Citation Codes

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Case Number

ITA No. 335.Agra/2012, Assessment Year: 2003–04

Advocates

Appellant by: Shri K.K Mishra, Jr. D.R
Respondent by: Shri Pankaj Gargh, Advocate

Judges

Shri Bhavnesh Saini, Judicial Member
Shri A.L Gehlot, Accountant Member

Acts

section 68 of the I.T Act, 1961,

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Smart Summary

Structured Summary of the Opinion — Appeal by Revenue (Assessment Year 2003–04)

Factual and Procedural Background

The appeal arises from an order dated 15.02.2012 of the learned Commissioner of Income Tax (Appeals)-I, Agra (CIT(A)) for Assessment Year 2003–04. The Revenue appealed against deletion by CIT(A) of an addition of Rs. 16,30,408/-, which the Assessing Officer (AO) had made by treating claimed agricultural income as income from other sources.

The assessee declared agricultural income of Rs. 20,23,208/-, comprising Rs. 9,13,312/- as his own agricultural income and Rs. 11,09,895/- claimed for his minor son Pramod Kumar. The AO obtained reports (District Horticulture Officer, Mathura and CPRI, Meerut) and concluded that a reasonable net agricultural income from the potato production shown would be approximately Rs. 50,000/- per hectare, yielding total agricultural income of Rs. 3,92,800/- for land measured at 7.85 hectares, and consequently made an addition of Rs. 16,30,408/-.

In an earlier round, the first appellate authority (CIT(A)) deleted that addition. The Tribunal (ITAT) in ITA No. 147/Agr/2010 dated 30.06.2011 remanded the matter back to CIT(A) because the Departmental Representative had not produced an ITAT order (dated 19.12.2008) relied upon by CIT(A). Following the Tribunal's direction, the CIT(A) re-examined the matter and again deleted the addition. The present order confirms the CIT(A)'s deletion and dismisses the Revenue's appeal.

Legal Issues Presented

Whether the CIT(A) erred in deleting the addition of Rs. 16,30,408/- by treating the amount as agricultural income rather than income from other sources, in light of reports from government agencies and the statement of a witness (Shri Bhupendra Singh).
Whether the Assessing Officer's estimation of net agricultural income at Rs. 50,000/- per hectare (and consequent addition) was justified given the documentary and other evidence presented by the assessee and earlier decisions of the Tribunal.

Arguments of the Parties

Appellant's (Revenue) Arguments

The CIT(A) erred in law and on facts by deleting the AO's addition of Rs. 16,30,408/- which treated the declared agricultural income as income from other sources.
The deletion was improper because the report of two Government Departments (CPRI, Meerut and District Horticulture Officer, Mathura) and the statement of a witness, Shri Bhupendra Singh (an agriculturist), contradicted the assessee's assertions regarding production and yields.

Respondent's (Assessee) Contentions and Evidential Points (as reflected in the record)

The assessee claimed agricultural income of Rs. 20,23,208/- for the year, supported by sales records and verification of sales and cold storage usage (documents and witnesses were produced and verification was undertaken by AO).
The assessee (and CIT(A) on review) relied on earlier ITAT decisions (notably in the case of Shri Jitendra Kumar Agarwal and Shri Shailendra Kumar Agarwal) which accepted higher yields and held that the reports of CPRI and District Horticulture Officer were general and vague and not based on field visits, rendering them unreliable.
The assessee challenged the AO's discrediting of documentary evidence (e.g., cold storage receipts) despite production of verifying persons and documentation.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
ITAT order dated 19.12.2008 in the case(s) of Shri Jitendra Kumar Agarwal (and referenced Shri Shailendra Kumar Agarwal) (Bench: ITAT, Agra)	Held that reports of CPRI and District Horticulture Officer were general, vague and indicative only — not reliable because they were submitted without making a field visit; accepted higher agricultural yields/income per hectare for that assessee.	CIT(A) examined that ITAT order, found the facts of the present case similar, treated the government reports as not reliable for lack of field verification, relied on the ITAT reasoning to accept the assessee's claimed agricultural income and deleted the addition. The Tribunal in the present appeal noted CIT(A)'s reliance on that ITAT order and upheld the deletion.
ITAT order in the case of Shri Shailendra Kumar Agarwal (referenced alongside Jitendra Kumar Agarwal)	Used as a comparandum for assessing per hectare income and supporting acceptance of higher yields in similar factual circumstances.	CIT(A) compared per-hectare computations from that order to the present case and used it to support acceptance of the assessee's declared agricultural income.
Connected case of Murari Lal (as referred in the appellate record)	Recorded acceptance by the same AO of yields of 55.57 tonnes per hectare in that connected case, illustrating prior acceptance of high yields by the AO.	CIT(A) and the Tribunal used the existence of that accepted yield to question consistency in AO's approach and to support the contention that the AO could accept similar high yields in comparable cases; used to bolster the assessee's position that high yields could be accepted.

Court's Reasoning and Analysis

The court reviewed the factual findings of the AO, the appellate history and the re-examination by the CIT(A) pursuant to the ITAT's remand. The analysis proceeded in the following logical steps:

Review of AO's factual basis: The AO had obtained reports from government agencies (CPRI, Meerut; District Horticulture Officer, Mathura) and recorded a statement of a farmer (Shri Bhupendra Singh). On that basis, the AO estimated net agricultural income at Rs. 50,000/- per hectare and made an addition.
Procedural history: CIT(A) originally deleted the addition relying on earlier ITAT orders; the ITAT remanded because the Departmental Representative had not produced the ITAT order relied upon. CIT(A) then re-examined the ITAT order and the case record as directed.
Evaluation of the government reports: CIT(A) found — and the Tribunal accepted — that the reports of CPRI and the District Horticulture Officer were indicative and approximative, prepared without field visits or specific verification of the assessee's land and cultivation conditions, and thus were not sufficiently reliable to displace the assessee's declared figures. The Tribunal noted that the ITAT had previously characterized similar reports as general and vague.
Comparative reasoning with precedents: CIT(A) compared the per-hectare income computed for the assessee with the income per hectare accepted in the ITAT decision in Jitendra Kumar Agarwal (Rs. 2,72,996/- per hectare as computed on the basis of figures shown in that order) and found the assessee's per-hectare figure (computed at Rs. 2,57,569/- per hectare on 7.855 hectares) to be lower. CIT(A) also noted similarity of land and cultivation conditions with other accepted cases (including proximity of lands and cultivation practices).
Assessment of other evidential points: CIT(A) considered AO's verification of sales and cold storage use, and the statement of Shri Bhupendra Singh, finding that the farmer's land and cultivation conditions were not demonstrably similar to the assessee's and that corroborative evidence produced by the assessee (sales verifications, cold storage documentation and the persons producing them) had not been rightly dismissed as unreliable.
Conclusion reached by the appellate authorities: On the totality of the facts, and in light of the ITAT's reasoning that the relevant government reports were general and not conclusive, CIT(A) held that the AO was not justified in treating Rs. 16,30,408/- as income from other sources. The present Tribunal (Accountant Member) reviewed these findings, found CIT(A)'s order consonant with the earlier ITAT decision and the Tribunal's earlier directions, found no contrary material pointed out by the Revenue, and therefore confirmed the CIT(A)'s order.

Holding and Implications

Holding: The appeal filed by the Revenue is DISMISSED.

Implications:

Direct effect: The addition of Rs. 16,30,408/- made by the AO by treating the assessee's declared agricultural income as income from other sources is deleted and the order of the learned CIT(A) confirming deletion is upheld.
Scope: The Tribunal's decision rests on the facts of the case and comparative reliance on prior ITAT findings that certain government reports were general and not based on field verification; the opinion affirms the CIT(A)'s application of those precedents to the present facts. The opinion does not purport to lay down a new legal principle beyond the application of the earlier ITAT findings to these facts.

Note: This summary has been prepared strictly from the text of the provided opinion. No information outside that text has been added or inferred.

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Asstt. Commissioner Of Income Tax-3, Mathura v. Shri Banwari Lal Agrawal, 57, Holi Wali Gali, Mathura .

A.L Gehlot, Accountant Member:— This is an appeal filed by the Revenue against the order dated 15.02.2012 passed by the ld. CIT(A)-I, Agra for the Assessment Year 2003–04.

2. The Revenue has raised the following effective ground of appeal:—

“That the learned Commissioner of Income Tax (Appeals)-1, Agra has erred in law and on the facts of the case in deleting the addition of Rs. 16,30,408/- made by treating agricultural income as income from other sources as envisaged in section 68 of the I.T Act, 1961, without appreciating the facts that the report of two Government Departments and the statement of a witness Shri Bhupenda Singh, agriculturist were contrary to the assessee's assertions.”

3. The brief facts of the case are that the assessee has claimed agricultural income of Rs. 20,23,208/- i.e his own agricultural income of Rs. 9,13,312/- and of minor son Pramod Kumar Rs. 11,09,895/-. The A.O made enquiry from District Horticulture Officer, Mathura and found that reasonableness of agricultural income from the production of potato crop is from 250 to 400 quintals per hectare depending upon the whether condition, fertilizer, adequate quality/quantity of seed and timely sowing of crop. After allowing expenditures, agricultural income is estimated at Rs. 41,826/-. The A.O after considering assessee's submission found that the net possible agricultural income should be Rs. 50,000/- per hectare from production of potato shown. The net agricultural income during the A.Y 2003–04 is Rs. 2,89,000/-. The A.O adopted rate of Rs. 50,000/- per hectare and calculated total agricultural income holding the agricultural land of self and minor measuring at 7.85 hectares of which calculation comes to Rs. 3,92,800/- as against Rs. 20,23,200 shown by the assessee. The A.O accordingly made the addition of Rs. 16,30,408/- accepting the agricultural income @ Rs. 50,000/- per hectare.

4. In original round of litigation, the CIT(A) deleted the addition against which the Revenue filed appeal before the Tribunal and sent back the matter to the file of CIT(A) in ITA No. 147.Agr/2010 vide order dated 30.06.2011 The relevant finding of the I.T.A.T is reproduced as under:—

“4. The ld. Departmental Representative relied upon the order passed by the Assessing Officer. Regarding the grievance of the Department on the deletion in dispute, the Bench has asked the ld. Departmental Representative to supply the order dated 19.12.2008 passed by this Bench in the case of Jitendra Kr. Agarwal and Shailendra Kr. Agarwal, which has been mentioned by the ld. CIT(A) in the impugned order at paragraph nos. 8 & 9 and deleted the addition in dispute, but he failed to produce the same. We are of the view that this is the only main evidence relied by the CIT(A) in deleting the addition in dispute and the same is not available with the ld. Departmental Representative. In absence of the same, we feel difficulty to decide the issue in dispute. Even the CIT(A) has also not given full particulars of the ITA numbers and Assessment Years relating to the order passed by the ITAT, Agra dated 19.12.2008 The assessee is also not interested to prosecute the matter. Therefore, in the interest of justice, we set aside the impugned order to the ld. First Appellate Authority to decide the issue in dispute afresh under law after giving opportunity to the assessee and mentioning the details of orders relied in the impugned order.”

5. In compliance to the directions of the I.T.A.T, the CIT(A) deleted the addition as under:— (Page nos. 12, 13, 14 & 15)

“After discussing the facts of the case of Shri Jitendra Kumar Agarwal, now it has been examined whether the fact of the case of the assessee in present appeal is similar to the above facts. I have found that similar to the fact of the case of Jitendra Kumar Agarwal, in case of the assessee in the present appeal, the AO has called for report of CPRI, Meerut and District Horticulture Officer, Mathura. The report of both the Government agencies in this case has also been found to be a indicative report and it has been mentioned in these report that the value given by them are approximate as it was observed by the Hon'ble ITAT, Agra in case of Jitendra Kumar Agarwal being general and vague in nature. As the report of CPRI, Meerut and District Horticulture Officer, Mathura was submitted without visiting the field of the assessee to find out the actual condition under which the potatoes were grown by him and the number of crop were produced, whether it was single crop or multiple crop, these reports are not reliable as held by the Hon'ble ITAT in case of Jitendra Kumar Agarwal. In the assessment order, the AO has not brought any evidence on record except a general report of CPRI and District Horticulture Officer, Mathura and one statement of a farmer to show that the production shown by the assessee was less than what was shown by him. Even after making verification of the sale of potatoes as shown by the assessee, these sales were in general got verified as discussed in the assessment order and as discussed by my predecessor CIT(A)-I, Agra in her order dated 18.2.2010 also. Even after getting the sales of the assessee verified, the AO found that these sales were made to distant place as Ajmer, Bombay, Jaipur etc. and hence, he concluded that such situation indicates something suspicious on the part of the assessee and therefore, he did not accept the details of sales shown by the assessee. The AO has even verified the storage of potatoes in Cold Storage, which was got duly verified after producing the person who was running the cold storage but noticing certain discrepancies in the payment of rent, he did not rely on the documentary evidence of cold storage produced before him. As regards to the statement of one farmer Shri Bhupendra Singh, it has been found that his land is not near to the land of the assessee and also, it has not been shown by the AO that the potatoes were being cultivated in the land of Shri Bhupendra Singh under the similar condition and growing the same number of crops as it was being done by the assessee. I have also found that as against the income of Rs. 85,000/- to Rs. 90,000/- per hectare admitted by Shri Bhupendra Singh, the income of Shri Jitendra Kumar Agarwal is coming to Rs. 2,72,996/- per hectare by growing multiple crop of potatoes and the same has been accepted by the Hon'ble ITAT, Agra. While accepting the income shown by Shri Jitendra Kumar Agarwal, the Hon'ble ITAT, Agra has also observed that in connected case of Murari Lal, yields of 55.57 ton per hectare was accepted by the same AO, therefore, question arises if the yield of 55.57 ton per hectare in case of Murari Lal is accepted by the AO, why it cannot be accepted in other cases like in case of Jitendra Kumar Agarwal and in case of the present assessee. It has also been explained to me that the land of Shri Banwari Lal Agarwal (assessee in the appeal) and Shri Jitendra Kumar Agarwal are nearby and they are being cultivated in the similar condition of growing multiple crop of potatoes. Therefore, I find that the facts of the case of Banbwari Lal (the assessee in this appeal) are similar to the facts of case of Shri Jitendra Kumar Agarwal rather than being similar to the facts of Shri Bhupendra Singh, which is the only one statement recorded by the AO but that may not be relevant for the case of the assessee (appellant). Other evidence in form of the report of CPRI, Meerut and District Horticulture Officer, Mathura collected by the AO has already been held as general and vague in nature by the Hon'ble ITAT Agra in case of Jitendra Kumar Agarwal and hence, in the case of assessee also, these reports cannot relied upon.

8.2 There are certain minor computation errors in computation of yield in the appeal order of my predecessor and the same has been pointed by the Ld. AR in his written submission. Before, finally deciding the issue in dispute in this case, these computation errors are also discussed here. As far as the income per hectare computed by the assessee in the case of Jitendra Kumar Agarwal coming to Rs. 2,72,996/- after taking area of land 3.117 hectare and total agriculture income of Rs. 8,50,997/- as against the area of 3.117 hectare and total agriculture income of Rs. 10,86,610/- taken by my predecessor Ld. CIT(A)-I, Agra in her order dated 18.02.2010 is concerned, I find that the Ld. AR is correct in pointing out the mistake because the income of Rs. 8,50,997/- has been mentioned in the order of Hon'ble ITAT in case of Jitendra Kumar Agarwal. Therefore, on the basis of figure of area and agriculture income mentioned by the Ld. AR in his written submission, correct amount of income per hectare would come to Rs. 2,72,996/-. Similarly in case of Shailendra Kumar Agarwal after comparing figure of area and total agriculture income taken from the order of Hon'ble ITAT passed in case of Shailedndra Kumar Agarwal, I find that the Ld. AR has correctly computed income per hectare at Rs. 2,19,044/-. As regards to the measurement of area of the assessee, mentioned by the Ld. AR as 9.459 hectare as against 7.855 hectare written in the order of my predecessor ld. CIT(A)-I, Agra in her order dated 18.2.2010 is concerned, I have verified from the case record and found that even the AO has computed the land holding of the assessee as 7.855 hectare. Therefore, I have not found any discrepancy in the land holding as mentioned in the assessment order and as mentioned in the order of CIT(A). However, despite taking the measurement of land at 7.855 hectare, the income of the appellant per hectare would come to Rs. 2,57,569/- (20,23,269/7.855) which is still less than income per hectare computed in case of Jitendra Kumar Agarwal.

8.3 In view of above findings, if under similar condition of cultivation of potatoes, the income shown by Shri Jitendra Kumar Agarwal has been accepted by the Hon'ble ITAT, Agra, I find that the agricultural income shown by the assessee in present appeal should also be acceptable as held by my predecessor Ld. CIT(a)-I, Agra in her order dated 18.02.2010 After examining all the facts of the assessee in the present appeal and facts of the case of Shri Jitendra Kumar Agarwal as discussed in para no. 7 and taking into account the decision of the Hon'ble ITAT, Agra that the report of CPRI is general report, which is not justified in law, I hold that the AO is not justified in treating the amount of Rs. 16,30,408/- as income from other sources, which was shown by the assessee a agriculture income and therefore, the addition of Rs. 16,30,408/- a as income from other source is deleted as decided by my predecessor CIT(A)-I, Agra also, therefore, the issue in dispute is decided in favour of the assessee.”

6. We have heard the ld. Representatives of the parties and records perused. This is second round of litigation. In the first round of litigation, the I.T.A.T in ITA No. 147.Agr/2010 vide order dated 30.06.2011 sent back the matter to the file of CIT(A), the relevant finding has been reproduced in paragraph no. 4 of this order. On perusal of direction of the I.T.A.T in earlier round of litigation, we notice that the CIT(A) in the first round of litigation while deleting the addition followed the order of I.T.A.T in case of Shri Jitendra Kumar Agarwal and Shri Shailendra Kumar Agarwal. Since the ld./Departmental Representative failed to produce order dated 19.12.2008 passed by I.T.A.T in the case of Shri Jitendra Kumar Agarwal and Shri Shailendra Kumar Agarwal which has also been mentioned by the CIT(A) in his order at para nos. 8 & 9 before deleting the addition and the mater was sent aback to the file of CIT(A). Thus, the direction of the I.T.A.T in earlier round of litigation was to decide the issue in accordance with order of I.T.A.T dated 19.12.2008 in the case of Shri Jitendra Kumar Agarwal and Shri Shailendra Kumar Agarwal. We notice that the CIT(A) in the impugned order examined the order of I.T.A.T in case of Shri Jitendra Kumar Agarwal and found that the facts of the case under consideration and the facts of the case of Shri Jitendra Kumar Agarwal was similar. The CIT(A), after considering the order of I.T.A.T in case of Shri Jitendra Kumar Agarwal, found that the agricultural income shown by the assessee in the present appeal should also be acceptable. The CIT(A) has also held that the A.O is not justified in treating the amount of Rs. 16,30,408/- as income from other sources which was shown by the assessee as agricultural income. The CIT(A) has also examined the estimation of the agricultural income per hectare and found that the assessee was holding 7.855 hector agricultural land and estimated agricultural income of Rs. 2,57,569/- per hectare. In the case under consideration which is still less than the income per hectare computed in case of Shri Jitendra Kumar Agarwal. The order of CIT(A) is in consonance with the order of I.T.A.T in the case of Shri Jitendra Kumar Agarwal and direction given by I.T.A.T in first round of litigation. The Revenue has failed to point out any contrary material. We, therefore, do not find any infirmity in the order of CIT(A). Order of CIT(A) is confirmed.

7. In the result, appeal filed by the Revenue is dismissed.

Asstt. Commissioner ... v. Shri Banwari Lal Agr...