ORDER
Diva Singh, J.M.
These five appeals are filed by the assessee against the consolidated order dated 31-3-1999 of Commissioner(A)-11, Agra pertaining to 1995-96 Assessment year.
2. The ground raised in each of these appeals are identical which as raised in ITA No. 201/Agr/99 read as under :
“Because the learned Commissioner(A) erred on facts and in law in confirming the addition of Rs. 1,70,800 out of agricultural income shown by the appellant.” In the remaining ITAs the amounts are as under :
ITA No. 197/Agr/99
Rs.
2 1,000
ITA No. 198/Agr/99
Rs.
34,700
ITA No. 199/Agr/99
Rs.
1,06,600
ITA No. 200/Agr/99
Rs.
1,45,700
3. It was a common stand both of the assessee and the revenue that the facts and circumstances as well as the reasons in the orders of the Tax Authorities are identical and as such can be decided on the basis of ITA No. 201/Agr/1999 in which the highest addition has been made. In ITA No. 201/Agr/1999 i.e., Veerendra Singh Bundela the relevant facts are that the assessing officer with regard to claim of Rs. 3,40,000 as agricultural income was of the view that the assessee could have earned only Rs. 1,69,200. However, with respect to the remaining amount of Rs. 1,70,800 he, treated the same to be income from other sources and made an addition of this amount.
4. Aggrieved by this, the assessee went in appeal before the Commissioner(A) who observed in para 1.3 appreciated the facts as under :
Name of the appellant
Area of Agricultural land
Agricultural income shown (Rs.)
agricultural income as assessee by the A.O. (Rs.)
Amount taxed as income from other sources (Rs.)
Malkhan Singh Bundela
17.34 acres
2,80,000
1,73,400
1,06,600
Puran Singh Bundela
16.43 acres
3,10,000
1,64,300
1,45,700
Ishwar Singh Bundela
17.53 acres
3,10,000
1,75,300
34,700
Virendra Singh Bundela
16.92 acres
3,40,000
1,69,200
2,70,800
Puran Singh Bundela
16.43 acres
3,10,000
1,64,300
1,45,700
5. According to the Commissioner(A) the following facts swayed the assessing officer to make the additions :
“The assessing officer stated in all these cases that the assessee had not submitted any evidence in support of sale of agricultural produce out of which the incomes as shown was enjoyed. It has also been remarked by the assessing officer, that during the year, these assessees have made huge investments in NSCs, immovable properties and have also claimed payment of advance tax. On being asked to explain the source of these investments and for household expenses, it was replied by the assessees that these have been incurred out of agricultural income. According to the assessing officer, Bundelkhand region, where the lands of the assessees were situated, is not an agriculturally prosperous area for want of enough irrigation facilities etc. Hence, it could not be accepted, in absence of any evidence from the assessees that such huge sums of agricultural income as claimed in their returns were in fact enjoyed by them during the year. The assessing officer, therefore, proceeded to estimate the agricultural income of the assessees from these lands at the rate of Rs. 10,000 peracre. After computing the total agricultural income in each case at the above rate, total agricultural income was estimated by him. Thereafter, he proceeded to tax the difference between shown agricultural income and the assessed agricultural income as income from other sources.”
6. Before the Commissioner(A) the following submissions were made on behalf of the assessee :
“In their identical written submissions the appellants state that during the course of assessment proceedings, copies of Khasra and Khatoni were filed. While referring to the remarks of assessing officer that no proof of sale proceeds was filed, the appellants state that the assessing officer had also estimated the income from agriculture at the rate of Rs. 10,000 per acre without any basis. As against this, the appellants had filed along with appeal petition certificate from Tehsildar to substantiate the amount of claimed agricultural income. It is the case of the appellant that Tehsildar was an expert in the matter relating to agriculture and his opinion was based on the quality of land, irrigation facilities etc. In this background it is claimed that the quantum of agricultural income shown by the appellants could not be held as unreasonable.
In all these appeals, a query letter as addressed by my learned predecessor to the assessing officer to make necessary enquiries about the nature of crops grown during the ye , ar i.e., Rabi, Kharif etc. and gross yield of crops which had been sold, details of expenses incurred on various items like fertilizers, seeds, pesticides, manual labour charges, electricity charges for running the tubewell, tractor charges, and expenses on freight for carrying produce to Mandi. In response to this query, a report has been sent by the assessing officer on 10-3-1998 including therewith a report of Lekhpal sundry details of income and expenditure (without any details) on agriculture activities alongwith copies of Khasra and Khatoni. Together with this, a report of Inspector of Income-tax has also been forwarded. On going through the report (a copy of which was also supplied to the counsel), it is noticed that it does not contain exact details about the operations undertaken by these assessees during the year under appeal. The details of weights and quantum of seeds, chemicals, fertilizers, diesel oil etc. used are conspicuously absent in this report. The report of the Inspector of Income-tax which gives the description about the location etc., of various land holdings of the appellants at different places, does not give any details of agricultural operations undertaken which would be linked to the shown agricultural income during the year.
It was felt at the hearing of these appeals that in the background of huge amounts of shown agricultural incomes during the year, there could be no better way than to ask the appellants themselves to evidence the extent of agricultural incomes by giving them specific opportunity. The appellants were thus required to furnish the following specific details regarding the agricultural incomes in their cases :
(i) Quantity and evidence regarding seeds, fertilizers etc. used for agricultural operations during the year;
(ii) Payment for irrigation including electricity bills for operating tubewell;
(iii) Evidence of sale proceeds during the year;
(iv) Yield of income from agricultural operations during last five years; and
(v) Quantity of food grains sold to Government, if any, under its procurement operations.
To these specific queries, none of the appellants submitted any details. It was reiterated by all of them by way of written submissions that the certificate given by the Tehsildar in their cases was based on proper appraisal of relevant factors. The appellants have also made reference to the report of the Income-tax Inspector who visited the site and found crops standing. Reference has also been made to the report of the Lekhpal about the crops grown and estimated yield for Rabi crop. According to the appellants remand report sent by the assessing officer supported the fact that appellants had substantial agricultural income. Arguing that the estimate made by the assessing officer was without any basis, it was desired that agricultural incomes shown in the case of various appellants be accepted and the additions made by the assessing officer as undisclosed incomes be deleted.”
7. Considering these the Commissioner(A) came to the following conclusion :
“On the facts and in the circumstances of these cases in appeal, it cannot be denied that these appellants were enjoying agricultural incomes as they were having large holdings. At the same time it could not be accepted with any degree of certainty that they were enjoying agricultural incomes during the year to the extent claimed by them in their returns. It may also not be called purely coincidental that huge agricultural incomes were available during the year when considerable investments in purchase of properties etc. were undertaken by them as mentioned in the assessment orders. Without prejudice to the claims of the assessees regarding huge agricultural incomes vis-a-vis huge investments, it could not be denied that it was incumbent upon them to produce the details of necessary expenditure incurred on various items required for conducting agricultural operations, the yield received and sale proceeds realized. The attitude of the appellants in all these cases for not providing required details is not understood. So much so, even the details of agricultural income shown by them in the preceding years have not been furnished during the appellate proceedings which would have been quite helpful in throwing some light on the agricultural income shown by them during the year.
In the aforesaid background, there does not appear any merit in the contention of the appellants that the assessing officer’s decision in their cases in treating part of the shown agricultural income as undisclosed income, was erroneous. While arriving at this conclusion, I am also guided by the decision of Hon’ble Allahabad High Court in the ease of Avdhesh Kumar Jain v. CIT 178 ITR 443 (All) wherein a conclusion had been arrived that in the absence of evidence about the agricultural income, the assessing officer’s assessment of such income as income from other sources was justified. The assessment made by the assessing officer in these cases is, therefore, confirmed.”
8. Still aggrieved, the assessee is in appeal before us.
9. Right at the outset it was submitted by the Authorized Representative of the assessee Shri Mohanji that first and foremost the decision relied upon by the learned Commissioner(A) to reject his claim is not applicable. It was stated that in the case of Avdhesh Kumar Jain v. CIT (1989) 178 ITR 443 (All) the claim of the assessee had been rejected because there was no proof at any stage and in fact a concurrent finding at every stage that the assessee had not filed any proof in support of his claim that he was actively engaged in agricultural activity. However, the position is not so in this case. Referring to the assessment order as well as the impugned order, it was his contention that there was a concurrent finding at every stage that the assessee was engaged in agricultural activity since the assessing officer himself has allowed the claim of the assessee to the extent of Rs. 1,69,200. Referring to the assessment order as well as the impugned order it was his further contention that simply because the assessee has not maintained any record of any expenses pertaining to the agricultural activity and the assessee has claimed the agricultural income on an estimate basis there was no reason or basis for the assessing officer to arbitrarily fix a flat rate of agricultural income without going into the aspect of nature of land etc. It was his contention that even the assessing officer has not based his estimation on any cogent fact or reason. A flat rate of Rs. 10,000 per acre it was argued is not justified and is not based on any comparison. As such, the contention was that the estimate is not correct and thus there is no reason why the estimate of the assessee should not be accepted. It was further contended by him that at the relevant point of time the assessee owned three tractors and engaged labourers. Simply because the details were not maintained by the assessee it was argued the assessee’s claim could not be rejected based on an arbitrary estimate of the assessing officer.
10. Inviting attention to page I of the Paper Book which is a certificate of the Tehsildar dated 12-9-1996, it was submitted that the person competent to estimate the gross agricultural income has certified that the assessee could have earned Rs. 4,75,000 from agricultural activity. Similarly reliance was also placed on page 2 of the Paper Book which is the certificate of the Tehsildar regarding the net agricultural income wherein the Tehsildar has certified that the assessee has earned net agricultural income of Rs. 3,65,000. It was his submission that the claim of the assessee is only Rs. 3,40,000. Referring to page 3 of the Paper Book, it was further submitted that it is the certificate of the Gram Pradhan, Lalitpur certifying that the lands of the assessees were irrigated by tubewell and yields the 2 crops in a year. Attention was also invited to the net agricultural income worked out on an estimate basis by the assessee at page 4 of the Paper Book and a certificate of Lekhpal at page 5 dated 4-3-1998 certifying that the assessee who is the owner of the land measuring 16.92 acres which is irrigated by Nala, well and tubewell and having mango trees numbering 20 to 25 which yields a good crop was also referred. Referring to the same it was also submitted that the Lekhpal has stated that he inspected the land and found that the agricultural land had a crop of Gram, Wheat, Masoor etc. which is likely to yield good crop and the Lekhpal has also estimated the expenditure which was likely to be incurred on labour, diesel, oil, seed, fertilizers and pesticides etc. Attention was also invited to page 6 of the Paper Book which is a letter addressed from the ACIT, Circlc-1, Jhansi to the Commissioner(A)-II, Agra which reads as under :
“Re. No. Misc./ITI/C-I/Jhs/97-98/454 dated 10-3-1998
Madam
Sub: Appeals in the case of S/Shri Puran Singh, Malkhan Singh, Ishwar Singh and Virendra Singh Bundela for the assessment year 1995-96 reg.
Kindly refer to your letter F.No. Misc./Commissioner(A)-II/Agra 97-98/269 dated 9-2-1998 on the above-mentioned subject.
2. In this regard it is submitted that as directed by your goodself, all the necessary information have been obtained. The I.T.I. of this office was directed to report the factual position of the case and he has submitted his ,detailed report in this regard. All the necessary documents furnished by the assessee as well as report of the Inspector are being sent for your kind perusal and records.
Yours faithfully
Sd/(Y.K. Singh)
Asstt. CIT
Circle-I, Jhansi
Encl : 1. Report of Lekhpal with details of Income and Expenditure on Agriculture and copies of Ksra and Khatohani in each case.
2. Report of the Inspector in original.”
11. Attention was also invited to Pages 7 to 15 of the Paper Book which contains the remand report of the Inspector of Income-tax department dated 9-3-1998 which was submitted to the ACIT Circle-I, Jhansi which was forwarded to the Commissioner(A). Attention was also invited to pages 16 and 17 of the Paper Book which is the copy of the written submission placed before the Commissioner(A)-II dated 19-1-1998 by the assessee wherein the following submissions were made :
“Before the Commissioner(A)-II
Sanjay Place, Agra.
Sir,
Ref. Appeals of :
(i) Sujan Singh Bundela
(ii) Malkhan Singh Bundela
(iii) Pooran Singh Bundela
(iv) Ishwar Singh Bundela
(v) Virendra Singh Bundela
The only point involved in their appeals is against the estimate of agricultural income made by the assessing officer. In this connection the appellants have already filed submissions dated 9-2-1998 and 17-12-1998, The assessees have also brought on record the certificates of Tehsildar regarding the estimate of agricultural income.
2. The written arguments dated 9-2-1998 with enclosures were sent by your predecessor to the assessing officer for his comments. The assessing officer vide his letter dated 10-3-1998 has forwarded the report of the Inspector of Income-tax and also report of the Lekhpal.
3. The Inspector had visited all the places where the agricultural lands are situated and has reported that :
(a) Agricultural crops were growing on all the fields.
(b) Irrigation facilities were available on each site.
(c) Tractor was also found.
(d) On some fields there was garden of mangoes and guava.
(e) Keeping in view all the facts narrated in the report the Inspector concluded that a huge agricultural yield cannot be ruled out from the above agricultural fields.
4. The remand report submitted by the assessing officer in the form of Inspector’s report clearly establish that the appellants have huge agricultural income. The estimate of Tehsildar is based on the condition of soil, irrigation facilities and other factors, The Tehsildar is an expert and his certificate has great evidentiary value.
5. It is requested that the agricultural income as shown by the appellants may kindly be accepted and the addition made by the assessing officer may kindly be deleted.
Yours faithfully,
Sd/-(Ranvir Singh)
Advocate for Appellants
Dated : 19-1-1998″
12. Accordingly it was his submission that simply because the assessee did not maintain the details of expenses etc. pertaining the agricultural activity there was no reason or basis for the department to estimate on a flat rate basis the possible income generated by the assessee. It was submitted that sufficient evidence was placed before the Tax Authorities to address the nature and type of irrigation and the facility of the assessee’s lands. The people qualified to comment or estimate the possible income have operated the assessee’s version. The department has not bothered to comment upon it and simply rejected the assessee’s claim because the assessee has not been careful in maintaining the bills etc. of expenditure incurred to generate the agricultural income. Thus after obtaining the Remand Report the Commissioner(A) at least should have discussed the evidences placed before him.
13. The learned Departmental Representative, on the other hand, placed reliance upon the orders of the Tax Authorities. Inviting attention to page 8 of the Paper Book at internal page 2 of the Inspector’s report it was his contention that the crop of wheat, urd and peas could not have been found to be standing at the same time as such the Inspector’s report does not have any value.
14. Having heard the rival submission and perused the material available on record and taken note of the decision relied upon by the learned Commissioner(A) we are of the view that in the peculiar facts of the case, the decision relied upon does not have any relevance, as such, in the peculiar facts and circumstances of the case it was wrongly relied upon. The concurrent finding on record in the present case is that the assessee has been engaged in agricultural activities. The issue which devolves for consideration now in the scenario is that where the assessee has not maintained the relevant details of expenditure incurred to earn agricultural income claimed could a flat rate be applied to estimate the possible agricultural income or would it have been more appropriate to base the estimate on the specific irrigation facility available on their different chuncks of land keeping in view the nature of the soil etc. It is seen that the factum of assessee being engaged in agricultural activities has been accepted by the revenue Authorities. However, no basis for estimating on a flat rate basis possible income of the assessee has been given either in the assessment order or in the impugned order. It is also seen that, on the other hand, in the remand proceeding the Inspector personally visited the agricultural fields of the assessee alongwith Shri Ram Sewak and Shri Ghuman Singh, Lekhpals of the respective areas and has given details of land holdings, the nature of irrigation facilities, etc. and crop found at that point of time. We have to take note of the fact in the Inspector’s report at internal page 2 no doubt it is mentioned that the crop of wheat and urd was found standing in the field which according to the learned D.R. could not have been found standing at the same time since one was Rabi crop and other was a Kharif crop. It is also seen that as per page 5 of the Paper Book which is the certificate of the Lekhpal wherein details of crops are given. It is stated that Gram, Wheat and Masoor were found standing on 4-3-1998. Thus without getting into the controversy as to whether it was typographical error or otherwise the fact remain that in the month of March 1998 on the assessee’s land a substantial crop of wheat, gram etc. were found to be growing. However, these facts do not address the issue at hand namely the extent of agricultural activity of the assessee in the period under consideration.
15. Accordingly, having gone through the material available on record, we are of the view that no doubt there was no reason or basis for the assessing officer to estimate on a flat rate basis the possible income generated by the assessee from agricultural activity or for the Commissioner(A) to confirm the same in view of the facts that details of the nature of the land holding and irrigation facilities, etc. were available. It is also seen that as per the certificates obtained in the remand proceeding the factum of extent of agricultural activity in the year under consideration has not specifically been addressed. Simply because in the month of March 1998 substantial agricultural crops were standing on the assessee’s land is also not by itself a reason to presume that there must be substantial agricultural activity in the year under consideration also. The fact that the assessee had tractors, etc. available also finds mentioned in the Inspector’s report. Accordingly, we are of the view that in the circumstances it would be appropriate to restore the issue back to the file of assessing officer to specifically address the extent of agricultural activity of the assessee in the year under consideration and thereafter estimate the possible extent of agricultural income generated from the specific lands of which the assessee is the owner. The assessing officer may call for necessary evidence of the land revenue Authorities if so required so as to decide the actual extent of agricultural activity on the land owned by the assessee in the year under consideration. Needless to say that the assessing officer will pass a speaking order in accordance with law after giving the assessee an opportunity of being heard. Accordingly the ground raised by the assessee is allowed for statistical purposes.
16. In the result, the appeal of the assessee is allowed for statistical purposes.
17. Since in the other appeals identical facts and circumstances are involved and no separate arguments either by the assessee or the revenue were addressed and in fact the common stand was that the appeals can be decided on the basis of arguments advanced in ITA No. 201/Agr/1999. Thus, for the reasons discussed in detail in ITA No. 201/Agr/1999 the grounds raised by the assessees in the appeals are also allowed for statistical purposes.
18. In the result, the appeals of the assessees are allowed for statistical purposes.