High Court Of Rajasthan
Bhairavnath Agrofin (P.) Ltd. vs. CIT–I
Assessment Year : 1994-95
Section : 2(1A)
Narendra Kumar Jain And Jainendra Kumar Ranka, JJ.
D.B. IT Appeal No. 527 Of 2011
January 24, 2013
ORDER
Jainendra Kumar Ranka, J. – The instant appeal has been filed by the appellant herein for the assessment year 1994-95 assailing the order passed by the learned Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (for short, “ITAT”), who vide order 30/07/2010 dismissed the appeal of the appellant.
3. The appellant is a private limited company and submitted its return of income for the assessment year 1994-95 on 22/03/1996 declaring an income of Rs. 10,59,837/-. The entire income was shown by way of agricultural income and thus an exemption was claimed. Initially, the return was processed u/s 143(l)(a) on 25/03/1997. Thereafter, it was revealed that huge amount in cash was deposited in the bank account of the appellant and it was further claimed -theit investment of more than Rs. 17 Lakhs was made in shares. Accordingly, the case was reopened by issuance of notice u/s 148 of the Income Tax Act.
4. In pursuance to the notice u/s 148, the Assessing Officer proceeded ahead to make enquiry with regard to the claim of agricultural income as well as investment in shares etc. It is stated by the Joint Commissioner of Income Tax, Special Range-I, Jaipur, who happens to be the Assessing Officer, that despite of ample opportunities having been given by sending several notices, no compliance was made by the appellant to attend the proceedings. The Assessing Officer, inter alia, required the appellant to provide; (1) information with regard to advance against share application money to the tune of Rs.86,100/-; (2) explain the nature and source of the cash deposited in the bank to the tune of Rs. 12,88,227/-; (3) to explain the source of agricultural income earned to the tune of Rs. 12,31,746/- the assessee appellant having claimed that he did not have land of its own but had taken agricultural land on lease from various persons. In this connection, the Assessing Officer required the appellant to prove by documentary evidence and to produce the concerned owner; (4) to provide the bills/details pertaining to purchase of seeds, sowing of and, electricity and other connected details of agricultural operations; (5) details of trading of shares and other details.
5. However, except some of the details, which were initially filed, the appellant did not care to produce anything further and the case was decided u/s 144 of the Income Tax Act by passing an ex parte order to the best of the knowledge of the Assessing Officer. The appellant however did not challenge passing of order under section 144 or reopening of assessment under section 148 of the Income Tax Act. The learned Assessing Officer thus, made addition by disbelieving the story of agricultural income of Rs. 12,81,500/- which was deposited in cash in Bank as the nature and source of such deposit was not substantiated. Further he made addition on account of dealing in shares as apparent sources were not proved.
6. Aggrieved by the aforesaid order of the Assessing Officer, an appeal was preferred before the Commissioner of Income Tax (Appeals) (in short, “CIT(A)”). Before the ld. CIT(A), the appellant produced some more material in the shape of receipts from Krishi Upaj Mandi Samiti; some affidavits and other materials. Since some of the evidences were not provided at the lower stage and were produced, first time before the CIT(A), therefore, in the interest of justice, the CIT(A) called for a remand report from the Assessing Officer. It was reported by the Assessing Officer in the remand report that (1) various lands situated in different areas of Nohar Tehsil were taken on lease for the period of one year staling from 1st January, 1993 to 1st January, 1994 and all the lease agreements are written in the same handwriting or typed, witnessed and signed on the same date; (2) the stamp papers were purchased on 03/04/1993 and 30/04/1994 and affidavits were made on the same date; (3) most of the sale proceeds were deposited in bank in April, 1993 only; (4) some of the agreements are for the period from 01/04/1992 to 31/03/1993; (5) all the affidavits show that part of the land owned by the said persons, who have filed affidavits, were given to the appellant company for cultivation and out of which ¾ th of the agricultural produce will be given to the appellant and balance ¼th will be given to the owner of the land; (5) agreement is for a period when sowing is not done in Rajasthan and two cultivation seasons in Rajasthan and June/July and October/November; (7) the receipts from Krishi Upaj Mandi Samiti are mainly in respect of Arandi, Sarson and Taramira and receipts are of the month of April, 1993 when it was impossible, for having cultivated the produce, since the land itself was taken for cultivation in the month of January, 1993 whereas the crop was sold in first week of April, 1993 and could not have been produced and sold within a period of three months; (8) no evidence at all was adduced by the appellant as to payment of the ¼th of agricultural produce to the land owners in pursuance to the lease agreements; (9) no details relating to expenses of cultivation was filed except copy of books of account; (10) neither evidence in support of the purchase of seed, fertilizers, pesticides was produced nor evidence of electricity consumption made available.
7. The ld. CIT(A), after going through the remand report, observed as under:—
“From the perusal of lease agreement, one can notice that various lands situated in different areas of Nohar Tehsil were taken on lease for the period of one year starting from 1st January, 93 to 1st January, 94. All the lease agreement are written in the same handwriting or typed and witnessed and signed on the same date. The stamp papers were purchased on 03.04.1993 and 30.04.1994 and affidavits were made on the same date. Incidentally, most of the sale proceeds were deposited in bank in April, 93 only. Some of the agreements are for the period of 01,04.93 to 31.03.93. All the affidavits show that a part of the land owned by the person who has filed affidavit was given to the appellant company for cultivation. ¾th of the agricultural produce will go to appellant and balance ¼th will be given to the owner of the land. Forgetting about the above mentioned defects, it is very strange that the agreement is for a period when sowing is not done in Rajasthan. The two cultivation seasons in Rajasthan are June/July and October/November. In certain parts of Rajasthan where irrigation facilities are available, the third crop is taken in the month of March/April also. Sowing season of mustard (Sarson) is Oct/Nov and of Arandi it is June/July. These are the main crops sold as per the Krishi Mandl’s receipts. Mustard will be ready to sale In Feb/March and Arandi will be ready to sale only in Oct/Nov. Thus it is not possible that the land taken on 1st of January will be utilized for agricultural purpose. The receipts from Krishi Upaj Mandi are mainly in respect of Arandi. Sarson and Taramira and receipts are dated April, 93. It means the land taken for cultivation in the month of January, 93 whereas the crop was sold in first week of April, 93 which is just not possible. In some of the cases agreement for the period starting from May, 93 to May, 94, some are for the period of 01.04.92 to 31.03.93. It means part of the land was returned in the month of January and part of it was returned in the month of April as well as in March, 93. Income if at all from the land which was in possession during the F. Y. 92-93 cannot be considered for A. Y. 94-95. As per all the agreements ¼th of the agricultural produce were to he paid to the original landowner but no evidence at all was produced by the appellant supporting payment of lease rent in the form of ¼th of agricultural produce.
No details regarding the expenses on cultivation was filed except copy of the books of account. No evidence in support of purchase of seeds, fertilizers and pesticides were made available. What Infrastructure the company had for doing this agricultural activities were also not furnished. In the light of above observations as well as observations of the AO in his assessment order, plea of the appellant regarding agricultural income cannot be accepted, As no other explanation on credit entries in the bank account was furnished, all the credit entries in the bank are considered as appellant’s income from other sources. Addition of Rs. 12,81,500/- is therefore confirmed. The second and third ground of appeal are thus decided against the appellant.”
8. In view of the above facts and circumstances, the CIT(A) was also not convinced as the appellant was unable to prove the apparent sources of credit in the bank account and after considering the issue at length the CIT(A) came to the conclusion that the story of taking agricultural land on lease and cultivating the land is merely a story and the appellant could not prove by acceptable evidence as to the actual earning of agricultural income in view of the reasons given herein before.
9. Aggrieved by the said order, the appellant preferred an appeal before the ld. ITAT. Before the ld. ITAT also, the appellant reiterated the said facts.
The ld. ITAT, while confirming the addition, held as under:—
“We have heard both the parties. The A.O. passed an order u/s 144 of the I. T. Act as the assessee failed to avail the various opportunities and also failed to give reply to notice u/s 142(1). The assessee filed some additional evidences and such evidences were not found genuine. The ld. CIT(A) has observed that lease agreement from January,, 1993 while agricultural receipts are in the month of April, 93. No sowing is done in April, 1993. The ld. CIT(A) has evaluated the evidences on the basis of human probability and surrounding circumstances. The conclusion drawn by ld. CIT(A) cannot be termed as incorrect We, therefore, feel that ld. CIT(A) has rightly upheld the addition of Rs. 12,81,000/- Hence grounds of appeal No. 1 and 2 are dismissed.”
With reference to the claim of investment in shares, the ld. ITAT held as under;—
“We have heard both the parties. Purchase and sale of shares is available but no details of opening and closing stock given. No details given as to shares of which company have been purchased or sold. Without such details, one cannot ascertain the quantum of profit or loss. Since the assessee is claiming loss, hence onus was on the assessee to provide the necessary details. Hence we feel that Ld. CIT(A) has rightly held that loss in shares cannot be allowed.”
10. A bare perusal of the above findings by the ld. ITAT as well as by the CIT(A), reveal that the appellant failed to provide adequate material on the points raised by the Assessing Officer as well as the CIT(A) and even before the ld. ITAT nothing material was placed except reiterating the facts pleaded before. When the appellant was not owner of the land and the agreements were full of discrepancies pointed out by the Assessing Officer it was for the appellant to produce the owner to the satisfaction of the ld. Assessing Officer for examining or by acceptable evidences or otherwise as also in meeting with the various defects/discrepancies pointed, but the appellant did not produce the said landowners and to meet with the various points. Heavy burden lay on the appellant to prove by acceptable evidence but the appellant did not discharge the burden.
11. Similarly, the appellant was not able to prove from reliable evidence as to deposit of amount in cash in the bank to the tune of more than Rs.12 Lakhs and in investing/trading in shares and it was the duty of the appellant to discharge its onus which heavily lay on it, however, despite of several opportunities provided not only by the Assessing Officer but even by the ld. CIT(A), the appellant failed to discharge its onus. The questions, running into 15, as raised and claimed to be substantial questions of law, are not at all questions of law much less substantial questions of law rather it is essentially a finding of fact recorded by the ld. ITAT and the same being essentially a finding of fact, no interference is called for by this Court.
12. Consequently, the appeal, being devoid of merit, is hereby dismissed in limine.
[Citation : 354 ITR 276]
