Gopal Agarwal Vs DCIT (ITAT Hyderabad)
ITAT Hyderabad held that assessee neither before AO nor before CIT(A) could produce any evidence to support his astronomical agricultural income. Accordingly, in absence of evidence, addition sustained.
Facts- During the course of assessment proceedings, from the details furnished by the assessee, AO noted that the assessee owns 4.3 acres of land at Shamirpet Village and that his son Mayur owns another 3.5 acres of land. It was claimed by the assessee that paddy is grown in this land and that there are teak wood trees adjacent to the agricultural land which were sold. It was accordingly claimed that the assessee has earned agricultural income of Rs.16,12,000/-. However, no proof of sale of agricultural produce was furnished.
AO noted that the assessee has claimed Rs.12,53,000/- as income from sale of paddy from a land holding of around 8 acres. According to the Assessing Officer, earning of such huge income from 8 acres of land is unbelievable. He therefore, estimated such income at Rs.20,000/- per acre and determined the agricultural income at Rs.1,60,000/- per annum. So far as the income from teak wood trees which were grown on the boundaries and sold for Rs.3,59,000/- is concerned, the same was rejected by the Assessing Officer in absence of supporting evidence. AO accordingly determined the total agricultural income at Rs.1,60,000/- per annum and made the balance addition of Rs.14,52,000/- treating the same as income from other sources.
Conclusion- Admittedly, the assessee neither before the Assessing Officer nor before the learned CIT (A) nor even before us could produce any evidence to support his astronomical agricultural income of Rs.12,53,000/- from 8 acres of landholding by selling paddy and Rs.3,59,000/- from sale of teakwood trees. Under these circumstances and in view of the detailed reasonings given by the learned CIT (A) on this issue, we do not find any infirmity in the same. Accordingly, the order of the learned CIT (A) on this issue is also upheld and the grounds raised by the assessee is dismissed.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal filed by the assessee is directed against the order dated 24.02.2014 of the learned CIT (A)-II, Hyderabad, relating to A.Y.2009-10.
2. Facts of the case, in brief, are that the assessee is an individual and derives income from salary, house property and other sources. He filed his return of income on 31.07.2009 declaring total income of Rs.14,87,486/- and agricultural income of Rs.16,12,000/-. The case was selected for scrutiny through CASS and statutory notices u/s 143(2) & 142(1) were issued and served on the assessee to which the A.R of the assessee appeared before the Assessing Officer from time to time and furnished the requisite details.
3. During the course of assessment proceedings, from the details furnished by the assessee, the Assessing Officer noted that the assessee owns 4.3 acres of land at Shamirpet Village and that his son Mayur owns another 3.5 acres of land. It was claimed by the assessee that paddy is grown in this land and that there are teak wood trees adjacent to the agricultural land which were sold. It was accordingly claimed that the assessee has earned agricultural income of Rs.16,12,000/-. However, no proof of sale of agricultural produce was furnished. The Assessing Officer noted that the assessee has claimed Rs.12,53,000/- as income from sale of paddy from a land holding of around 8 acres. According to the Assessing Officer, earning of such huge income from 8 acres of land is unbelievable. He therefore, estimated such income at Rs.20,000/- per acre and determined the agricultural income at Rs.1,60,000/- per annum. So far as the income from teak wood trees which were grown on the boundaries and sold for Rs.3,59,000/- is concerned, the same was rejected by the Assessing Officer in absence of supporting evidence. The Assessing Officer accordingly determined the total agricultural income at Rs.1,60,000/- per annum and made the balance addition of Rs.14,52,000/- treating the same as income from other sources.
4. The Assessing Officer further noted that a survey u/s 133A of the Act was conducted in the case of M/s. Basai Steels & Power (P) Ltd wherein the assessee is the Managing Director and also the head of the promoter’s family. During the survey, certain documents/materials were impounded. From the impounded documents, pages 1, 2 & 5 are ledger account statements of Shri Ramakrishna for the periods June 2008 to May, 2009 which contained details of cash given to Shri Ramakrishna on various dates totaling to Rs.18.28 crores. Similarly, pages 7 & 8 with heading “Account of Gopal Agarwalji (2009) with marking “Ramakrishna Dubai” contained the details for the period 1.1.2009 to 27.05.2009. The contents of these sheets evidenced receipt of amounts in Indian Rupees in Hyderabad and remittances made to Shri Gopal Agarwal and his family members’ Bank Accounts with HDFC Bank & AXIS Bank. The impounded documents were found from the chamber of Shri Gopal Agarwal in assessee’s business premises.
4.1 During the course of survey Shri Piyush Agarwal, s/o Shri Gopal Agarwal stated that these papers relate to transactions in Dubai and Shri Ramakrishna is an employee in Samchira DMCC and that his father Shri Gopal Agarwal could explain the transactions better. Subsequent inquiries from HDFC & AXIS Banks Secunderabad revealed that the credits to Shri Gopal Agarwal and his family member’s Bank Accounts was from “ALROSTMA”, a money exchanger in Dubai. Summons were issued to Shri Gopal Agarwal’s family members for the purpose of examination about the source for the credits into their bank accounts. In response to the same, wife of Shri Gopal Agarwal and his three sons and their spouses have filed affidavits wherein it was deposed that Shri Gopal Agarwal is the only person who is aware of all the transactions in respect of amounts received into their Bank Account at Hyderabad. In the sworn statement recorded from Shri Gopal Agarwal on 13.07.2011, he denied knowledge of the documents (pages 1, 5 & 6) impounded from his chamber and also denied any knowledge about Sri Ramakrishna and gave a vague explanation about the transactions recorded in (pages 7 & 8) which reflected the amounts given at Hyderabad and in turn having remittances in equal amounts in HDFC & AXIS Banks. The Assessing Officer noted from the statement furnished by the HDFC Bank, Secunderabad through letter dated 21.07.2011 that the remitter’s name in all the 88 instances happened to Sri Ramakrishna except on 10 occasions in which Shri Gopal Agarwal was himself the remitter. The assessee also deposed that the amounts credited into HDFC and AXIS Bank accounts represented loans raised from a person in Dubai but had not disclosed the name(s) of the person(s) from whom such loans were raised despite adequate opportunity. In absence of any satisfactory explanation, the Assessing Officer invoked the provisions of section 68 of the I.T. Act and made addition of Rs.14,46,00,000/- to the total income of the assessee, by observing as under:
5. In appeal, the learned CIT (A) confirmed both the additions.
6. So far as the addition of Rs.14,46,00,000/- u/s 68 of the I.T. Act is concerned, the learned CIT (A) confirmed the addition by observing as under:
7.1 It is pertients to mention that appeals in case of Shri Gopal Agrwal , Smt pushpa Agarwal and Smt. Mayur Gopal Agrwal were posted for hearing on 29.08.2012, 11.10.2012, 01.11.2012 12.12.2012 14.06.2013, 19.07.2013, 21.08.2013, 12.09.2013 and 18.12.2013. For all the hearing notices given, either the appellant did not respond or sought for adjournment as the details were to be gathered. On 12.09.2013, the Authorized Representative appeared and sought for adjournment on the ground that enquiries by Enforcement Directorate are pending regarding sources for the foreign remittances sent from Dubai to India. However, the assessment records are obtained from the Assessing Officer and the appeals are finalized based on the information available on record. It is also pertinent to mention that in the cases of company, M/s.Basai Steels & Power Pvt. Ltd., information was submitted by the Authorized Representative, which is relevant for these appeals also. Through written submissions made on 23.12.2011, it was submitted that Shri Gopal Agarwal desired to set up business in Dubai for trading in steel and went to Dubai for finding out suitable customers and partners. In the process, he came to know that the funds are available in Dubai free of interest and raised loans from various parties through Shri Girish Agarwal, a family friend, and his Assistant Shri Ramakrishna had also helped in raising the said loans. These loans were transferred to India through authorized dealers, namely HDFC Bank and Axis Bank to use the funds to set up steel factory at Bellary. It was further explained that all the loans were unsecured loans and interest-free. It is clearly evident, if one compares the replies given by Shri Gopal Agarwal in his statement dated 13.07.2011 and his submissions filed on 23.12.2011, there is marked difference/variation in his submissions. In the statement at Question No.24, a specific query was asked as to what was the rate of interest and repayment schedule, and Shri Gopal Agarwal replied that the details would be submitted before 10.08.2011. If the loans were taken free of interest, if it was truth, he would have said it at the time of recording the statement itself. Further, so far the names, addresses of the lenders is not provided. No details of interest payments were given. Even the principal amount is not repaid in subsequent years. On the other hand, he continued to get the funds from Dubai even for subsequent year without offering any security, without paying any interest. This speaks volumes of the genuineness of the transactions. Further, the dates and amounts of cash given to Shri Ramakrishna tallies exactly with the amounts received from Dubai and credited in HDFC Bank and Axis Bank accounts. It is surprising to note that no submissions were ever made by Shri Gopal Agarwal on this vital aspect. All his replies are silent on this issue. The details of share capital year-wise as furnished by the Authorized Representative are as under:
