The ITO, Vapi Ward-3, Vapi v. Shri C J Rathod ( Ind ), Silvassa

ITA 2022/AHD/2002 | 1997-1998
Pronouncement Date: 22-02-2010 | Result: Dismissed

Appeal Details

RSA Number 202220514 RSA 2002
Assessee PAN AACHC1270L
Bench Ahmedabad
Appeal Number ITA 2022/AHD/2002
Duration Of Justice 7 year(s) 8 month(s) 11 day(s)
Appellant The ITO, Vapi Ward-3, Vapi
Respondent Shri C J Rathod ( Ind ), Silvassa
Appeal Type Income Tax Appeal
Pronouncement Date 22-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 22-02-2010
Date Of Final Hearing 16-02-2010
Next Hearing Date 16-02-2010
Assessment Year 1997-1998
Appeal Filed On 11-06-2002
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH JUDICIAL MEMBER AND SHRI A.N.PHAUJA ACCOUNTANT MEMBER ITA NO.2022 2023 2151/AHD/2002 ASSESSMENT YEAR:1997-98 DATE OF HEARING:16.2.10 DRAFTED:16.2.10 INCOME TAX OFFICER VAPI WARD-3 VAPI INCOME-TAX OFFICE AJIT NAGAR CHALA VAPI INCOME TAX OFFICER VAPI WARD-3 VAPI INCOME-TAX OFFICE AJIT NAGAR CHALA VAPI SHRI C. J. RATHOD (HUF) AT & POSTNAROLI SILVASSA U.T. OF DAMAN & NAGAR HAVALI PAN NO. AACHC1270L V/S. V/S. V/S. C.J. RATHOD (INDL) AT & POST : NAROLI DADRA & NAGAR HAVELI SILVASSA C.J. RATHOD (INDL) AT & POST : NAROLI DADRA & NAGAR HAVELI SILVASSA INCOME TAX OFFICER WARD-3 VAPI (APPELLANT) .. (RESPONDENT) ITA NO.1285/AHD/2006 & C.O. NO.178/AHD/2006 ASSESSMENT YEAR: 1995-96 INCOME TAX OFFICER WARD-1 VAPI AJIT NAGAR CHALA VAPI SHRI C.J. RATHOD (HUF) AT & POST. NAROLI SILVASSA U.T. OF DADRA & NAGAR HAVELI V/S. V/S. C. J. RATHOD (HUF) SHRI C.J. RATHOD KATRA OF HUF AT & POST NAROLI U.T. OF DADRA & NAGAR HAVELI PAN NO.AACHC1270L INCOME TAX OFFICER VAPI WARD-1 AJIT NAGAR CHALA VAPI GUJARAT (APPELLANT) .. (RESPONDENT) ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 2 ITA NO.1286/AHD/2006 & C.O. NO.179/AHD/2006 ASSESSMENT YEAR:1996-97 INCOME TAX OFFICER WARD-1 VAPI AJIT NAGAR CHALA VAPI SHRI C.J. RATHOD (HUF) AT & POST. NAROLI SILVASSA U.T. OF DADRA & NAGAR HAVELI V/S. V/S. C. J. RATHOD (HUF) SHRI C.J. RATHOD KATRA OF HUF AT & POST NAROLI U.T. OF DADRA & NAGAR HAVELI PAN NO.AACHC1270L INCOME TAX OFFICER WARD-1 VAPI AJIT NAGAR CHALA VAPI (APPELLANT) .. (RESPONDENT) ITA NO.2301/AHD/2006 & C.O. NO.2/AHD/2007 ASSESSMENT YEAR:2003-04 INCOME TAX OFFICER WARD-1 VAPI AJIT NAGAR CHALA VAPI SHRI C.J. RATHOD (HUF) AT & POST. NAROLI SILVASSA U.T. OF DADRA & NAGAR HAVELI V/S. V/S. C. J. RATHOD (HUF) SHRI C.J. RATHOD KATRA OF HUF AT & POST NAROLI U.T. OF DADRA & NAGAR HAVELI PAN NO.AACHC1270L INCOME TAX OFFICER WARD-1 VAPI AJIT NAGAR CHALA VAPI (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI MEHUL K PATEL & SHRI GOPAL KRISHNAN AIYER AR REVENUE BY:- SHRI C.K. MISHRA SR-DR O R D E R ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 3 PER BENCH:- THESE FIVE APPEALS BY THE REVENUE ONE APPEAL AND THREE CROSS OBJECTIONS (COS) BY THE ASSESSEE ARE ARISING OUT OF DIFFERENT ORDERS OF COMMISSIONER OF INCOME-TAX (APPEALS)-V SURAT. THE RELEVANT ASSESSM ENT YEARS INVOLVED ARE 1995- 96 1996-97 1997-98 AND 2003-04 IN THESE APPEALS A ND COS. 2. THE FIRST COMMON ISSUE IN THESE APPEALS OF THE R EVENUE IS AGAINST THE ORDER OF CIT(A) IN TREATING THE ADDITION IN THE STATUS OF HUF ON SUBSTANTATIVE BASIS AND ACCEPTING THE STATUS OF HUF. THIS ISSUE IN THE COS OF THE ASSESSEE IS SUPPORTIVE OF THE ORDER OF CIT(A). 3. THE BRIEF FACTS LEADING TO THE ABOVE COMMON ISSU E IN THESE APPEALS (IN ITA NO.2203/AHD/2002 ARE THE NOTICES U/S.148 OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS ISSUED ON THE ASSESSE E HUF IN THE STATUS OF HUF FOR THE YEARS UNDER CONSIDERATIONS AS ALSO FOR THE YEARS 19 87-88 TO 1996-97. THE ASSESSEE FILED RETURNS OF INCOME IN RESPONSE TO NOTICE U/S.1 48 OF THE ACT DECLARING AGRICULTURAL INCOME AND DIARY INCOME ACCOMPANIED BY COMPUTATION OF INCOME AND RECEIPTS AND PAYMENTS ACCOUNT FOR THE RESPECTIVE PERIODS. THE A SSESSEES NATURE OF INCOME IS FROM DIARY FARMING AND AGRICULTURAL. THE ASSESSMENT S U/S.143(3) R.W.S. 147 OF THE ACT WAS FRAMED BY THE DCIT CIRCLE-1 VAPI ACCEPTING TH E STATUS OF ASSESSEE AS HUF BY ACCEPTING ASSESSEES AGRICULTURAL INCOME AND FROM D IARY FARMING AS IT IS BUT ONLY BY MAKING CERTAIN DISALLOWANCE OF UNEXPLAINED EXPENDIT URE ON ACCOUNT CONVEYANCE REPAIR & MAINTENANCE AND MISCELLANEOUS EXPENSES AS NOT RELATED TO AGRICULTURAL ACTIVITY VIDE ORDER DATED 28-03-2000. AGGRIEVED AG AINST THE ASSESSMENT ORDERS THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A) FOR ALL THE TEN ASSESSMENT YEARS I.E. 1987- 88 TO 1996-97 CHALLENGING THE DISALLOWANCE OF AGRI CULTURAL EXPENSES AT 50%. THE CIT(A) DISMISSED THE APPEALS OF THE ASSESSEE FOR AL L THESE ASSESSMENT YEARS BY A COMMON ORDER VIDE ORDER DATED 26-12-2000. AGGRIEVE D THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE CONS OLIDATED ORDER FOR ALL THESE 10 ASSESSMENT YEARS SET ASIDE THE ISSUE OF DISALLOWANC E OF AGRICULTURAL EXPENSES TO THE FILE OF THE ASSESSING OFFICER FOR RE-EXAMINATION AF TER PROVIDING OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 4 4. THE ASSESSING OFFICER IN THE SECOND ROUND FRAMED THE ASSESSMENT WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL. DURING SECOND ROUND THE ASSESSING OFFICER RAISED THE ISSUE OF STATUS OF HUF BY STATING THAT R ETURN OF INCOME FOR AND FROM ASSESSMENT YEARS 1987-88 TO 1996-97 WERE FILED BY T HE ASSESSEE IN THE STATUS OF HUF AFTER CBI INQUIRIES IN JANUARY 1996 AND PRIOR TO THAT NO RETURN IN THE STATUS OF HUF WERE FILED BY THE ASSESSEE. IT WAS ALSO NOTED BY THE ASSESSING OFFICER THAT NO LIST OF COPARCENERS WERE ATTACHED WITH THE RETURN O F INCOME AND EVEN THE DATE OF FORMATION OF HUF IS NOWHERE INDICATED OR NO EVIDENC E WERE FILED FOR THE SAME. HE ALSO NOTED THAT NO PROOF THAT THIS PROPERTY IS ANCE STOR IS FILED AND THE ASSESSEE IS FAILED TO FILE DETAILS OF LAND BELONGING TO HUF OR THAT SHRI C.J. RATHOD PUT HIS PROPERTY IN THE COMMON POOL OF THE HUF OR THAT THE HUF SIGNI FIES A GROUP AND THEREFORE ESSENTIALLY THERE IS PLURALITY OF PERSONS. FINALLY HE NOTED IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 1997-98 WHICH IS A LEAD MATTER WHICH READS AS UNDER:- 5. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO S HOW AS TO WHO ARE THE OTHER COPARCENER OF THE HUF. A SINGLE PERSON CANNOT BE TREATED AS A HUF FOR THE PURPOSE OF THE I.T. ACT. A FAMILY HUF SIGNIFIES A GROUP AND IS THEREFORE ESSENTIAL THAT THERE SHOULD BE A PLURALITY OF PERSO NS. VIRTUALLY THE HUF IS FIRMED AFTER THE INQUIRIES WER E INITIATED AGAINST THE RATHOD GROUP TO CARRY OUT THE NECESSARY ADJUSTMENTS OF UND ISCLOSED INCOME AND ASSETS ACQUIRED BY THE FAMILY MEMBERS. TE STATUS CLAIMED BY THE ASSESSEE OF HUF IS THEREFO RE REJECTED AND THE INCOME WHICH IS ASSESSED AND TAXED IN THE HANDS OF SHRI C.J. RATHOD (INDIVIDUAL) ON SUBSTANTIVE BASIS AND IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. ACCORDINGLY THE ASSESSING OFFICER ASSESSED THE ASS ESSEE HUF ON PROTECTIVE BASIS AND SUBSTANTATIVE ADDITION WAS MADE IN THE HANDS OF INDIVIDUAL. AGGRIEVED THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 5. THE CIT(A) ALLOWED THE STATUS OF HUF AND DIRECTE D THE ASSESSING OFFICER THAT ANY ADDITION IS TO BE TAXED ON SUBSTANTATIVE BASIS IN THE HANDS OF HUF AND NOT IN THE INDIVIDUAL STATUS. FOR THIS THE CIT(A) HELD IN PARA-18.6 TO 18.8 AS UNDER:- 18.6 I HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS OF THE APPELLANT AND ALSO THE FACTS MENTIONED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER I AM OF THE VIEW THAT ASSESSING OFFICER HAS SNOT BROUGHT OU T SUFFICIENT AND CONVINCING REASONS IN THE ASSESSMENT ORDER TO DENY THE CLAIM O F THE STATUS OF THE ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 5 APPELLANT AS HUF. THE STATUS OF HUF APPEARS TO HAVE BEEN REJECTED MERELY ON TECHNICAL GROUNDS. 18.7 THE CERTIFICATE OF MAMLATDAR SUBMITTED BY THE APPELLANT SUPPORTS THE CONTENTION OF THE APPELLANT AND BESIDES ITS VERACI TY HAS ALSO NOT BEEN QUESTIONED BY THE ASSESSING OFFICER. THUS I AM OF THE VIEW THAT ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE STATUS O F HUF. 18.8 IN VIEW OF THESE FACTS OF THE CASE THE INCOME IN THE HANDS OF THE APPELLANT SHRI C.J. RATHOD (HUF) IS TO BE TAXED ON SUBSTANTIVE BASIS AND NOT ON PROTECTIVE BASIS. AGGRIEVED THE REVENUE CAME IN SECOND APPEAL BEFORE US. 6. BEFORE US THE LD. SR-DR SHRI C.K. MISHRA ARGUED ON BEHALF OF THE REVENUE. HE STATED THAT THE TRIBUNAL HAS SET ASIDE THE ORIGI NAL ASSESSMENT AS THERE WAS NO EXAMINATION OF THE CHARACTER OF INCOME AND EXPENDIT URE AND ACCORDING TO HIM THE INVESTIGATION INTO THE STATUS OF THE ASSESSEE WHET HER THE SAME IS HUF OR INDIVIDUAL HAS RIGHTLY BEEN ASSESSED BY THE ASSESSING OFFICER IN THE CASE OF HUF ON PROTECTIVE BASIS AND ON SUBSTANTATIVE BASIS IN INDIVIDUAL. HE REFERRED TO THE TRIBUNALS ORDER IN THE FIRST ROUND THAT THE ASSESSEE FAILED TO INDICAT E SATISFACTORILY THE SOURCE OF EXPENDITURE AND EVEN THE TRIBUNAL HAS RECORDED THAT HOW MUCH THE AGRICULTURAL LAND HOLDING OF THE ASSESSEE AND THE ASSESSING OFFICER W AS DIRECTED TO EXAMINE THE SAME WITH REFERENCE TO REVENUE RECORDS. AS THIS WA S NOT DONE THE TRIBUNAL SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFIC ER. ACCORDING TO THE LD. SR-DR THE ASSESSING OFFICER IN THE SECOND ROUND HAS CORRECTLY EXAMINED THE STATUS OF THE ASSESSEE AND FOUND THAT THERE IS NO PROOF THAT THIS PROPERTY BELONGS TO THE ANCESTRAL OF THE ASSESSEE SO AS TO BECOME AN HUF PROPERTY. A CCORDING TO HIM THE AO HAS RIGHTLY REJECTED THE CLAIM OF THE ASSESSEE TO BE AS SESSED IN HUF STATUS AND EVEN THE ASSESSEE HAS FILED ITS RETURNS OF INCOME FOR 10 YEA RS AFTER CBI INQUIRIES IN JANUARY 1996 AND HE STRESSED THAT EVEN THE DATE OF FORMATIO N OF HUF WAS NOT INDICATED NOR EVIDENCED WAS FILED FOR THE SAME. HE STRONGLY AGIT ATED TO THE ORDER OF CIT(A) AS HE HAS DECIDED ON THE BASIS OF PHOTO COPY OF MAMLATDAR CERTIFICATE EVIDENCING INHERITANCE OF LAND AND THIS CERTIFICATE IS NOT CON CLUSIVE THAT THE LAND BELONGS TO HUF. IN VIEW OF THESE ARGUMENTS THE LD. SR-DR URGED THE BENCH TO CONFIRM THE ORDER OF THE ASSESSING OFFICER. ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 6 7. ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE SHRI MEHUL K PATEL FIRST OF ALL STARTED HIS ARGUMENT BY REFERRING TO ASSESSEE S PAPER BOOK PAGE-26 WHERE HE HAS TAKEN US TO ASSESSMENT ORDERS ORIGINALLY PASSED BY THE ASSESSING OFFICER. HE STATED THAT THE ASSESSEE HAS FILED RETURNS OF INCOM E IN RESPONSE TO NOTICE U/S.148 OF THE ACT ISSUED IN THE CAPACITY OF HUF AND NOT INDIV IDUAL. HE STATED THAT THE ASSESSEE HAS FILED 7 X 12 EXTRACTS OF AGRICULTURAL LANDS OWNED BY THE ASSESSEE AND A CERTIFICATE FROM THE MAMLATDAR OF SILVASSA STATING THAT THE ASSESSEE HAS INHERITED PIECES OF AGRICULTURAL LAND TOTALLY ADDITION MEASUR ING 4 HECTARES AND 5 ACRES. ACCORDING TO THE LD. COUNSEL ONCE THE ASSESSING OF FICER HAS ACCEPTED THE STATUS OF ASSESSEE AS HUF AND WHICH WAS NOT CHALLENGED EITHER BY THE REVENUE OR BY THE ASSESSEE IN APPELLATE PROCEEDINGS IN THE SET ASIDE ASSESSMENTS THE ASSESSING OFFICER HAS NO POWER TO ENQUIRE INTO THE STATUS AND CHANGE THE STATUS FROM HUF TO INDIVIDUAL. HE ALSO TAKEN US TO THE TRIBUNALS ORDE R SETTING ASIDE THE ASSESSMENT DATED 04-04-2003 AND STATED THAT THE ISSUE BEFORE T HE TRIBUNAL WAS ONLY RESTRICTED TO DISALLOWANCE OF EXPENSES TO THE EXTENT OF 50% OF TO TAL EXPENDITURE MADE ON ACCOUNT OF AGRICULTURAL ACTIVITIES. HE READ OUT THE TRIBUN ALS ORDER FINDINGS IN PARA-3 & 4 . HE ALSO REFERRED THE CASE LAW OF HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT V. STEEL CAST CORPORATION (1977) 107 ITR 683 (GUJ) AND IN THE CASE OF NITIL P SHAH ALIAS MODI (2005) 276 ITR 411 (GUJ). HE STATED THAT THE JURIS DICTIONAL HIGH COURT IS EXACTLY ON THE SAME POINT. ACCORDINGLY HE URGED THAT THE R EVENUES APPEAL BE DISMISSED ON THIS COMMON ISSUE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. FIRST OF ALL IT IS ADM ITTED FACT THAT THE REVENUE HAS ISSUED NOTICE U/S.148 OF THE ACT IN THE STATUS OF H UF TO THE ASSESSEE FOR ALL 10 YEARS. THE ASSESSING OFFICER HAS EXAMINED THIS ISSUE THAT THE ASSESSEE IS CARRYING OUT THE ACTIVITY OF DIARY FARMING AND AGRICULTURE. THE ASSE SSEE WAS ALSO ASKED DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS TO FURNIS H THE DETAILS OF LAND OWNED BY THE ASSESSEE AND IN RESPONSE TO THIS THE ASSESSEE FILED COPIES OF REVENUE RECORD I.E. 7 X 12 EXTRACT AGRICULTURAL LAND OWNED BY THE ASSESSEE AND ALSO A CERTIFICATE FROM THE MAMLATDAR OF SILVASSA STATING THAT THE ASSESSEE HAD INHERITED PIECE OF AGRICULTURAL LAND TOTALLY ADDITION MEASURED 4 HA 5 ACRES. ACCORDINGLY THE ASSESSING OFFICER FRAMED ASSESSMENT IN THE STATUS OF HUF BY M AKING CERTAIN AD DISALLOWANCE OF EXPENDITURE INCURRED ON AGRICULTURE. THE MATTER WAS CARRIED BY THE ASSESSEE FIRST BEFORE CIT(A) AND FINALLY BEFORE THE TRIBUNAL. THE ONLY ISSUE BEFORE THE TRIBUNAL ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 7 BEFORE CIT(A) AND FINALLY BEFORE THE TRIBUNAL. THE ONLY ISSUE BEFORE THE TRIBUNAL RELATES TO DISALLOWANCE OF AGRICULTURE EXPENSES MAD E BY THE ASSESSING OFFICER. FOR THIS THE TRIBUNAL IN FIRST ROUND VIDE ORDER DATED 04-04-2003 HAS RECORDED FINDINGS IN PARA-1 AS UNDER:- ALL THESE APPEALS BY THE ASSESSEE RELATE AROUND TH E COMMON ISSUE I.E. DISALLOWANCE OF AGRICULTURAL EXPENSES MADE BY THE A .O U/S 69C OF THE I.T. ACT 1961. FOR THE SAKE OF CONVENIENCE THESE APPEALS ARE CONSOLIDATED AND DISPOSED OFF BY A COMMON ORDER. WE FURTHER FIND THAT ON THIS ISSUE THAT THE TRIBUN AL HAS SET ASIDE THE ISSUE TO EXAMINE THE CHARACTER AND ALLOWABILITY OF THE EXPEN DITURE VIS--VIS THE AGRICULTURAL ACTIVITY AND OTHER ACTIVITIES BY GIVING FOLLOWING F INDS IN PARA-3 & 4 :- 3. I FIND THAT THE CASE WAS NOT EXAMINED IN THE RI GHT PERSPECTIVE. THE REQUIREMENT OF SEC. 60C IS THAT THE EXPENDITURE HAS TO BE FOUND TO HAVE BEEN INCURRED BY THE ASSESSEE IN THE FINANCIAL YEAR AND SECONDLY THE ASSESSEE FAILS TO INDICATE SATISFACTORILY THE SOURCE OF SUCH EXPEN DITURE. THE PROVISIONS OF SEC. 69C ARE MERE CLARIFICATORY AND EMBODY AND EMBODY A RULE OF EVIDENCE. EVEN OTHERWISE AN ADDITION COULD BE MADE IN RESPECT OF T HE AMOUNT OF EXPENDITURE WHICH THE ASSESSEE IS FOUND TO HAVE BEEN ACTUALLY I NCURRED BUT NOT SATISFACTORY EXPLAINED. FROM THE PHRASEOLOGY OF THI S SECTION IT TRANSPIRES THAT THE CONDITION PRECEDENT AS TO THE EXISTENCE OF EXPE NDITURE MUST BE CONCLUSIVELY ESTABLISHED BY EVIDENCE. 4. THERE IS ABSOLUTELY NO DISCUSSION IN THE IMPUGNE D ORDERS AS TO THE CHARACTER AND ALLOWABILITY OF THE EXPENDITURE WITH THE ORDER ACTIVITIES. WHAT ARE THOSE OTHER ACTIVITIES. WHAT FOR THE EXPENDITURE WA S INCURRED. HOW MUCH AGRICULTURAL AND THE ASSESSEE IS HOLDING. WHAT CROP S IT WAS PRODUCING. EVIDENCE OF REALIZATION OF AGRICULTURAL INCOME COUL D HAVE BEEN EXAMINED WITH REFERENCE TO THE REVENUE RECORDS. THIS WAS NOT DONE . AS A MATTER OF FACT THERE WAS NO EXAMINATION APROPOS THE CHARACTER OF INCOME AND THE EXPENDITURE. IN MY OPINION THE CASE WAS NOT EXAMINED IN THE RIGHT P ERSPECTIVE. I THEREFORE IN THE INTEREST OF JUSTICE SET ASIDE THE IMPUGNED ORDE RS AND RESTORED IT TO THE FILE OF AO WITH A DIRECTION TO DECIDE IT AFRESH IN ACCO RDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE TO B EING HEARD. 9. WE FIND FROM THE ABOVE DIRECTIONS OF THE TRIBUNA L SETTING ASIDE THE ISSUE OF ALLOWABILITY OF EXPENDITURE RELATING TO AGRICULTURE INCOME. IN SUCH SITUATION THE QUESTION ARISES WHETHER THE ASSESSING OFFICER WHIL E FRAMING THE SET ASIDE ASSESSMENT CAN EXAMINE THE ISSUE OF STATUS OF THE A SSESSEE WHICH HAS BECOME FINAL AND CONSEQUENTLY MADE THE ADDITION IN THE HA NDS OF INDIVIDUAL ON SUBSTANTATIVE BASIS AND ON PROTECTIVE BASIS IN THE STATUS OF HUF. THIS HAS BEEN ANSWERED BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF STATE TRADING CORPORATION OF INDIA LTD. V ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 8 STATE OF TAMIL NADU (1995) 96 STC 282 284-85 (MAD) BY HOLDING THAT EV EN A PARTICULAR POINT WHICH IS COVERED BY THE ORIGINAL A SSESSMENT AND THE SAME HAS BECOME FINAL CANNOT BE AGITATED BEFORE THE TRIBUNAL IN APPEAL AGAINST THE FRESH ASSESSMENT ORDER MADE ON REMAND FROM THE TRIBUNAL. THE HONBLE MADRAS HIGH COURT HELD AS UNDER:- IN VIEW OF THE ABOVE DISCUSSION IT IS SEEN THAT T HE ASSESSING OFFICER IS CORRECT IN OBSERVING THAT THE C FORM IN QUESTION WAS NOT CON SIDERED FOR THE PURPOSE OF ASSESSMENT SINCE IT WAS NOT A MATTER BEFORE THE TR IBUNAL. THE CONTENTION OF THE APPELLATE THAT THIS ORDER DATED NOVEMBER 30 1990 OF THE ASSESSING OFFICER IS TO IMPLEMENT BOTH THE ORDERS OF THE DEPUTY COMMISSIONE R AND THE TRIBUNAL IS INCORRECT. THE ORDER OF THE DEPUTY COMMISSIONER WAS ALREADY IMPLEMENTED ON AUGUST 18 1989 AND THIS WAS NOT AGITATED WITHIN TH E TIME PRESCRIBED FOR APPEAL AND WAS ALLOWED TO BECOME FINAL. THEREFORE THERE I S NO REASON TO INTERFERE WITH THE ORDERS OF THE ASSESSING OFFICER NOW APPEALED AG AINST ON THIS POINT. THEREAFTER THE PETITIONERS FILED AN APPEAL IN T.A. NO. 857 OF 1991 BEFORE THE TRIBUNAL. BY THE ORDER DATED JULY 13 1992 THE TRIB UNAL DISMISSED THE SAID APPEAL. 2 . ADMITTEDLY THE PETITIONERS HAVE NOT FILED ANY AP PEAL AGAINST THE ORDER OF THE ASSESSING OFFICER DATED AUGUST 18 1989 LEVYING TAX AT 10 PER CENT ON THE TURNOVER OF RS.20 23 290 AND THE ORDER DATED AUGUST 18 1989 HAS BECOME FINAL. FURTHER THE ORDER OF REMAND DATED MARCH 27 1989 BY THE APPELLATE AUTHORITY IN APPEAL NO.57 OF 1988 WITH REGARD TO THE TURNOVER OF RS.1 21 05 095 WHICH INCLUDED THE TURNOVER OF RS.20 23 290 WAS NOT THE S UBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL IN T.A.NO. 454 OF 1989 WHICH W AS SUBSEQUENTLY REMANDED TO THE ASSESSING OFFICER. SIMILARLY THE ORDER OF REMAN D DATED SEPTEMBER 20 1989 MADE BY THE TRIBUNAL IN T.A.NO. 454 OF 1989 DOES NO T COVER THE TURNOVER OF RS.20 23 290. CONSEQUENTLY IN THE PRESENT PROCEED INGS INITIATED AGAINST THE ORDER OF THE ASSESSING OFFICER DATED NOVEMBER 30 19 90 PASSED PURSUANT TO THE ORDER OF REMAND DATED SEPTEMBER 20 1989 IN T.A.NO .454 OF 1989 IT IS NOT AT ALL OPEN TO THE PETITIONERS TO CANVASS THE CORRECTNESS OF THE ORDER OF THE ASSESSING OFFICER DATED AUGUST 18 1989 WHICH HAS BECOME FINA L. IN THESE CIRCUMSTANCES THE APPELLATE AUTHORITY AND THE TRIBUNAL RIGHTLY HE LD THAT THE QUESTION RELATING TO THE TURNOVER OF RS.20 43 522.90 CANNOT BE AGITATED IN THE PRESENT PROCEEDINGS AS THE ORDER OF THE APPELLATE AUTHORITY DATED MARCH 2 7 1989 IN APPEAL NO. 57 OF 1988 AND THE ORDER OF THE ASSESSING OFFICER DATED 1 8 1989 IN RESPECT OF THE TURNOVER OF RS.20 43 522.90 HAS ALREADY BECOME FINA L. 3 . MR.CHANDRAN LEARNED COUNSEL FOR THE PETITIONERS SUBMITTED THAT SUBSEQUENT TO THE ORDER OF REMAND DATED SEPTEMBER 20 1989 IN T .A.NO.454 OF 1989 THE ORDERS OF THE ASSESSING AUTHORITY AND THE APPELLATE AUTHORITY ARE MERGED IN THE ORDER OF THE TRIBUNAL AND THEREFORE THEY ARE ENTIT LED TO CHALLENGE THE ENTIRE ASSESSMENT ORDER INCLUDING THE ASSESSMENT MADE AT THE ENHANCED RATE ON A TURNOVER OF RS.20 23 290. HOWEVER WE ARE UNABLE TO ACCEPT THE ABOVE CONTENTION OF LEARNED COUNSEL FOR THE PETITIONERS BECAUSE THE ASSESSING OFFICER IS ENTITLED TO PROCEED WITH THE MATTER PURSUANT TO TH E ORDER OF THE REMAND MADE BY THE APPELLATE AUTHORITY ON MARCH 27 1989 IN APPEA L NO. 57 OF 1988 AND FURTHER ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 9 IT DOES NOT ALTER THE TAX LIABILITY. INASMUCH AS TH E TURNOVER OF RS.20 23 290 WAS NOT AT ALL THE SUBJECT MATTER OF THE APPEAL IN T.A. NO.454 OF 1989 AND CONSEQUENTLY THE ORDER OF REMAND DATED SEPTEMBER 2 0 1989 IN T.A.NO. 454 OF 1989 DOES NOT COVER THE SAID TURNOVER OF RS.20 23 2 90 WE CANNOT COUNTENANCE THE CONTENTION OF LEARNED COUNSEL FOR THE PETITIONE RS BASED ON THE THEORY OF MERGER. IN THESE CIRCUMSTANCES IT HAS TO BE HELD T HAT THE ASSESSMENT MADE AT THE ENHANCED RATE ON A TURNOVER OF RS.20 43 520.90 IS CORRECT AND THE ORDER OF THE TRIBUNAL IS NOT LIABLE TO BE INTERFERED WITH IN THIS TAX CASE REVISION. THERE IS NO MERIT IN THIS REVISION AND IT IS LIABLE TO BE DISMI SSED AND ACCORDINGLY IT IS DISMISSED. NO COSTS. SIMILARLY THE HONBLE MADRAS HIGH COURT IN THE CAS E OF M.S.P. SENTHIL KUMAR V CIT (2000) 241 ITR 502 504 505 (MAD) HAS HELD THAT WH ERE THE QUESTION REGARDING THE VALIDITY OF JURISDICTION OF THE OFFICER TO REOPEN A SSESSMENT PROCEEDINGS HAS BECOME FINAL IN AN APPEAL AGAINST A FRESH ORDER MADE PURS UANT TO REMAND TO THE FIRST APPELLATE AUTHORITY BY THE TRIBUNAL THE ASSESSEE I S NOT ENTITLED TO RAISE THE QUESTION ABOUT VALIDITY OF REOPENING OF ASSESSMENT BEFORE TH E TRIBUNAL. WE FIND THAT THE HONBLE MADRAS HIGH COURT HAS CONSIDERED THE DECISI ON OF HONBLE KERALA HIGH COURT IN THE CASE OF M.K. MOHAMMAD KUNHI V. CIT (1973) 92 ITR 341 (KEL) WHEREIN IT IS HELD AS UNDER (FROM HEAD NOTES):- WHERE THE APPELLATE TRIBUNAL REMANDS A CASE THE FI NALITY OF VIEWS EXPRESSED BY IT WHILE DOING SO DEPENDS ON THE NATURE OF THE O RDER OF REMAND. IF THE REMAND IS IN THE NATURE OF CALLING FOR A FINDING AN D THE TRIBUNAL KEEPS SEISIN OF THE CASE IT MAY BE PERMISSIBLE FOR THE TRIBUNAL TO RECONSIDER ITS VIEWS. ON THE OTHER HAND IF THE TRIBUNAL DISPOSES OF THE APPEAL WHILE PASSING THE ORDER OF REMAND AND ANOTHER APPEAL COMES BEFORE THE TRIBUNAL AGAINST THE ORDER PASSED AFTER THE REMAND IT HAS NO POWER TO RECONSI DER THE FINDING OR OPINION. QUESTIONS WHICH HAVE BECOME FINAL AND CONCLUDED BY THE REMAND ORDER CANNOT BE REOPENED. IN VIEW OF THE ABOVE CASE LAWS WE ARE OF THE VIEW THAT WHERE A MATTER IS TAKEN IN APPEAL BEFORE TRIBUNAL AGAINST A FRESH ASSESSMENT O RDER MADE IN PURSUANCE OF REMAND BY THE APPELLATE AUTHORITY THE TRIBUNAL HAS NO JURISDICTION TO CONSIDER AND DECIDE A PARTICULAR POINT WHICH HAS ALREADY BEEN DE CIDED BY THE ASSESSING AUTHORITY IN THE ORIGINAL ASSESSMENT ORDER AND HAS BECOME FIN AL AND NO SUCH FURTHER PROCEEDINGS WERE SUCH TAKEN AGAINST SUCH ASSESSMENT ORDER. THIS IS SO BECAUSE OTHERWISE THE PROCEDURE WOULD OFFEND AGAINST THE RU LE OF FINALITY OF JUDICIAL PROCEEDINGS. 10. ANOTHER FACET OF THE ARGUMENTS MADE BY THE LD. COUNSEL FOR THE ASSESSEE ARE THAT THE REVENUE HAS NOT DISTURBED THE STATUS OF HU F FROM ASSESSMENT YEARS 1987- ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 10 88 TO 1994-95 AS NO APPEAL HAS BEEN FILED BY THE R EVENUE FOR THESE ASSESSMENT YEARS. EVEN THE REVENUE HAS ACCEPTED THE STATUS OF HUF FOR THE ABOVEMENTIONED ASSESSMENT YEARS AND CAN REVENUE NOW ON THIS POINT IS ENTITLED TO CLAIM THAT THE ASSESSEE IS AN INDIVIDUAL EVEN THOUGH THE ASSESSMEN T FOR SEVERAL YEARS WERE ACCEPTED IN THE STATUS OF HUF. ONCE AN INCOME FROM A PARTICULAR PROPERTY HAS BEEN ASSESSED IN THE STATUS OF HUF IT IS NOT OPEN TO TH E DEPARTMENT TO ASSESS WITHOUT ANY FRESH MATERIAL SUCH INCOME IN THE STATUS OF IN DIVIDUAL. WE FIND THAT IN THE PRESENT CASE BEFORE US THE ASSESSEE WAS ALSO ASKED DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS TO FURNISH THE DETAILS OF LA ND OWNED BY THE ASSESSEE AND IN RESPONSE TO THIS THE ASSESSEE FILED COPIES OF REVE NUE RECORD I.E. 7 X 12 EXTRACT AGRICULTURAL LAND OWNED BY THE ASSESSEE AND ALSO A CERTIFICATE FROM THE MAMLATDAR OF SILVASSA STATING THAT THE ASSESSEE HAD INHERITED PI ECE OF AGRICULTURAL LAND TOTALLY ADDITION MEASURED 4 HECTARE 5 ACRES. THE ASSESSING OFFICER HAS NOT VERIFIED THE GENEALOGICAL TREE OF THE FAMILY OF THE ASSESSEE AND DESPITE THE FACTS AVAILABLE BEFORE HIM HE HAS NOT MADE ANY INQUIRY IN THE ORIGINAL AS SESSMENT AND ACCEPTED THE STATUS OF THE ASSESSEE AS HUF ON THE BASIS OF EVIDENCES AN D DOCUMENTS PLACED BY THE ASSESSEE. WE FIND THAT THE HONBLE KERALA HIGH COU RT IN THE CASE OF KRISHNA BHAT V. AGRICULTURAL INCOME TAX OFFICER (1981) 130 ITR 894 (KER) HELD THAT IN THE ABSENCE O F ANY MATERIALS ON RECORD THE ASSESSMENT IN A STATUS DIFFERENT FROM THAT IN THE EARLIER YEARS IS NOT WARRANTED. THE HONBLE KERALA HIGH CO URT RELIED ON THE HONBLE APEX COURT JUDGMENT IN THE CASE OF NEW JEHANGIR VAKIL MILLS CO. LTD. V CIT (1963) 49 ITR 137 (SC):- THE RULINGS GIVEN BY THE FULL BENCH OF THE MADRAS HIGH COURT AND THE DIVISION BENCH OF THE BOMBAY HIGH COURT APPEAR TO H AVE GOT THE APPROVAL OF THE SUPREME COURT THOUGH NOT EXPRESSLY AS COULD BE GATHERED FROM THE FOLLOWING PASSAGE OCCURRING IN NEW JEHANGIR VAKIL M ILLS CO. LTD. V. CIT [1963] 49 ITR (SC) 137 142 : THE EXTENT TO WHICH A DECISION GIVEN BY AN INCOME- TAX OFFICER FOR ONE ASSESSMENT YEAR AFFECTS OR BINDS A DECISION FOR ANO THER YEAR HAS BEEN CONSIDERED BY COURTS SEVERAL TIMES AND SPEAKING GEN ERALLY IT MAY BE STATED THAT THE DOCTRINE OF RES JUDICATA OR ESTOPPE L BY RECORD DOES NOT APPLY TO SUCH DECISIONS; IN SOME CASES IT HAS BEEN HELD THAT THOUGH THE INCOME-TAX OFFICER IS NOT BOUND BY THE RULE OF RES JUDICATA OR ESTOPPEL BY RECORD E CAN REOPEN A QUESTION PREVIOUSLY DECID ED ONLY IF FRESH FACTS COME TO LIGHT OR IF THE EARLIER DECISION WAS RENDERED WITHOUT TAKING INTO CONSIDERATION MATERIAL EVIDENCE ETC. ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 11 THE FACTS OF THE PRESENT CASE BEFORE US CLEARLY STA TES THAT THE STATUS OF HUF HAS BEEN ACCEPTED BY THE ASSESSING OFFICER AFTER DUE IN QUIRY AND GOING THROUGH THE DOCUMENTARY EVIDENCES PRODUCED BEFORE HIM AND THE R EVENUE HAS NOT CHALLENGED THE FINDINGS OF THE ASSESSING OFFICER FOR THE ASSES SMENT YEARS 1987-88 TO 1994-95. TO THAT EFFECT THAT THE STATUS OF THE ASSESSEE IS HUF IN THOSE ASSESSMENT YEARS SUBSEQUENT SET ASIDE BY THE TRIBUNAL AND THAT ALSO NOT ON THIS ISSUE STATUS CANNOT BE DISTURBED. ACCORDINGLY WE ARE IN CONFORMITY WI TH THE FINDINGS OF CIT(A) ACCEPTING THE STATUS OF THE ASSESSEE AS HUF AND HOLD THAT WHA TEVER ADDITION WILL BE SUSTAINED THAT WILL BE IN THE HANDS OF THE HUF AND NOT IN IND IVIDUAL. ACCORDINGLY COMMON ISSUE OF ALL THESE APPEALS AND COS IS DECIDED IN FA VOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 11. COMING TO THE FIRST COMMON ISSUE IN ITA NO.2023 AND 2151/AHD/2002 OF THE REVENUE AND THE ASSESSEE IS AS REGARDS TO THE ESTIM ATION OF AGRICULTURAL INCOME. 12. THE ASSESSEE OWNS AGRICULTURAL LAND OF 4 HECTOR S AND 0.5 ACRES AS PER THE REVENUE RECORDS. THE ASSESSEE IS AN AGRICULTURIST A ND FILED HIS RETURN OF INCOME IN RESPONSE TO NOTICE U/S.148 OF THE ACT DECLARING NET AGRICULTURAL INCOME AT RS.5 34 915/- AS AGAINST THE GROSS AGRICULTURAL INC OME OF RS.7 00 862/-. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED T HAT THE ASSESSEE HAS FILED SALE BILLS OF AGRICULTURAL PRODUCE TO THE EXTENT OF RS.1 .50 LAKHS WHICH ARE UNSIGNED. HE ALSO NOTED THAT THE BILLS ARE WITHOUT NAMES AND ADD RESSES AND ONLY PRODUCE SOLD IS CHIKU ONLY. HE ALSO NOTED THAT THE ENTIRE TRANSA CTION IS IN CASH AND THE SALE BILL IS IN THE NAME OF C.J. RATHOD INDIVIDUAL. HE ALSO NOTED T HAT THE ASSESSEE HUF HAS CLAIMED TO HAVE TAKEN AGRICULTURAL LAND OF 4 HECTAR ES AND 195 ACRES ON RENT FROM SHRI NATVERSINH K SOLANKI AND BHAGWANSINH J SOLANKI. AC CORDINGLY THE ASSESSING OFFICER TREATED THE ENTIRE AGRICULTURAL INCOME AS I NCOME FROM OTHER SOURCES AT RS.7 00 862/-. AGGRIEVED THE ASSESSEE PREFERRED AP PEAL BEFORE CIT(A). 13. THE CIT(A) AFTER NOTING THE FACT THAT THE ASS ESSEE RIGHT FROM 1987-88 TO 1996-97 DECLARED AGRICULTURAL INCOME. THE ASSESSEE CONTENDED BEFORE THE CIT(A) THAT HE HAS FILED COPIES OF SALE BILLS REGARDING SA LE OF AGRICULTURAL PRODUCE AND ALSO FILED EVIDENCE TO SHOW THE HOLDING OF AGRICULTURAL LAND BY THE ASSESSEE. THE CIT(A) FORWARDED THESE SUBMISSIONS AND EVIDENCES TO THE AS SESSING OFFICER. THE AO IN THE ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 12 REMAND REPORT EXAMINE THE ASPECT OF AGRICULTURAL IN COME AND NOTED THAT ONLY X-EROX COPIES OF SALE BILLS REGARDING SALE OF AGRICULTURAL PRODUCE HAVE BEEN PRODUCED AND HE NARRATED THE AGRICULTURAL INCOME ASSESSED FOR DI FFERENT ASSESSMENT YEARS AS UNDER:- A.Y ASSESSED INCOME INCOME SHOWN BY THE APPELLANT 1987-88 126.015 138.185 1988-89 158.273 192 575 1989-90 302 364 420 994 1991-92 286 947 380 125 1992-93 319 404 427 555 1993-94 624 826 808 456 1994-95 784 415 998 064 1995-96 831 604 1 055 608 1996-97 853 281 1 059 721 TOTAL 4 817 857 6 160 346 IN VIEW OF THE REMAND REPORT AND SUBMISSIONS OF THE ASSESSEE THE CIT(A) CONSIDERED THE INCOME FROM OTHER SOURCES AT RS.2.50 LAKHS AND BALANCE WAS CONSIDERED AS AGRICULTURAL INCOME BY GIVING FOLLOWI NG FINDINGS IN PARA-13.25 TO 13.28 :- 13.25 THE PURPOSE OF CITING THESE JUDICIAL DECISIO NS IS TO REINFORCE THE CONTENTION THAT IN ORDER TO CONCLUSIVELY ESTABLISH THAT THERE IS AGRICULTURAL INCOME RIGHT FROM A.Y. 1987-88 ONWARDS IN THE CASE OF THE APPELLANT MERELY FILING OF CERTAIN BILLS REGARDING LOAN REVENUE OR C ERTIFICATE OF MAMLATDAR OR SALE BILLS ETC. ARE NOT SUFFICIENT. THE POSITION MAY VAR Y FROM YEAR TO YEAR. THERE COULD BE AGRICULTURAL RECEIPTS SAY IN ONE ASSESSME NT YEAR BUT NONE IN THE IMMEDIATELY FOLLOWING YEAR. SUCH EVENTUALITIES ARE WITHIN THE REALM OF POSSIBILITY. 13.26 THUS APPELLANTS CONTENTION THAT AS HE HAD FI LED SUFFICIENT DETAILS THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES IS NOT ACCEPTABLE. I WOUL D HOWEVER LIKE TO CLARIFY THAT REGARDING POSSESSION OF AGRICULTURAL LAND BY T HE APPELLANT RELEVANT DETAILS HAVE BEEN MADE AVAILABLE BY THE APPELLANT. WHAT HO WEVER CANNOT BE ASCERTAINED WITH CERTITUDE IS THE FACT OF THE RECEI PT OF AGRICULTURAL INCOME FROM YEAR TO YEAR. 13.27 A COMPARISON OF AGRICULTURAL INCOME SHOWN BY THE APPELLANT FOR VARIOUS YEARS AND ASSESSED BY THE ASSESSING OFFICER SHOWS T HAT THE AMOUNT OF AGRICULTURAL INCOME AS SHOWN BY THE APPELLANT AT TH E APPELLATE STAGE AND AS ASSESSED BY THE ASSESSING OFFICER IS NOT THE SAME. THIS IMPLICITLY MEANS THAT THE AGRICULTURAL RECEIPTS OF RS.7 00 862/- SHOWN FO R A.Y 1997-98 DOES NOT ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 13 INDICATE THE CORRECT STATE OF AFFAIRS AND SUCH QUAN TIFICATION IS ALSO NOT AMENDABLE TO PROPER VERIFICATION BY EVIDENCE OF INC ONTROVERTIBLE NATURE. THEREFORE A PART OF SUCH INCOME IS TO BE INEVITABLY TREATED AS INCOME FROM OTHER SOURCES. 13.28 AFTER TAKING INTO ACCOUNT OF THE RELEVANT FAC TS AND CIRCUMSTANCES OF THE CASE I AM OF THE VIEW THAT AN INCOME TO THE EXTENT OF RS.2 50 000/- IS TO BE TAKEN AS INCOME FROM OTHER SOURCES AND THE BALANCE AMOUNT AS AGRICULTURAL INCOME OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION. 14. AFTER HEARING THE RIVAL CONTENTIONS AND GOING T HROUGH THE CASE RECORDS WE FIND THAT THE REVENUE HAS ACCEPTED THE AGRICULTURAL INCOME IN EARLIER YEARS AT RS.6.24 LAKHS IN ASSESSMENT YEAR 1993-94 AND RS.5.3 0 LAKHS IN ASSESSMENT YEAR 1992-93. ACCORDINGLY WE CAN ONLY MAKE A FAIR ESTI MATE AND TAKING THE FIGURES OF EARLIER YEARS WE ESTIMATE THE DISALLOWANCE AT RS.1 LAKH ONLY AND THE BALANCE CAN BE TREATED AS AGRICULTURAL INCOME. THE ASSESSING OFFI CER IS DIRECTED TO RE-COMPUTE THE DISALLOWANCE AT RS.1 LAKH ONLY. THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED AND THAT OF ASSESSEE IS PARTLY ALLOWED. 15. THE NEXT TWO COMMON ISSUES IN ITA NO.2023 AND 2151/AHD/2002 OF THE REVENUE AND THE ASSESSEE IS AS REGARDS TO UNEXPLAIN ED INVESTMENT IN IMMOVABLE PROPERTY AT RS.7 99 059/- BY THE ASSESSING OFFICER UNEXPLAINED INVESTMENT IN MOTOR CAR BY THE ASSESSING OFFICER AND UNEXPLAINED INVEST MENT OF LOANS AND ADVANCES AT RS.25 63 440/-. FOR THIS ASSESSEE HAS RAISED FOLL OWING GROUND NO.4 & 5 AND REVENUE HAS RAISED FOLLOWING GROUND NO.6 :- ITA NO.2151/AHD/2002 04. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT NOT TO HAVE CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION TO THE TUNE OF RS.4 13 480/- ON ACCOUNT OF INVESTMENTS IN LAND AND CASH BALANCE BY TREATING THEM AS UNEXPLAINED INVESTMENTS U/S.69. THE ACTION OF THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS OF TH E CASE AND DESERVES TO BE DELETED. 05. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN M AKING ADDITION ON ACCOUNT OF INTEREST @ 18% ON RS.12 82 977/- BEING THE AMOUNT OF LOANS AN D ADVANCES GIVEN BY THE ASSESSEE TO VARIOUS PARTIES. THE ACTION OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS OF THE CASE AND DESERVES TO BE DELETED. ITA NO.2023/AHD/2002 ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 14 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE COMMISSIONER (APPEALS) WAS NOT JUSTIFIED IN DIRECTING THE A.O TO TAX THE F OLLOWING INCOME IN THE HANDS OF C.J. RATHOD HUF ON SUBSTANTIVE BASIS AND NOT ON PROTECTIVE BASIS 2. UNEXPLAINED INVESTMENT IN THE IMMOVABLE PROPERTY RS.7 99 059 3. UNEXPLAINED INVESTMENT RS.3 49 445 4. UNEXPLAINED LOANS AND ADVANCES RS.25 63 440 16. WE HAVE HEARD THE RIVAL CONTENTION ON THESE C OMMON ISSUES AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. AS REGARDS TO UNEXPLAINED INVESTMENT IN IMMOVABLE PROPERTY TO THE TUNE OF RS. 7 99 059/- THE ASSESSING OFFICER HAS IDENTIFIED THE ASSETS AS UNDER:- RESIDENTIAL HOUSE AT NAROLI 63 700 LAND AT NAROLI 18 239 AGRICULTURAL LAND 1 70 000 FARM HOUSE CONSTRUCTION 25 000 WIRE FENCING 25 000 AGRICULTURAL EQUIPMENTS 30 890 LIVESTOCK 44 230 DIESEL ENGINE 8 520 K.A. CHIKHLIWALA FOR LAND 1 31 000 OTHER ASSETS PLUS CASH BALANCE 2 82 480 TOTAL 7 99 059 AS REGARDS TO UNEXPLAINED INVESTMENT IN MOTOR CAR TV FRIDGE ETC. THE ASSESSING OFFICER MADE ADDITION OF RS.3 49 445/- AND ALSO MAD E ADDITION OF UNEXPLAINED LOANS AND ADVANCES AT RS.25 63 440/- BY STATING THE REASO NS THAT THE ASSESSEE HAS NOT FILED COPIES OF BALANCE-SHEET FOR ASSESSMENT YEARS 1994-95 AND 1995-96 WITH THE RETURNS OF INCOME AS SOURCES OF THESE INVESTMENTS A RE NOT ASCERTAINED. THE ASSESSEE EXPLAINED BEFORE THE AO FROM THE BALANCE-S HEET FOR THE YEAR ENDING 31-03- 1997 THAT THERE CAPITAL OF RS.49 73 264/- DURING TH E YEAR 1997-98 WAS TRANSFERRED FROM SHRI C.J. RATHOD INDIVIDUAL AND DURING THE ASS ESSMENT YEAR 1995-96 A SUM OF RS.31.53 LAKHS WAS TAXED IN THE HANDS OF INDIVIDUAL AND THE SAME WAS SETTLED UNDER KVSS 1998. THE AO WAS NOT CONVINCED AND MADE ADDITI ON OF ABOVE THREE COUNTS. THE CIT(A) DELETED THE ADDITION MADE BY THE AO ON A CCOUNT OF UNEXPLAINED INVESTMENT IN ASSETS AT RS.7 99 059/- TO THE EXTENT OF RS.3 89 579/- AND THE SUSTAINED THE BALANCE ADDITION OF RS.4 13 480/-. SI MILARLY THE CIT(A) ALSO DELETED THE ADDITION OF UNEXPLAINED INVESTMENT IN MOVABLE P ROPERTY I.E MOTOR CYCLE TV FRIDGE ETC. ON THE BASIS OF AGRICULTURE INCOME DECL ARED BY THE ASSESSEE IN ALL THE YEARS. HE HAS CONSIDERED THE CASH FLOW MADE BY THE ASSESSEE AND THE INCOME OF ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 15 LAST 10 YEARS AS DECLARED AND ASSESSED BY THE AO. HE HAS ALSO DELETED THE ADDITION OF UNSECURED LOANS AND ADVANCES EXCEPT THE ADDITION OF RS.4 13 480/-. 17. WE FIND THAT THE CAPITAL OF THE HUF FOR ASSESS MENT YEAR 1997-98 HAS BEEN SHOWN AT RS.49 73 264/- AND THIS IS SUPPORTED BY TH E CAPITAL ACCOUNT AND COPIES OF BALANCE-SHEET FOR THE ASSESSMENT YEARS 1987-88 TO 1 996-97 AND IN THE ASSESSMENT YEAR 1997-98 THE CAPITAL WAS AT RS.4 61 928/- THE ASSESSEE HAS FIELD THE DETAILS BEFORE THE LOWER AUTHORITIES AND EVEN BEFORE US NOW AS UNDER:- PARTICULARS AMOUNT PARTICULARS AMOUNT HOUSEHOLD EXPENSES 54 000 OPENING BALANCE 4 671 346 C.B. RATHOD 200 000 SURPLUS ON AGRI. PRODUCTION 526 915 BANK CHARGES 234 SURPLUS ON NON AGRL. PROD. 19 220 CLOSING BALANCE 4 973 264 RENT OF AGRI. LAND 8 000 BANK INTEREST 2 017 TOTAL 5 227 498 5 227 498 ACCUMULATED CAPITAL AS ON 31/03/95 774 059 AMOUNT TAXED UNDER THE KVVS SCHEME A.Y. 95096 3 15 3 000 CAPITAL AS ON 31/03/95 3 927 059 PROFITS AND CREDITS IN THE A.Y. 96-97 862 287 WITHDRAWALS IN A.Y. 96-97 118 000 CAPITAL AS ON 31/03/1996 4 671 346 PROFITS AND CREDITS IN THE A.Y. 97-98 556 152 WITHDRAWALS IN A.Y. 97-98 254 234 CAPITAL AS ON 31/03/1997 4 973 264 WE FURTHER FIND THAT THE ASSESSING OFFICER HIMSELF ADMITTED THE AGRICULTURAL INCOME OF THE ASSESSEE AT RS.68 60 207/- AND RS.2 10 661/- AS INCOME FROM AGRICULTURAL AND DIARY FARMING RESPECTIVELY UP TO ASSESSMENT YEAR 19 97-98. IT IS ALSO A FACT THAT OUT OF CAPITAL OF RS.49 73 246/- A SUM OF RS.31.53 LAKHS H AS BEEN TRANSFERRED FROM SHRI C.J. RATHOD INDIVIDUAL DURING THE ASSESSMENT YEAR 1 995-96 AND THIS AMOUNT WAS TAXED IN THE HANDS OF SHRI C.J. RATHOD INDIVIDUAL I N ASSESSMENT YEAR 1995-96 AND THE DEMAND WAS SETTLED UNDER THE KVSS SCHEME 1998. ACCORDINGLY THIS AMOUNT WAS AGAIN TRANSFERRED FROM SHRI C.J. RATHOD HUF TO INDIVIDUAL IN ASSESSMENT YEAR 1997-98. WE FURTHER FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS ACCEPTED THE FOLLOWING SOURCE:- ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 16 SHRI ABULI ABDULHUSSEIN & CO. AGAINST SUPPLY OF MATERIALS RS. 25 000/- ADVANCE AGAINST SALE OF LAND RS.11 00 000 ADVANCES RECEIVED FROM C.J. RATHOD TRANSPORT CO. TO THE TUNE OF RS.8 250000/- REPRESENTS ASSETS AND LIABILITIES TRA NSFERRED FROM C.J. RATHOD TRANSPORT CO. TO THE C.J. RATHOD (HUF)S ACCOUNT. SIMILARLY THE LOANS FROM GARDEN FINANCE LTD. TO THE TUNE OF RS.1 98 385/- HA S ALREADY BEEN COMMENTED UPON BY THE ASSESSING OFFICER. 18. WE FURTHER FIND THAT THE ASSESSING OFFICER AS W ELL AS CIT(A) HAS CONSIDERED THAT OUT OF THE TOTAL AMOUNT GIVEN AT RS.57.16 LAKH S GIVEN BY THE ASSESSEE THE FOLLOWING LOANS WERE CLAIMED TO BE ADVANCE RECEIVED FOR PURCHASE OF LAND BY THE ASSESSEE AS UNDER:- DATE NAME AMOUNT MODE 05/04/96 GOMAN CHHIBA RATHOD 50 000 CASH 08/10/96 CHHIBABHAI J PARMAR 50 000 CASH 08/06/96 KHANDUBHAI J SOLANKI 101 000 CASH 25/06/96 FATEHSINH B SOLANKI 36 000 CASH 10/12/96 B.C. RATHOD K.A. CHIKHALIWALA 1 113 463 131 000 CASH THE ASSESSEE PURCHASE THIS LAND FROM VHIKUBHAI C RA THOD BUT DUE TO CBI ENQUIRIES PURCHASED OF LAND COULD NOT BE MATERIALIZED AND THE ADVANCE WAS OUTSTANDING. THE ASSESSEE HAS ALSO OBTAINED ADVANCE AGAIN SALE OF LA ND FROM NAILESH B PARMAR AND JAIDEVSINH B PARMAR AT RS.8 LAKHS AND RS.3 LAKHS RE SPECTIVELY. TAKING INTO CONSIDERATION THE CAPITAL AVAILABLE WITH THE ASSESS EE AND THE LOANS AS PER RECORDS WE FIND THAT THE ASSESSEE HAS SUFFICIENT FUNDS FOR ADVANCING THE AMOUNT CONSIDERING THE AMOUNT OF RS.31.53 LAKHS RETAINED BY THE INDIVI DUAL TO HUF. ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) DELETING THE S AME AND WE CONFIRM THE SAME. WE FIND THAT IN ENTIRETY UNEXPLAINED INVESTMENT IN HO USEHOLD ITEMS AND UNEXPLAINED INVESTMENT IN IMMOVABLE PROPERTY HAS BEEN EXPLAINE D TAKING THE CAPITAL AVAILABLE WITH THE ASSESSEE AND FUNDS AVAILABLE IN TERMS OF I NCOME AND ASSETS BY THE ASSESSING OFFICER FOR ALL 10 YEARS. ACCORDINGLY WE CONFIRM THE ORDER OF CIT(A) ON THIS ISSUE. 19. AS REGARDS TO UNEXPLAINED INVESTMENT SUSTAINED BY THE CIT(A) AT RS.4 13 480/-. WE ARE OF THE VIEW THAT THE CIT(A) H AS SUSTAINED THE ADDITION ONLY ON THE PREMISE THAT NO DETAILS REGARDING AGREEMENT OF PURCHASE OF LAND HAS NOT BEEN ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 17 PRODUCED BEFORE HIM ACCORDINGLY HE SUSTAINED THE ADDITION. WE FIND THAT BEFORE US THE ASSESSEE HAS EXPLAINED THE SOURCES AS THE AVAIL ABILITY OF FUNDS AND INVESTMENT MADE OUT OF THE SAME. THE CIT(A) HAS RECORDED THE FACTS THAT FROM THE AGRICULTURAL ACTIVITY AND DIARY FARMING THE ASSESSEE HAVING INC OME WHICH IS NOT DISPUTED. ONCE THE FUNDS TO THE TUNE OF RS.60 LAKHS FOR INVESTMENT IS AVAILABLE WITH THE ASSESSEE THE SOURCE ITSELF IS EXPLAINED AND ACCORDINGLY WE DELETE THIS ADDITION AND TO THAT EXTENT THE ORDER OF CIT(A) IS REVISED. 20. COMING TO THE ISSUE OF DEEMED INTEREST CHARGE B Y THE ASSESSING OFFICER @ 18% ON THE AMOUNT OF LOANS AND ADVANCES GIVEN BY TH E ASSESSEE TO VARIOUS PERSONS AS NARRATED ABOVE. WE ARE OF THE VIEW THAT THIS ISS UE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE TRIBUNA LS DECISION IN GROUP CASE IN ITA NO.2147/AHD/2002 IN THE CASE OF SMT. NIRMALA J RATHOD V. ITO WARD-3 VAPI DATED 30-04-2007 IN PARA-28 AS UNDER:- 28. ON THE OTHER HAND THE LD. DR MERELY RELIED ON THE ORDERS OF THE ASSESSING OFFICER AS WELL AS CIT(APPEALS). IT SEEMS THAT THIS ADDITION CHARGING OF INTEREST ON LOANS AND ADVANCES IS MEREL Y ON ESTIMATE BASIS AND WITHOUT ANY REASONING. THE ASSESSEE HAS MADE A CATE GORICAL STATEMENT THAT NO INTEREST WHATSOEVER HAS CHARGED ON THESE LOANS O R ADVANCES AND THERE WAS NO SUCH PRIOR AGREEMENT FOR CHARGING OF INTERES T WITH THESE DEPOSITORS. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE WE FEEL THAT THE ASSESSING OFFICER HAS MADE ADDITION WITHOUT ANY BASIS THE SA ME DESERVES TO BE DELETED. ACCORDINGLY ORDERS OF THE LOWER AUTHORIT IES IS REVERSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED ON THIS ISSUE. AS ABOVE THAT THERE IS NO AGREEMENT BETWEEN THE AS SESSEE AND THE PERSONS TO WHOM THE MONEY HAS BEEN ADVANCED REGARDING CHARGING OF INTEREST AND ASSESSEE HAS ACTUALLY NOT CHARGED ANY INTEREST AND THESE LOA NS WERE INTEREST FREE LOANS. AS THERE IS NO CHARGE OF INTEREST THE ASSESSEE IS NOT ENTITLED FOR ANY INCOME. ACCORDINGLY THE DEEMING ADDITION MADE BY THE ASSES SING OFFICER IS DELETED IN VIEW OF THE DECISION OF THE TRIBUNAL IN ASSESSEES GROUP CASE SMT. NIRMALA J RATHOD (SUPRA). COMING TO REVENUES APPEAL NO.2023/AHD/2002. 21. THE ADDITION IN THE CASE OF INDIVIDUAL HAS BEEN MADE ON SUBSTANTIATED BASIS BY THE ASSESSING OFFICER BUT THE CIT(A) DELETED THE ADDITION ACCEPTING THE HUF OF THE ASSESSEE AND DIRECTED THE AO TO TREAT THE ADDIT ION ON SUBSTANTIATED BASIS IN THE HANDS OF HUF. THE CIT(A) DELETED THE ADDITION FROM THE INDIVIDUAL AS ABOVE IN ITA ITA NO.2022 2023 2151/AHD/02 1285-86/AHD/06 & 2301/A/06 CO 178 17 9/AHD/06 & 2/AHD/07 I TO VAPI WD-3 V. C.J. RATHOD (HUF) A.YS. 97-98. 96-97 95-96 PAGE 18 NO.2022/AHD/2002 FOR THE ASSESSMENT YEAR 1997-98 IN THE CASE OF HUF WHERE WE HAVE DECIDED THE ISSUE OF STATUS IN FAVOUR OF ASSES SEE AND THE ENTIRE ADDITION IN THE HANDS OF INDIVIDUAL IS DELETED. ACCORDINGLY THIS A PPEAL OF REVENUE IS DISMISSED. COMING TO REVENUES APPEAL NO.1285-1286/AHD/2006 & ITA NO. 2301/AHD/2006 AND ASSESSEES CO NO.178-179/AHD/2006 AND 2/AHD/200 7. 22. THE ONLY ISSUE IS AS REGARDING THE STATUS OF HU F. WE HAVE ALREADY DECIDED THE ISSUE ON STATUS OF INDIVIDUAL IN ITA NO.2022/AHD/2002 . TAKING A CONSISTENT VIEW WE DISMISS THE APPEALS OF THE REVENUE AND THE COS O F THE ASSESSEE ARE SUPPORTIVE. 23. IN THE RESULT REVENUES APPEALS ARE DISMISSED AND THAT OF ASSESSEES APPEAL NO.2151/AHD/2002 IS ALLOWED PARTLY AND COS O F ASSESSEE ARE SUPPORTIVE HENCE DISMISSED IN LIMINE. ORDER PRONOUNCED IN OPEN COURT ON 22 /02/2010 SD/- SD/- (A.N.PHAUJA) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD DATED :22/02/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-V SURAT 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD