Sunday, March 23, 2014

Exemption for agricultural income denied as assessee couldn't produce certificate of Tehsildar and financials

IT: Where assessee in support of claim of agricultural income, failed to produce certificate of Tensildar and accounts pertaining to agricultural activities, revenue authorities were justified in rejecting said ad hoc claim of assessee
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[2014] 42 taxmann.com 178 (Allahabad)
HIGH COURT OF ALLAHABAD
Smt. Prem Sundari
v.
Commissioner of Income-tax*
RAJIV SHARMA AND DR. SATISH CHANDRA, JJ.
IT APPEAL NO. 95 OF 2008
MAY  31, 2013 
Section 2(1A) of the Income-tax Act, 1961 - Agricultural income [Burden of proof] - Assessment year 1997-98 - Assessee filed her return declaring certain agricultural income - In absence of any evidence brought in support of said income, Assessing Officer rejected assessee's claim - Tribunal upheld order of Assessing Officer - It was undisputed that for claiming benefit of agriculture income, assessee was required to produce certificate of Tehsildar for assessment year under consideration - Further, assessee had to maintain accounts pertaining to entire agriculture activity - Whether since assessee failed to fulfill aforesaid obligations, Assessing Officer was justified in rejecting assessee's ad hoc claim relating to agricultural income - Held, yes [Paras 10 & 13] [In favour of revenue]
CASES REFERRED TO
 
Sudarshan Silks & Sarees v. CIT [2008] 300 ITR 205/169 Taxman 321 (SC) (para 10).
Dwijendra Mishra for the Appellant. D.D. Chopra for the Respondent.
ORDER
 
Dr. Satish Chandra, J. - The present appeal has been filed by the assessee under Section 260A of the Income-tax Act, 1961 against the judgment and order dated 31-1-2008, passed by the Income-tax Appellate Tribunal, Lucknow in ITA No. 882/Luc/02 for the assessment year mentioned above.
2. On 30-06-2008, a coordinate Bench of this Hon'ble Court has admitted the appeal on the following substantial questions of law, reads as under:—
"(b) Whether Income-tax authorities such as Assessing Officer, CIT(Appeals) or I.T.A.T. can take a different view in subsequent assessment year in the matter where facts and law are the same ?
(e) Whether the same income derived from the house property as rent can be assessed to income-tax first for Smt. Ansuya for the assessment year 1997-98 and there after the appellant and thus income from house property of Lucknow was subjected to double taxation of income-tax ?
(g) Whether ITAT, Commissioner Income-tax (Appeals) and Assessing Officer can change the A.L.V. for rented property for 9 months to 12 months without any evidence to support the finding and a finding without evidence on record is unsustainable ?
(j) Whether agriculture income given by the assessee if only partly accepted by the income-tax authorities the non-accepted portion of the agriculture income can be treated as income from other sources without any evidence or material for the same?
(k) Whether agriculture being in "state list" under schedule VII of the Constitution of India any mode of keeping account of Agriculture income can be imposed by the income-tax authorities ?
(m) Whether I.T.A.T. or CIT (appeals) or Assessing Officer can pass any order in contravention to law laid down by the Hon'ble Supreme Court or this Hon'ble Court or any other Hon'ble High Court if the same is not at variance with law laid down by this Hon'ble Court and such order passed by the I.T.A.T. or CIT (appeals) or Assessing Officer shall be illegal void and inoperative ?"
3. The brief facts of the case are that for the assessment year under consideration, the assessee has filed the return declared the income of Rs.2,80,120/-, out of which, Rs.60,120/- as the rental income and Rs.2,20,000/- as agriculture income. The Assessing Officer (AO) observed that on 16-11-1992, the Tehsildar has issued a certificate, where the agriculture income was indicated at about Rs.84,000/- only. Whereas for the assessment year under consideration, no evidence was produced. In these circumstances, the AO has estimated the agriculture income at Rs.50,000/- and the remaining amount of Rs.1,70,000/- was considered as income from undisclosed sources. The CIT(Appeals) upholds the same. However, in the second appeal, the Tribunal after considering the total area owned by the assessee and other material assessed the agricultural income at Rs.1,00,000/-. Thus, the assessee got a relief of Rs.50,000/-. Hence, the addition pertaining to agriculture income was sustained at Rs.1,20,000/-.
4. Regarding the rental income from the properties, it appears that the assessee was having two properties situated at Allahabad and Lucknow. For Allahabad property, the assessee has shown the rental income at Rs.90,000/-. 1/5th for repair etc. i.e. Rs.18,000/- was deducted. Thus, A.L.V. comes to Rs.90,000-18,000 = Rs.72,000/-only. The AO, as per computation given in his order, has taken the half share of the rental income of Rs.36,000/- as the assessee is the co-sharer in this property. The claim under Section 23(1) of the Income-tax Act, was denied, as the property was newly constructed property.
5. Regarding the Lucknow property, the A.L.V. was taken @ 9,900 per month, which comes at Rs.1,18,800/- and 1/5th was deducted i.e. Rs.23,760/-. Thus, the total income comes to Rs.95,040/-. The claim under Section 23(1) was denied, as the property was less than 5 years old. The property was not a joint property. So, the entire income was assessed in the hands of the assessee as no evidence for co-ownership was furnished. The same was upheld by the first appellate authority as well as by the Tribunal. Being aggrieved, the assessee has filed the present appeal.
6. With this background, Sri Dwijendra Mishra, learned counsel for the appellant-assessee submits that the AO has ignored the agricultural income of the previous assessment years of the assessee. In this regard, the certificate issued by the Tehsildar on 16-11-1992 was ignored.
7. Learned counsel further submits that the agricultural income is not subject to verification and no account is needed for the same. So, the claim of the assessee was wrongly rejected by the lower authorities.
8. Regarding the rental (A.L.V.) income, learned counsel submits that the rental income cannot be doubled for Lucknow property without mentioning the reason. The AO has enhanced the rental income illegally which was upheld by the appellate authorities. He also submits that the income from the house property remain the same as half share of the co-owner of the appellant Smt. Ansuya was shown in the earlier assessment years. He submits that the owner of the house property means persons entitled to receive the rent. He also submits that the A.L.V. was wrongly taken by the AO pertaining to the Lucknow property.
9. On the other hand, Sri D.D. Chopra, learned standing counsel for the Income-tax Department justified the impugned order.
10. After hearing both the parties, it appears that on 16-11-1992, a certificate of the Tehsildar was issued, which is not relevant for the assessment year under consideration i.e. 1997-98. For claiming the benefit of the agriculture income, it is necessary to produce the certificate for the assessment year under consideration. Further, the assessee should maintain the accounts pertaining to entire agriculture activity. In the instant case, no account was maintained by the assessee. The claim was ad hoc, which was examined by the lower authorities. The addition was restricted on the basis of estimation. The estimation is a question of facts as per the ratio laid down in the case of Sudarshan Silks & Sarees v. CIT [2008] 300 ITR 205/169 Taxman 321 (SC).
11. Regarding A.L.V. i.e. rental income, it appears that the assessee is the owner of two residential units. Allahabad property is jointly owned by one Smt. Ansuya Devi as per the Court Decree. For Allahabad property, A.L.V. was considered at Rs.90,000/-. 1/5th was deducted for the house repair etc. Thus, the A.L.V. comes at Rs.72,000/-. Being 50% owner, it comes to Rs.36,000/-.
12. Regarding Lucknow property, the A.L.V. @ 9,000/- per month which comes to Rs.1,18,800/-. 1/5th repair was deducted i.e. Rs.23,760/-. Thus, the net rental income for Lucknow property comes to Rs.95,040/-. The deduction under Section 23(1) of the Act was denied for both the properties as the properties were less than 5 years old. The assessee has wrongly claimed that properties were more than 5 years old. The assessee could not substantiate her claim by producing any documentary evidence pertaining to co-ownership for the Lucknow property. So, the entire income from this property was rightly assessed in the hands of the assessee.
13. In other words, the assessee has produced the documents i.e. the Court decree pertaining to the half share of the Allahabad property, but regarding Lucknow Property, no evidence was furnished. Nothing was produced before the Tribunal as well as before this Hon'ble High Court. Moreover, in the absence of documents, A.L.V. is to be estimated and the same is the question of facts. No question of law emerges from the impugned order. When it is so, then we decline to interfere with the impugned order passed by the Tribunal. The same is hereby sustained along with the reasons mentioned therein. No substantial question of law is emerging from the impugned order passed by the Tribunal.
14. In the circumstances, the answer to the substantial questions is either not required or in favour of the Department and against the assessee.
15. In the result, the appeal filed by the appellant-assessee is dismissed.
No cost.

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