Commissioner Of Income Tax, Hisar v. M/S S.r.m. Cotton & Oil Mills, Anaj Mandi, Bhiwani

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No. 415 of 2008DATE OF DECISION : 24.07.2008 Commissioner of Income Tax, Hisar .... APPELLANT Versus M/s S.R.M. Cotton & Oil Mills, Anaj Mandi, Bhiwani ..... RESPONDENT CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTALHON'BLE MR. JUSTICE AUGUSTINE GEORGE MASIH Present:Mr. Sanjeev Kaushik, Advocate,for the appellant-revenue. * * * SATISH KUMAR MITTAL , J. The Revenue has filed this appeal under Section 260 A of theIncome Tax Act, 1961 against the order dated 27.7.2007 passed by theIncome Tax Appellate Tribunal, Delhi Bench `A', New Delhi (hereinafterreferred to as `the Tribunal') in ITA No. 1375/DEL/04 for the AssessmentYear 1999-2000. In the present appeal, the dispute is regarding the addition ofRs. 6,51,000/- made by the Assessing Officer. The addition was made by theAssessing Officer, while treating the agricultural income shown by theassessee on account of sale of trees as “Income from other sources”. Theorder of the Assessing Officer was upheld by the Commissioner of Income ITA No. 415 of 2008 Tax (Appeals) Karnal. However, on appeal filed by the assessee, theTribunal has deleted the said addition while observing as under : “We have considered the rival contentions, carefullygone through the orders of the authorities below and alsodeliberated on the case laws cited by the learned AR in thecontext of factual matrix of the case. From the record, we foundthat the assessee has purchased agricultural land measuring upto six acres, and on a portion of it, factory building along withan office was constructed. On the vacant land, trees wereplanted in the financial years 1991-92 and 1992-93, theexpenses so incurred on plantation were also debited in thebooks of account. The trees were claimed to be nurtured by theassessee with a view to earn the money by selling the samewhen these trees grow fully. During the year underconsideration i.e. 1999-00, the same were sold to M/s. ShreeRam Trader; the sale consideration was received throughaccount payee cheques which were deposited in the regularbank account of the assessee. Thus, the payment was collectedthrough the assessee's banker State Bank of Patiala, Bhiwaniwhich was deposited vide pay in slip dated 21.10.1998 and26.10.1998. On asking by the Assessing Officer, the assesseehas furnished documentary evidence regarding ownership ofagricultural land, fact of growing of trees thereon in thefinancial years 1991-92 and 1992-93, copies of the vouchers of various expenditure incurred in connection thereto which wereduly recorded in the books of account in those years. Theassessee has also furnished bill wise details of sale of trees toShree Ram trader. The amount was received as salesconsideration through account payee cheques were deposited inthe regular bank account and payment was realized throughbanking channel. As per our considered view, the assessee hasdischarged the primary onus casted on it, and once suchdocuments and information were furnished to the AssessingOffiocer, the burden shifts on the revenue to show thatdocuments/information furnished were not true. If after 3-4years, the purchaser has left the place of his business, theassessee cannot be faulted and if while leaving the changedaddress has not been made known to the assessee, the assesseecannot be compelled to furnished the changed address. Oncethe genuineness of the transaction of sale is proved, theconsideration of which was received through account payeecheques, the assessee cannot be faulted if the Assessing Officeris unable to find out the bank address of the supplier. It is alsonot the case where payment was made in cash or through draftswhich cannot be prepared by deposited cash, but on thecontrary, the payment was received through account payeecheque of the purchaser for which there has to be a bankaccount. In view of the above, we hold that assessee has discharged its primary onus, thereafter the burden has shifted torevenue, which it has failed to discharge. We, therefore, do notfind any merit in the action of the lower authorities fordisbelieving the income earned by the assessee withoutbringing any adverse cogent material on record.” Against the aforesaid order, the instant appeal has been filed by the revenue, raising the following substantial questions of law : “1. Whether, on the facts and in the circumstances of the case,the ITAT is right in law in holding that onus of proving thesource and genuineness of transaction appearing in the accountbooks of the assessee regarding agriculture income standsproved by ignoring the fact that the identity of the person towhom trees are alleged to have been sold remained unproved,and even the receipt in lieu of sale-consideration also remainedunverified from the bankers? 2. Whether on the facts and in the circumstances of the case, thefindings recorded by the ITAT are perverse and contrary torecord as the assessee failed to discharge the onus? Counsel for the appellant-revenue submits that the burden toprove the aforesaid transaction as genuine was on the assessee, but theassessee has failed to discharge the initial onus, because he could notproduce M/s. Shree Ram Traders, who is alleged to have purchased thetrees. In the present case, it has been found by the Tribunal that thetrees were planted in the vacant land in the financial years 1991-92 and1992-93 and the expenses incurred on the plantation of those trees were alsodebited in the books of account. Subsequently, when those trees grew up,the same were sold to M/s. Shree Ram Traders. It has been found that thesale consideration was received through account payee cheques, which wasdeposited in the regular bank account of the assessee. The assesseefurnished bill, vide which the trees were sold to M/s. Shree Ram Traders.The identity of the purchaser has been duly disclosed. In thesecircumstances, the Tribunal has come to the conclusion that the assesseeshifted the burden on the revenue, but the revenue failed to show that thedocuments/information furnished by the assessee were not true. Merelybecause after three or four years, the purchaser has left the place of hisbusiness, and the assessee could not furnish the correct address of thepurchaser, it cannot be taken that the transaction of sale was genuine. In view of these findings of facts, in our opinion, no substantialquestion of law arises from the impugned order. Dismissed. ( SATISH KUMAR MITTAL ) JUDGE JUDGE July 24, 2008 ndj ( AUGUSTINE GEORGE MASIH ) JUDGE