Sunil Kumar Ahuja Vs ACIT (ITAT Hyderabad)
ITAT Hyderabad held that CIT(A) wrongly deleted the addition as nature of entries found in the cash book which were not recorded in the day book was not considered.
Facts- During the course of assessment proceedings, on verification of the cash book and daybook, AO noted that number of cash receipt received as per cash book are not reflecting in the day book.
AO, therefore, asked the assessee to explain the discrepancies. The assessee explained that there are mistakes in daybook and cashbook originally submitted and filed another cash book. However, AO rejected the explanation of the assessee and treated the cash receipts appeared in the cash book as above as unaccounted income and added an amount of Rs.2,44,14,000/- to the income of the assessee u/s 68 of the I.T. Act. In appeal, the learned CIT (A) deleted the addition.
Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that the ld.CIT(A) in our opinion without considering the nature of the entries found in the cash book which were not recorded in the day book, deleted the addition which is not justified. In our opinion, there is a difference between the introduction of cash as “other income” whenever there is deficiency in cash book and income from “profit on sale of land” not recorded in the books of accounts. Under these circumstances, we are of the considered opinion that the ld.CIT(A) is not justified in deleting the addition of Rs.2,44, 14,000/-.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
The above two appeals are cross appeals and are directed against the order dated 28.02.2022 of the learned CIT (A)-1 1, Hyderabad, relating to A.Y.2010-1 1. For the sake of convenience, these were heard together and are being disposed of by this common order.
ITA 158/Hyd/2022 – (Assessee)
2. Grounds raised by the assessee are as under:
“1. The order of the learned CIT (A) is erroneous to the extent is prejudicial to the appellant.
2. The learned CIT (A) erred in confirming the addition made by the Assessing Officer towards agricultural income of Rs. 12,09,000/-.
3. Any other ground/grounds that may be urged at the time of hearing”
3. Ground of appeal 1 & 3 being general in nature are dismissed.
4. Ground of appeal No.2 relates to the order of the CIT (A) in confirming the addition of Rs. 12,09,000/- by the Assessing Officer treating the agricultural income as income from other sources.
4.1 So far as the treatment of agricultural income of Rs. 12,09,000/- as “income from other sources” is concerned, the facts, in brief, are that the Assessing Officer disbelieved the agricultural income declared by the assessee on the ground that the assessee has not booked any income for agricultural activities. The receipts come to the books at regular intervals but there is no outgo and the assessee was not able to produce any evidence of carrying out of any agricultural activities other than its possession of the agricultural land. He compared the treatment of such agricultural income as other income in the past years and accordingly treated the amount of Rs. 12,09,000/- as income from other sources which has also been confirmed by the CIT (A).
Aggrieved with such order, the assessee is in appeal before the Tribunal.
5. We have heard the rival arguments made by both sides. We find an identical issue had come up before the Tribunal in assessee’s own case in the preceding A.Ys. We find the Tribunal in ITA Nos. 151 to 153/Hyd/2022, order dated 8.7.2022 while deciding the identical issue has granted partial relief to the assessee wherein the benefit of agricultural income of Rs.25,000/- for the A.Y 2003-04, Rs30,000/- for the A.Y 2004-05 and Rs.35,000/- for the A.Y 2005-06 were granted by observing as under:
“9. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT (A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs.81,485/- treating the same as income from other sources as against agricultural income declared by the assessee. Similar additions have been made for the A. Y 2004-05 amounting to Rs. 90,861/- and for A. Y 2005-06 Rs.95,377/-. We find the learned CIT (A) upheld the action of the Assessing Officer the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the learned Counsel for the assessee that since the assessee is holding 38.86 acres of agricultural land which is not in dispute, therefore, some benefit of agricultural income should be given to the assessee.
10. We find some force in the above argument of the learned Counsel for the assessee. Holding of 38.86 acres of agricultural land by the assessee is not in dispute since the learned CIT (A) has given a finding on this issue. However, the allegation of the Revenue is that the assessee failed to produce any evidence regarding the expenditure towards carrying out of such agricultural activities by him, the yield of flowers and vegetables and the sale of such products in the market. At the same time, holding of 38.86 acres of agricultural land is not in dispute. Therefore, in our opinion, some agricultural income should be made available to the assessee. On being a pointed query by the Bench at the time of hearing, the learned Counsel for the assessee submitted that the land is situated at Kurnool and rainfed. Therefore, considering the totality of the facts of the case and in the interest of justice, the benefit of Rs.25,000/- for the A.Y 2003-04, Rs.30,000/- for the A. Y 2004-05 and Rs.35,000/- for the A. Y 2005-06, as agricultural income, in our opinion, will meet the ends of justice. We hold and direct accordingly. The order of the learned CIT (A) for the above 3 years are accordingly modified and the Assessing Officer is directed to give the benefit of agricultural income of Rs.25, 000/- for A. Y 2003-04, Rs.30,000/- for the A. Y 2004-05 and Rs.35,000/- for the A. Y 2005-0 6 respectively. Grounds raised by the assessee are thus partly allowed”.
6. Similarly, the Tribunal following the above order has given the benefit of Rs. 45,000/- as agricultural income for the AY 2007-08. Respectfully following the order of the Tribunal in assessee’s own case for the preceding years, we are of the considered opinion that an amount of Rs.60,000/- may reasonably be estimated as agricultural income for the impugned Y . We accordingly modify the order of the CIT (A) and direct the Assessing Officer to give benefit of Rs.60,000/- as agricultural income and the balance amount is to be treated as “income from other sources”. Ground of appeal No.2 by the assessee is accordingly partly allowed.
7. In the result appeal filed by the assessee is partly allowed.
ITA No. 178/Hyd/2022 (Revenue)
8. Grounds raised by the Revenue are as under:
“1. The Ld. CIT(A) erred both in law and on facts of the case in allowing relief to the assessee.
2. The Ld. CIT(A) erred in deleting the addition of 2,44, 14,000/- towards cash receipts recorded in cash book but not reflected in the day book.
3. The Ld. CIT(A) erred in concluding that the income of 2,44, 14,000/- is included in the ‘other income’ of Rs.3,67,00,000/- admitted by the assessee in his return though the dates of the transactions relating to both are different.
4. The Ld. CIT(A) erred in deleting the addition of 5,08,48,600/ -towards undisclosed investment being amount reflected in the books of account of one Sri OSS Prasad but not reflected in the books of the assessee.
5. The Ld. CIT(A) erred in accepting the assessee ‘s explanation that he had paid totally Rs. 7,67,55,400/- to Sri OSS Prasad and his concerns which includes 5,08,48,600/- ignoring the fact that as per the details furnished, the amount paid to Sri OSS Prasad was only Rs. 92,53,300/-
6. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary.”
9. Grounds of appeal 1 & 6 being general in nature are dismissed.
10. Ground of appeal No.2 by the Revenue relates to the order of the CIT (A) in deleting the addition of Rs.2,44, 14,000/-
11. Facts of the case, in brief, are that the assessee filed original return of income on 30.10.2010 declaring total income of Rs.66,55,790/- and agricultural income of Rs. 12,09,000/-. He filed the revised return of income on 30.03.20 12 declaring total income at Rs.4,25,60,720/- and Rs.12,09,000/-. The return was processed u/s. 143(1) and subsequently, the case was selected for scrutiny. Statutory notices u/s. 143(2) and 142(1) were issued to which the AR of the assessee appeared before AO and filed replies.
11.1 During the course of assessment proceedings, the AO noted that the assessee has offered additional income of Rs.3,67,00,000/-, the details of which are as under:
