This appeal is directed against the order passed by the assessing officer in a block assessment completed under section 158BC(c) of the Income Tax Act, 1961.
As many as 8 grounds have been preferred but at the time of hearing, the learned counsel for the assessee stated that ground Nos. 1 to 4 were not being pressed and these are therefore, rejected. Ground No. 8 is general in nature requiring no comment on our part and we would like to mention that the only grounds which were argued were ground Nos. 5 and 6 which involve a single issue, namely, the action of the department in treating a part of the income shown by the assessee as agricultural income by holding the same to be income earned from undisclosed sources and not from agricultural activities.
In the course of assessment proceedings the assessing officer noticed that the return for the block period showed substantial agricultural income. It was noted as a fact that the assessee was the owner of land measuring 1,25 acres up to 1992-93 which went up to 4.62 acres in 1993-94. By means of an order-sheet entry dated 17-9-1996 the assessing officer asked the assessee to prove the genuineness of the agricultural income shown in the return as also to furnish and substantiate the expenditure incurred on tilling, fertilizers etc. In response thereto the assessee furnished a letter written by the Tehsildar to the District Revenue Officer-cum Land Acquisition Collector wherein he had valued the paddy crop at Rs. 12,000 per acre. As against this the assessing officer sought information from the Krishi Gian Kendra, Kurukshetra. We may mention that the letter of the Tehsildar relied upon by the assessee is placed at pp. 42 and 43 of the compilation filed whereas the information obtained from the Krishi Gian Kendra is placed at pp. 53 to 59 of the compilation. On a perusal of the letter the assessing officer opined that the income per acre was a negative figure. He also noted as a fact that the assessee did not own any agricultural implements except a tubewell and it was clear that he was getting the agricultural operations done from others for which he was incurring heavy expenditure. Keeping the aforesaid facts in mind the assessing officer worked out the assessee's agricultural income plus the income which was earned from non -agricultural activities and which was ultimately treated as income from undisclosed sources as follows: The sum of Rs. 1,02,203 was brought to tax as undisclosed income attracting tax @ 60 per cent.
Before us the learned counsel argued at length, and we would any vehemently, contending at the outset that no query was raised at the time of assessment by the assessing officer about the quantum of agricultural income and this was done belatedly on 17th Sept., 1996, by means of an order-sheet entry just a few days before the conclusion of the assessment order which was on 27th Sept., 1996 As regards evidence in support of the assessee's figures, the learned counsel placed strong reliance on the letter of the Tehsildar/Patwarsi contending that the figure mentioned therein did represent an accurate working of the assessee's agricultural income. The further submission was to the effect that the department could not tamper with the figure of agricultural income shown as this would amount to taxing the agricultural income itself which the Central Government could not do as it was a State subject.
On a query from the Bench about the maintenance of account books, vouchers, etc. by the assessee in respect of his agricultural income, the only reply given was that all incomings had been deposited in the bank. It was further stated that no incriminating documents were found at the time of search which would show that the income earned by the assessee from agricultural activities and actually shown in the return for block assessment was lower or higher and what had actually been shown was incorrect. The learned counsel also referred to the information obtained from the Krishi Gian Kendra contending that this represented an ideal state of affairs and could not be made applicable to each and every case. In concluding the learned counsel urged that the addition made by the assessing officer be deleted and relied on the following decisions: (i) Pradeep Batra v. Inspecting Assistant Commissioner (1991) 39 ITD 406 (Del), (iii) Sunder Agencies v. Dy. CIT (1998) 1 DTC 166 (Mum-Trib) : (1997) 63 ITD 245 (Mumbai); (iv) Harakchand N. Jain v. Asstt. CIT (1998) 6 DTC 364 (Mum-Trib) 223 : (1998) 101 Taxman 324 (Mum-Trib); and (v) (1995) 215 ITR (St) 70CBDT Circular No. 717 dt, 14th Aug., 1995 (P.98).
The learned Departmental Representative, on the other hand, vehemently supported the order of assessing officer contending that the Tehsildar did not have requisite qualifications to certify the yield from any particular type of land and otherwise also it was not his duty to give such certificates. In support of the Revenue's case, the learned Departmental Representative vehemently supported the information obtained from the Krishi Gian Kendra, Kurukshetra, which, according to him, had certified the income to be a negative figure. He, therefore, urged that the addition made by the assessing officer be confirmed.
In reply the learned counsel for the assessee stated that the income of the assessee had been accepted in the past assessments prior to the present block assessment no doubt under section 143(1). On a query from the Bench the learned counsel stated that other than agricultural income the assessee had interest income from bank and other sources.
We have considered the. rival submissions and also perused the material oil record to which our attention was invited during the course of the hearing. The decisions cited at the Bar have also been duly taken into account. The first point we would like to decide is the question of opportunity, whether adequate or not as it was the plea of the learned counsel that the first query raised pertaining to agricultural income was on 17th Sept., 1996 by means of an order sheet entry and the assessment was completed on 27th Sept., 1996. On the facts of the case, we are not inclined to restore the matter back to the file of the assessing officer as not useful purpose would be served considering the fact that the assessee had not placed any material on record which would show that any records were being maintained pertaining to agricultural income and whether there is complete detail and evidence in respect of the expenditure incurred against the agricultural income.
A pointed query from the Bench did not elicit any positive information from the learned counsel and as already noted by us the sole reliance was on the letter from the Tehisildar placed on the compilation. In other words, the assessee is not in a position to support the figure of agricultural income stated to have been earned by him during the various assessment years included in the block period. On the other hand, the information obtained from the Krishi Gian Kendra also takes into account an ideal situation where an assessee incurs various types of expenditure, has complete agricultural implements and shows different types of crops, etc. It is noted as a fact in the present case by the assessing officer that the assessee does not own any agricultural implements having only a tube well and the inference drawn is that the agricultural operations are got done from outside by incurring heavy expenditure. In other words, the facts and figures given by the Krishi Gian Kendra, Kurukshetra are not strictly applicable as these envisage an ideal situation whereas each case has to be decided on its own facts. In the final analysis, we hold that in the present case it is not possible to work out the agricultural income either on the basis of the assessee's evidence or on the basis of the evidence which has been relied upon by the department.
It may, however, be appreciated that the present is a case of block assessment subject to the newly introduced search and seizure provisions. These provisions take into account assessment completed on the basis of seized material which reveals the undisclosed income of an assessee. In the present case, the assessee has filed returns for the assessment years preceding the date of the raid showing therein income from interest, etc. as also agricultural income the latter for rate purposes. Nothing has been brought on record by the department to show that any of these earlier returns have been adversely commented upon either with respect to the taxable portion or with respect to the agricultural income which admittedly is not taxable. At p. 13 of the compilation is an intimation under section 143(1)(a) for assessment year 1996-97 which shows total income of Rs. 11,953 and agricultural income of Rs. 75,830. It is also noticed from the compilation that the assessee along with the returns has filed P&L a/c, details of interest income as also the balance sheet reflecting various assets both movable and immovable. Not a single piece of incriminating evidence has been found during the course of search and seizure which would show any undisclosed income on the part of the assessee. The entire assessment order refers only to the agricultural income earned in various assessment years comprising the block and the entire exercise of the assessing officer is in the direction of trying to prove that the quantum of agricultural income is lesser than the figures actually shown to have been earned and the balance has been treated as income from undisclosed sources. In our opinion, such is not the mandate provided by the newly inserted provisions and on the peculiar facts of the present case where only agricultural income has been touched and no other item of taxable income has been disturbed and there is no reference to any undisclosed investment and no seizure of cash or jewellery, we are not in a position to appreciate the stand of the Revenue to temper with the agricultural income converting the same into taxable income and that also on surmises and conjectures. In the earlier part of the present order, we have already referred to the information obtained from the Krishi Gian Kendra observing that this would apply to a given case and not to each and every case. The assessing officer himself has noted as a fact that the assessee does not have any agricultural and gets all the agricultural implements operations done from an outside agency incurring heavy expenditure.
This by itself would lead to the conclusion that the basis to upset the figures shown was not at all valid and justified. In the final analysis, we delete the entire addition on account of undisclosed income of Rs. 1,02,203, and this would mean the quashing of the assessment order itself as no other item has been subjected to tax. We must make it absolutely clear while parting with this appeal that the same has been delivered on its own facts and same may not apply to each and every case irrespective of the facts existing. Further, in the view that we have taken, we do not find it necessary to discuss each and every decision cited at the bar before us but we must observe that these have all been taken into account in deciding the present appeal.