In absence of accounts/certificate of agriculture activity claimed to have been carried out, mere affidavit not sufficient to discharge the burden
ABCAUS Case Law Citation:
ABCAUS 3257 (2020) (02) HC
Important case law relied upon by the parties:
Smt. Prem Sundari vs. CIT
The appellant assessee was engaged in the business of running a restaurant besides earning commission and interest income.
The Assessing Officer (AO) observed during the scrutiny assessment that the assessee had done share trading during the year under consideration with a huge margin money, however, he had not shown the income from such share trading in the return of income.
The claim of the assessee was that he paid for the margin money out of agricultural income of his deceased father. However, the assessee failed to explain the source of investment of margin money with the supporting the documentary evidences. The assessee even could not produce the bill/vouchers in support of agricultural income and the statement of copy of joint bank account in the name of assessee and his father showed a meagre deposit to support his claim.
Accordingly, giving the benefit of deposits in the bank account as assessee father’s agricultural income contribution towards the margin money, the AO treated balance out of the margin money as unexplained income of the assessee and added to the returned income u/s 68 of the Income Tax Act, 1961 (the Act).
Being aggrieved, the assessee went in appeal before the CIT(A) who confirmed the finding of the Assessing Officer by observing that the assessee had failed to explain the source of investment shown to be invested from his father’s agricultural income in the margin money of share trading business.
He further observed that the assessee had not brought on record any material evidence regarding production of wheat, potato and rice crop and storage of these crops for a period of two and a half year thereof ; that the assessee had not produce any evidence regarding sale of stored crop and thus merely a submission of an affidavit by the assessee would not be sufficient to discharge the burden of proving the source of agricultural income of his father.
Therefore, the CIT(A) held that the assessee failed to discharge the primary onus to explain the source of agricultural income of his father and his bank deposit and reconciliation of the bank deposit before one year and agricultural income earned thereof and accordingly upheld the finding of the AO as reasonable and logical in the absence corroborative evidence.
In second appeal by the assessee, the Tribunal observed that in the absence of relevant material evidence on record, such as return of income, withdrawals for agricultural expenses on cultivation of crops, details of agricultural activities, suitability of soil in terms of fertility for the types of the crops, and other facilities of tubewell/canal for irrigation etc. in support of the aforesaid agricultural income, the CIT(A) has disbelieved the affidavit of the deceased father of the assessee in respect of his agricultural income from the sale of stored crops of wheat, potato, rice etc.
The Tribunal observed that the agricultural land was owned by the assessee’s father. However, the assessee had not claimed such an agricultural income from his father either in the earlier assessment years or in the succeeding years. Over and above the assessee’s father was neither filing return of income nor any statement of account including income and expenditure statement of working of his agricultural income had been furnished by the assessee so as to ascertain the correct amount of agricultural income.
The Tribunal noticed that the assessee had failed to produce material documentary evidence to proof cultivation of agricultural produce by way of Khasra Khatauni, source of irrigation (tube well/canal), evidence on cold storage etc. to justify the cash deposits in the aforesaid joint bank account in which even the cash deposits do not correlate with the proceeds emanating from Mandi Parishad. Therefore, the agricultural income claimed was rightly disbelieved by the CIT(A).
The Tribunal noted that the Jurisdictional High Court, in a case on the issue of admissibility of the agriculatural income had emphasised on the certificate from Tehsildar and held that the assessee should maintain the accounts pertaining to entire agriculture activity.
The Tribunal stated that for the purpose of claiming the benefit of the agriculture income, it is necessary to produce the material evidence to substantiate claim of agricultural income. Further, the assessee should maintain the accounts pertaining to entire agriculture activity which had not been maintained by the assessee.
Accordingly, the Tribunal dismissed the grounds of appeal.
Not satisfied, the assessee preferred an appeal under section 260A of the Act raising the following substantial questions of law:
(i) Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in sustaining the addition u/s 68 of the Act?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in disbelieving the affidavit filed by the father of the assessee who had testified the availability of money as a result of agriculture produce sold and past savings duly deposited in bank account.
(iii)Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in upholding the order of the CIT (Appeals)?”
The Hon’ble High Court opined that the above questions of law were not substantial questions of law but were essentially factual in nature.
The Hon’ble High Court stated that whether the addition towards the margin money could be sustained or not was a factual issue that was specifically gone into by the Assessing Officer in his assessment order. The Commissioner of Income Tax (Appeals) upheld the order of the Assessing Officer by giving a detailed reasoning. Further, the Tribunal also specifically considered the issue in relied upon the decision of the Court.
Therefore the Hon’ble High Court dismissed the appeal being devoid of any merit as no substantial questions of law were involved.
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