1980-VIL-08-ITAT-

Equivalent Citation: TTJ 013, 236,

Income Tax Appellate Tribunal CALCUTTA

Date: 16.12.1980

LATE SM BASHIR.

Vs

INCOME TAX OFFICER.

BENCH

Member(s)  : P. V. B. RAO., T. V. K. NATARAJA CHANDRAN.

JUDGMENT

2. The original assessment was completed in this case on an income of Rs.1,29,626 which included a sum of Rs. 7,500 treated as income from undisclosed sources. In the original return filed by the assessee a sum of Rs. 14,750 was shown as agricultural income in Part 'F' of the return. When the ITO called for evidence, the assessee had produced memorandum book of agricultural income in support of the agricultural income returned. However, the ITO noticed that the memorandum book appeared to have been written up at a stretch and, therefore, he could not given full credit for the agricultural income shown and treated the sum of Rs. 7,500 as income from undisclosed sources.

3. On appeal, the ld. AAC in his order dt. 1st June,1965 deleted the addition. On appeal by the Revenue against the order of the AAC the IT Tribunal, Allahabad Bench, restored the matter to the ld. AAC with the following observations:

"We have heard the parties at considerable length and find that the factual position has not been properly brought out by the Departmental authorities. There is nothing on record to show that how and what circumstances Mohd. Anwar and Syed Ahmad Hussain were made attorneys by the owner of lands and how they were declared occupiers. Whether any compensation was paid by the said two gentlemen to the owner of lands or not is not clear. Similarly there is nothing on record to show how the said two gentlemen in turn permitted the assessee to occupy the entire land and to cultivate the same without any consideration. The fact that the assessee has not shown payment of any land revenues to the Govt. Authorities or compensation either to the said two gentlemen or to the owner of land cast a reasonable doubt on the entire explanation furnished by the assessee. The books of account have also not been looked into in detail. It appears that the produce from the lands were of sugar cane and Urd of considerable amount. The expenses shown however, do not show the purchases of seed and fertilisers which are absolutely necessary for such a big areas of land which is yielding a huge crop. There is no light thrown on the issue whether the owner Shri Iqbal Hasan Khan lives in Pakistan and is not an Indian National. We, therefore, think that further investigation in this case is necessary."

4. The ld. AAC, in his turn, restored the matter by his order dt. 22nd Nov., 1967 to the ITO directing him to pass fresh orders in accordance with directions given by the Tribunal. That is way the matter came to be restored to the ITO for re-consideration. The ITO had called for details and the assessee's representative filed a reply dt. 17th Feb., 1978. The ITO was of the opinion that the assessee could not produce any satisfactory evidence and, therefore, he has again assessed a sum of Rs. 7,500 as income from undisclosed sources as in the original assessment.

5. On appeal before the CIT (Appeals) it was contended on behalf of the assessee that the agricultural income shown by the assessee was quite in order and the department has accepted the agricultural income shown by the assessee in the subsequent years i.e. 1965-66 to 1967-68 & 1972-73. Therefore, it was urged that the ITO was not justified in treating a part of the agricultural income as income from undisclosed sources.

6. The ld. CIT (Appeals) was of the opinion that the onus to prove the agricultural income was on the assessee and as the memorandum book produced before him appeared to have been written up at a stretch, he held that it was not reliable. On merits, he had also pointed out that as against sale proceeds of Rs. 20,621 the net income of Rs. 14,751 which amounted to 70 per cent, was unthinkable especially when the expenditure towards cost of seeds was shown at Rs. 26 only and no expenditure of fertiliser was shown. Further, he has also rejected the plea of the ld. counsel for the assessee that the agricultural income shown by the assessee in the later years was accepted on the ground that the principle of res judicata did not apply and the facts of each year had to be considered separately on merits. Therefore, he concluded that the agricultural income of Rs. 14,751 shown by the assessee was not correct and could not be accepted. His conclusion was reinforced by his finding that there was no evidence of any expenditure towards land revenue and compensation to the two gentlemen who were looking after the other lands and, therefore, the agricultural income shown was highly exaggerated. Since, according to him, the net income from agriculture would be between 30 per cent & 40 per cent of the sale proceeds, the quantum of income assessed under other sources was also upheld by him. Hence the appeal by the assessee before the Tribunal.

7. At the time of hearing, the ld. counsel for the assessee filed a paper book and referred to the relevant portion thereof during the course of his argument. According to him, the ITO did not consider all the evidence filed by the assessee before him, and therefore, he has not carried out the necessary investigations directed to be done by the Tribunal in their order dt. 28th April, 1967. In particular, he has referred to the order of the AAC dt. 1st June,1965 in respect of asst. yrs. 1963-64 & 1964-65 wherein the same point came up for consideration in respect of original assessment order passed by the ITO and after giving various reasons he has deleted the assessment of a portion of agricultural income shown by the assessee for the asst. yrs. 1963-64 & 1964-65 but which was treated as income from undisclosed sources. In other words, the assessee has produced necessary evidence regarding possession of agricultural lands cultivated which belonged to others and the income entered in the memorandum book was based on original papers relating to sales of agricultural produce. This order of the AAC is available at pages 26 to 31 of the paper book filed. Further, he has stated that the agricultural income of Rs. 4,625 shown in the return for the asst. yr. 1965-66 and agricultural income of Rs. 14,631 shown in the return for the asst. yr. 1966-67 were accepted by the Department. Further it was stated that the memorandum book had been maintained at the site of the lands and the one now produced for our perusal was only a fresh copy of the old memorandum book originally produced before the AAC at the time of original appellate proceedings. Therefore, he urged that the assessment of income from undisclosed sources is unjustified and should be deleted.

8. The ld. Deptl. Rep. on the other hand, filed his paper book. According to him, the position which existed before the Tribunal when it set aside the order for fresh consideration, remained the same even at present and, therefore, the assessment of income from undisclosed sources is quite justified. Further, he has strongly supported the order of the ld. CIT (Appeals) especially the reasons given on merits. Therefore, he has justified the assessment of income from undisclosed sources.

9. We have duly considered the rival submissions and the paper book submitted by both the parties. The facts of the case for the earlier years as well as for the later years show that the income has been shown by the assessee from agriculture in section 'F' of the return filed. It is also undisputed that the income of Rs. 14,631 shown by the assessee for the asst. yr. 1966-67 had been accepted when it is stated that the entire extent of land was cultivated while in the asst. yr. 1965-66 only a limited extent of agricultural land was cultivated admitting income of Rs. 4,625 which was also accepted by the Department. In the re-assessment made by the ITO, he has duly considered the written reply of the assessee dt. 17th Feb., 1978 stating that the assessee's Counsel expressed his inability in furnishing the details called for and thus could not produce satisfactory evidence. We have looked into the letter of the assessee dt. 17th Feb., 1978. It was pointed out that the necessary particulars of Khasra were submitted by the legal representative and, therefore, he has drawn the attention of the ITO to the letters dt. 4th Jan., 1971 & 15th Dec., 1975 wherein necessary particulars of plots cultivated together with Khasra and Khatauni were duly submitted. Further, it was also stated that the bulk of the produce was sold to one Shabban Kidwai when the legal representative had undertaken to produce on 1st Dec., 1964 before the ITO but as his present whereabouts were not known after a lapse of 14 years, he could not be produced to verify the sale of agricultural produce to him. Further, it was pointed out in the letter that in the reply dt. 9th Jan., 1971 particulars regarding various expenses were furnished and, therefore, the legal representative requested the ITO to take a realistic view of the matter of finalising the assessment. Therefore, it is abundantly clear that the ITO has not taken pains to consider the correspondence cited by the legal representative in his letter dt. 17th Dec., 1978 and verify the particulars which were necessary to decide the issue as directed by the Tribunal. In this case, the facts and circumstances of the case clearly show that there is no dispute about the possession of agricultural lands by the assessee and the whole issue revolves round the quantum of agricultural income shown by the assessee. The case of the Department is that the assessee had not produced evidence regarding ownership of lands, the extent thereof, sale proceeds, expenses and the net income thereof. The case of business is that necessary evidence regarding ownership of plots of lands to the extent of 17.68 acres and also taking over possession of 44 acres of land from the occupiers of the lands, namely, Md. Anwar and Syed Ahmad Hasan, were also produced before the AAC and this evidence consisted of certified copies of Khasra and affidavit by the aforesaid occupiers of lands affirming the fact that plots of lands Nos. 1492, 1493, 1494, 1495, 1496, 1501/A and 1501/B measuring approximately 44 acres had been given over to the appellant for the purpose of cultivation. Further the original papers on the basis of which the memorandum books were written were produced before the AAC which revealed that agricultural operation had been performed and income arose by way of sale of sugarcane, grass, etc. Therefore, we find that necessary investigations were not carried at as directed by the Tribunal possibly because of lapse of 14 years in between. Therefore on the basis of existing record, we held that the findings of facts given by the ld. AAC in his order dt. 1st June, 1975 in respect of the asst. yrs. 1963-64 & 1964-65 clearly establish the case of the assessee regarding ownership of land as well as possession of land belonging to occupiers and deriving of agricultural income from those lands. Further, the authenticity of memorandum book produced before him also cannot be doubted as original papers on the basis of which memorandum book were written up, were produced before him and he had actually gone through the same. Therefore, the extent of agricultural income shown in the original memorandum book cannot be disputed or denied. In fact, the ld. AAC had also dislodged the finding the another concern M/s. J.K. Iron & Steel Co. had incurred loss in agricultural operation by pointing out that the concern had actually earned profit but on account of allowance of depreciation not loss was sustained. Moreover, the acceptance of income from agricultural operation shown by the assessee in subsequent years by the Revenue also cannot be ignored. Therefore, we are of considered opinion that the income from agriculture shown by the assessee should be accepted and the assessment of a portion thereof as income from undisclosed sources in unwarranted in view of the facts and circumstances of the case especially by findings of fact given by the AAC in his order dt. 1st June, 1975 with which we agree.

10. In the result, the appeal in allowed.

 

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