cotton and the same is filed in paper book 14. In the reworking of cost, the assessee has excluded amount adopted as cost towards the six items, as discussed in para 31 herein above, which were brought to notice of the AO as well as CIT(A). The assessee has also excluded cost towards bullock power, manure and incidental charges as not applicable in its case. Copy of the working is at page 1788/PB 14. 52. The assessee submits that it has excluded three more items as they too do not relate to the assessee. It will be appreciated that the assessee is owning 60 acres of land since the year 1952. By any standards 60 acres of agricultural land is a large holding just at the time India gained independence. Even if one were to discount the possibility of assessee HUF rearing livestock for selling them, it cannot be denied that an entity owning 60 acres of agricultural land in the year 1952 would be owning a few bullocks and cows used for agricultural activity. The nature of expense recorded in MPKV cost sheets is of hire of bullocks for carrying o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he department, the MPKV cost estimate is higher than MSP declared by the Central Government. Also, the report of the Niti Ayog shows that MSP is accepted by farmers as giving them fair return sufficient to make some investments out of the income earned. Therefore, one can safely presume that cost as per MPKV is inflated by a small percentage. Further, one can make a reasonable assumption that Central Government would have factored a return of at least 20% in the MSP price for the farmer. If 20% is considered on sale price, it will amount to 25% on purchase price. If 25% of revised cost of 48.96% is considered as excessive cost estimate, then it works out to 12.24% which reduced from 48.96 gives a cost percentage of 36.72%. If cost is 36.72%, profit will be 63.28% Which is near to 65% adopted by the assessee. 56. The assessee therefore submits that if factor of inflation in cost estimates of MPKV is factored and 9 items of cost which do not relate to the assessee to determine cash income, the profit percentage on sale price works out to 65%. Comments on submissions of the DR on cost 57.1 The learned DR has furnished written submissions along with its own version of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yield of later years. Copy of statement of yield adopted for extrapolation to various years is at page 1890-96/PB 14. 62. For sale rates, wherever MPKV data is available, the same is adopted. If the same is not available, the assessee has adopted sale rates as per APMC Sangola, the said details are at page 1793-97/PB 14 and was furnished before the AO. Where no evidence for sale rate is available for a particular year, the assessee has adopted price increase of 2% p.a. and accordingly prior or later year's data is adopted with necessary adjustment @ 2% p.a. D. Assessing Officer s findings in second round livestock income other receipts: (1) Regarding the live stock income, it is the case of the assessee that the live stock income was consequential to the agricultural activities undertaken by the assessee on his agricultural (HUF) lands. Generally, all agriculturists maintains the livestock like cows, cattle, goats, etc. Merely on the basis of estimation, the assessee worked out the live stock income i.e. purchase and sale of cattle, animals etc and claimed the said income exempt income. This is the way of the livestock-agricultural income was reflected in the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 to 2006-07). In this regard, the Assessing Officer did not give benefit of set off for this tax income against the investment of properties. The ignored the existence of such income in the past having taxed the similar income in the later years i.e. assessment years 2001-02 to 2006-07. It is claim of the assessee that since, taxed income, the entire claim amounting to Rs.26,74,689/- should be considered existing and granted benefit of set off of the said income against the unaccounted assets discovered during the search action. Further, it is the claim of the assessee that earning of income on account of sale of manure and fodder is consequential to the fact of agricultural activities on the lands of the assessee. 20. We have so far narrated the Assessing Officer s finding on the (i) agricultural income; (ii) livestock income; and, (iii) other manure/fodder income and the Assessing Officer s treatment to the claims of the assessee. Now, we shall deal with the deduction of agricultural expenses against the gross agricultural income. Regarding this deduction, in the absence of the direct evidence, the Assessing Officer held 90% of the gross agricultural income should relate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Formula of 51:49 : Further, on the percentage figures of 51.04 : 48.96%, another formula revolved by the assessee on the basis of MPKV data, the assessee made the following submissions in favour of his formula of 65:35 :- 55. The assessee seeks to bring to your Honours notice the disparity in cost estimated by MPKV and the MSP declared by the Govt of India. The said disparity is not factored in the NP percentage of 51.04%. The assessee submits that for all the years for which data was obtained by the department, the MPKV cost estimate is higher than MSP declared by the Central Government. Also, the report of the Niti Ayog shows that MSP is accepted by farmers as giving them fair return sufficient to make some investments out of the income earned. Therefore, one can safely presume that cost as per MPKV is inflated by a small percentage. Further, one can make a reasonable assumption that Central Government would have factored a return of at least 20% in the MSP price for the farmer. If 20% is considered on sale price, it will amount to 25% on purchase price. If 25% of revised cost of 48.96% is considered as excessive cost estimate, then it works out to 12.24% which reduced fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural lands. Available surplus agricultural income at the rate of 50% works out to around 62.2 crores against the investments in agricultural lands amounting to Rs.41,38,204/-. E. Income Quantification for A.Y. 2002-03 by A.O.: For the assessment year 2002-03, as per the gross receipts i.e. exempt income out of agricultural crop sale, sale of manure, sale of fodder, sale of live stock etc is Rs.21,01,455/-. Against that the Assessing Officer determined the exempt income of Rs.1,43,880/-. In the process, the Assessing Officer disallowed or treated certain sale of income as taxable income i.e. (i) less sale of live stock of Rs.11,47,500/-, (ii) less sale of manure of Rs.34,600/-, less sale of fodder of Rs.26,400/-. In the process, the Assessing Officer rejected the assessee s claim and adopted a new way of quantifying the agricultural income of Rs.1,43,880/- being 10% of the assessee s gross receipts agricultural income at Rs.21,01,455/-. The Assessing Officer did not completely deny existence of the income taxed the same as income from other sources. In the process, the live stock income of Rs.11,47,500/- is treated as taxable other income in adopting the said 10%, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions :- This is in continuation of written Submission -2, submitted in this case, which contained the Note submitted by the Assessing Officer on Paper Book No 14 expressing reservations on the manner in which the appellant proposes to substantiate the surplus arising from the agricultural income claimed by the appellant to have been earned during the period 1952-53 to 2006-07. The Appellant has now submitted a reworked chart for the same period at Page Nos. 1967 and 1968 of Paper Book submitted to the Hon ble ITAT/ The CIT(ITAT)- DR. In this regard, the comments of the undersigned are submitted as under:- (a) The comments given earlier in Written Submission-2,on the adoption of ratios of 50% and 65% are reiterated and it is stated that the assessee HUF has adopted two ratios i.e. 65% of the gross agricultural income and 50% of the gross agricultural income. Both these ratios are without any verifiable basis. Further, the ratio of 50% is observed to be excessive in so far as if the surplus worked is reworked after considering the expenses viz. bullock power, manure an incidental charges, then the surplus available to the assessee HUF is reduced substantially in so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... realistically and the same need to be accepted of the gross receipt are worked out on MPKV data, the expenditure data should also be considered from the same source. In which case, the agricultural income of the assessee for that year could be 8.76%. Rebutting the above objection of the ld. DR for the Revenue, ld. Counsel took us loss of Rs.13,652/- (Page 1753 of the Paper Book). In the process, this calculation was not accepted by the Assessing Officer as he adopted 10% of the gross receipts. As per the assessee, MPKV figure as lower. In this regard, ld. DR s argument is that the Assessing Officer could not be found MPKV data. Page 1744 and 1745 of the Paper Book, para 3.4.5 mentioning that it is never case of loss, ld. Counsel for the assessee relied on the reports of the Niti Aayog. Further, referring to the contents of para 5.3.5, ld. Counsel highlighted the facts relating to the agricultural is a main source of income and not the agricultural losses. Further, referring to data given in said para, ld. Counsel highlighted the facts relating to the agricultural income source to certain household. He also submitted the facts MSP scheme of the Government held for the farmers in ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claim of earning receipts only the sale proceeds from the fodder and manure generated in the assessee s lands. Ground no.4 relates to the agricultural cost incurred for earning the agricultural income. There exists various formula in this regard. Where the assessee claims that the assessee incurs 35% of the agricultural income and the Assessing Officer/CIT(A) adopts 85% to 90% of the same. Ground no.5 relates to non-consideration the livestock income for explaining the sources of investments in lands/properties etc. Ground nos.6 and 7 constitute argumentative. The ground-wise adjudication given in the following paragraphs. Ground no.1 29. Ground no.1 relates to the non-compliance to the Tribunal s directions : The assessee s claim regarding the existence of Maruti Nivrutti Navale Bigger HUF and corpus of HUF (60.40 acres of the land since 1952), the Tribunal accepted the same and, however, it remanded the issue of quantification of land holdings earnings from the said lands to Assessing Officer. In the first round of proceedings, the issues are recommended to the file of the Assessing Officer for quantifying the agricultural income earned by the assessee, the availabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rought our attention by the ld. Counsel for the assessee. On plain reading of the said data, Assessing Officer noted that the agricultural income of the assessee will be in losses if the data is adopted without any adjustments. The Assessing Officer committed various mistakes in analyzing the MPKV data too. In the process, the Assessing Officer overlooked the directions of the Tribunal regarding the making of requisite adjustments specific to the assessee. 32. The case of the assessee Ratio of Agricultural income : Agricultural expenditure: Assessee objected to the Assessing Officer s estimation @ 10% and the reasons for doing so. It is the case of the assessee that, if Rs.100 is gross agricultural income, around 35% of the same is incurred on agricultural expenditure. Certainly, Rs.90/- is never spent to earn Rs.10/-. It is also born out of the records by way of the order of the Tribunal (supra) that the said agricultural income is vary from one crop to the other crop. The expenditure incurred for quantifying the serial crops which are annually seasonal crops is different from the expenditure incurred on the perennial trees. In any case, neither the assessee nor the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B Net cost as per MPKV 11,241.00 18,434.29 11,637.47 18,951.11 Less: Cost which are not relatable to HUF I Interest on working capital 508.19 665.59 427.89 1,222.21 II Depreciation of farm instrument (being notional cost) 337.62 1,145.80 418,97 626.96 III Rental Value of Land 1,544.45 2,676.89 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,084.97 F(a) Sale value by adopting yield and sale rate as per MPKV (page 1749 of paper book 12) 2,25,361 56,850.00 55,847.00 77,436.00 4,15,494.00 F(b) Profit amount as per MPKV 113359 31379 31549 35798 2,12,085.23 F(c) Percentage 50.3 55.2 56.5 46.2 51.04 34. The above working is provided showing the agricultural income and agricultural expenditure ratio of 51.04 : 48.96. The working is provided only for 4 crops leaving other 3 crops fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder consideration. (b) The comments given earlier on the quantum of household expenses adopted are reiterated and it is stated that the estimation of the household expenses claimed to have been incurred by the assessee HUF are without any basis and have been estimated at very low amounts. (c) The appellant has not submitted any new evidence in so far as the chart now submitted is just a reworking of the earlier chart submitted. The following observations made earlier are resubmitted and reiterated as under:- The working submitted by the assessee HUF is a pure estimation and is not supported by any evidence whatsoever. In estimating the various elements of cost as per the method arising from MPKV data, the assessee HUF has excluded certain heads of expense as per its convenience. On reworking of the estimation after inclusion of the excluded heads of expenses, it is seen that the result is a deficit in all the years. It can be inferred from the deficit arising in all the years, that the assessee did not have surplus available for investing in lands purchased in various years. It is therefore concluded that the working of the agricultural income s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1953-54 onwards) are relevant. In our opinion, considering the principle of judicial discipline, the finding of the Tribunal is in the first round is sacrosanct. MPKV data needs to be used for this object. Ld. AR demonstrated how MPKV can be utilized with data necessary modification. In principle, the same is in order and hence acceptable. In effect, the ratio of 51:49 (Income : Expenditure) should be the base for quantification of agricultural income. Accordingly, ground no.1 is allowed. Ground no.2 39. Ground no.2 relates to the yield from crops grown in agricultural lands of the HUF. The relevant details are already discussed in preceding paragraphs. The base paper for this purpose of crops grown in the agricultural lands are the 7/12 extracts as well as the MPKV data. The said extracts mentioned the facts about the crops grown on fields of the assessee. However, there are certain inconsistencies with respect to crops grown in the assessment years started from assessment year 1953-54 onwards. While there is consistency with respect to 7 crops and there are inconsistencies with respect to others qua the claims in return of income. Some crops are mentioned in 7/12 of som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gricultural income. So far as taxation of the same as income from other sources, we confirm the same, however, it should be available for explaining the sources of the assets/investments discovered during the search action or any other investments. To that extent, we are agree with the Assessing Officer s contentions that the livestock income as well as the receipts from fodder and manure are taxable. No credible evidence is furnished by the assessee in support of generation from livestock/fodder/manure. Therefore, taxing them on other sources income is approved. In other words, the Assessing Officer s decisions so far as taxation of such livestock/manure/fodder income for the assessment years 2001-02 to 2006-07 is concerned, the Assessing Officer has rightly taxed the same under the head income from other sources . Since the taxed income is available to the assessee, the same should be considered for explaining the sources of investments/other discoveries. Thus, the said income was not considered by the Assessing Officer as agricultural income. We confirm the same. Accordingly, the ground no.3 stands dismissed. Ground no.4 42. Ground no.4 relates to the adopting the agric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t either on the working capital or on the fixed capital. The cost of depreciation is not a real cost. There is no whisper about the assessee hiring labour or bullock power or purchase of manure etc. Therefore, the adjustment requested by the assessee before us to the cost estimated by the MPKV appears reasonable and sustainable. 44. In our view, the said ration is held to be proper and sustainable in this case of the assessee. We have also held that the Revenue has not made out a case that all the 9 heads of expenditure [(i) interest on working capital; (ii) depreciation of farm instrument (being notional cost); (iii) rental value of land; (iv) interest on fixed capital; (v) family labour-male (being notional cost); (vi) family labour-female (being notional cost); (vii) bullock power; (viii) manure; and, (ix) incidental charges] are incurred by the assessee. Thus, for this assessee, the ratio of agricultural income and agricultural expenditure can be 51:49%. Considering the reasonability of the claims of the assessee with reference to the agricultural cost, the issue raised in ground no.4 is partly justified. In the process, the Assessing Officer s ratio of 10:90; CIT(A) s ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lates to the Assessing Officer s finding about the absence of investable surplus from agricultural income after considering the household expenses: The background facts of the issue include that the Assessing Officer quantified the surplus income on estimation basis which is disapproved by us in principle. As per estimation of the Assessing Officer, the income quantified i.e. net agricultural expenses is so meager which is not even adequate enough to meet the household expenses. Now, having dismissed the Assessing Officer s stands, there is a requirement for calculating the agricultural income and addition of other income of the assessee to the former for all the years under consideration in the light of the directions mentioned above. Accordingly, the finding of the Assessing Officer will to undergo change. It is a prayer of the assessee before us that this issue needs to be remanded to the file of the Assessing Officer for fresh consideration and decision in the matter. As discussed in the open Court, the Assessing Officer is required not only to quantify the agricultural income on one hand and other sources income (livestock income, fodder and manure income) to arrive at the to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1966-67 65,891 1967-68 1,94,542 1968-69 1,39,147 1969-70 1,57,980 1970-71 2,11,382 1971-72 1,25,807 1972-73 1,45,454 1973-74 1,22,038 1974-75 95,118 1975-76 96,058 1976-77 98,531 1977-78 1,01,732 1978-79 1,29,297 1979-80 1,59,461 1980-81 1,81,840 1981-82 1,73,877 1982-83 1,46,402 1983-84 1,76,666 1984-85 1,84,026 1985-86 1,38,658 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived. 49% constitutes the agricultural expenditure. The Assessing Officer is directed to reduce the said gross agricultural income figures by the said 49% for arriving at the net agricultural income of the assessee for both blocks i.e. (i) A.Ys. 1953-54 to 2001-02 and (ii) A.Ys. 2002-03 to 2007-08.6. Summary of our findings 51. To sum up, we proceed to reiterate the directions of the Tribunal in the first round (supra) i.e. requirement of adopting the MPKV figures with necessary changes/adjustments considering of the specific facts of the assessee under consideration (refer para 8 above). This relates quantification of agricultural income. To sum up, the assessee reports three sources of receipts i.e. (i) agricultural income; (ii) livestock income; and, (iii) fodder/manure income to explain the investments/other assets of HUF. Our finding on each of these sources are summed up as follows,- 51(A) Agricultural Income : The Assessing Officer is directed to adopt the gross agricultural income of figures extracted above (para 49) after removing arithmetic errors, if any, as they are based on the MPKV figures read with 7/12 extracts. Compliance to (para 8) the existing direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r aggregating all receipts [para 51 (A)+(B)+(C)], after reducing personal withdrawals of all members of HUF. Accordingly, Ground 1, 2, 4, 5 7 also allowed as protanto. Further, ground 3 stands dismissed. Ground 6 is allowed for statistical purposes. 52. In the result, the appeal of the assessee in ITA No.367/PUN/2017 is partly allowed for statistical purposes. ITA Nos.360 to 366 542/PUN/2017 (8 Appeals) 53. Before us, at the outset, both the Counsels submitted that all these eight appeals of the assessee-HUF relate to the assessment years 2001-02 to 2007-08 in the second round. The Assessing Officer made additions on account of (i) agricultural income and (ii) livestock/fodder/manure receipts. The Assessing Officer estimated the agricultural income at the flat rate of 10% of the agricultural income claimed by the assessee in its returns (supra). Further, the Assessing Officer made additions on account of livestock income and manure/fodder income (other sources of income) too. Regarding the agricultural income addition, the CIT(A) made amendment to the said flat rate of 10%. The CIT(A) of the view 15% should be fair. Otherwise, in principle, the CIT(A) confirmed al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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