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2010 DIGILAW 843 (MP)

CIT v. Nalin Patni

2010-08-18

PRAKASH SHRIVASTAVA, SHANTANU KEMKAR

body2010
JUDGMENT By The Court 1. Shri R.L. Jain, learned senior advocate with Ms. v. Mandlik, learned Counsel for the Appellant. 2. This appeal has been filed under Section 260A of the Income Tax Act, 1961 against the order of Tribunal, dt. 24-2-2010, for the block assessment period 1987-88 to 29-1-1997. 3. The brief facts are that a search under Section 132 of the Act was conducted at the Bharat Modi Group of Industries wherein, Shri Pradeep Kumar Patni, was a liaison officer, therefore, common residential premises of Shri Pradeep Kumar Patni and Nalin Patni were also searched under Section on 19-1-1997 and the assessment proceedings for the block period 1987-88 to 29-1-1997 were initiated against the Respondent Assessee. the Assessee had filed block return and the block assessment was completed by the AO on an income of Rs. 57,37,094. The CIT(A)-II allowed the appeal partly, deleting the addition of Rs. 41,05,633 and the Tribunal by the impugned order dismissed the appeals preferred by the revenue hence, the present appeal. 4. Learned Counsel for the Appellant submitted that the Tribunal committed an error in holding that the Assessee had agriculture income, when no evidence was produced by the Assessee in this regard and the Tribunal did not appreciate that it was the onus of the Assessee to prove it. He further submitted that since the agricultural income itself was not proved, therefore the investment in share and immovable property made out of the agricultural income could not be upheld. He further submitted that the deletion of the addition of Rs. 11,65,000 on account of unexplained income in Hundies was unsustainable. 5. We have heard learned Counsel for the Appellant and perused the record. 6. So far as the issue of the proof of agricultural income is concerned, orders passed by the CIT(A) as well as the Tribunal indicate that the tax authorities rightly placed the onus on the Assessee to prove the agricultural income. The CIT(A) as well as the Tribunal have concurrently found that the Assessee had by way of evidence established the agricultural income. The CIT(A) has recorded that the Assessee had produced copies of Khasara entries, disclosing the extent of land, the status of the Assessee and the crops during relevant periods in support of his submission that he had acquired land on lease and had earned income from the actual agricultural operations in the capacity as Bataidar. The CIT(A) has recorded that the Assessee had produced copies of Khasara entries, disclosing the extent of land, the status of the Assessee and the crops during relevant periods in support of his submission that he had acquired land on lease and had earned income from the actual agricultural operations in the capacity as Bataidar. The CIT(A) has also noted that the Assessee had filed the evidence to show that the yield per acre of land for various crops was reasonable and the income disclosed was also reasonable having regard to the extent of land. The revenue record was relied upon as primary evidence of the actual agricultural operations and it was noted that the Assessee had disclosed the net income from agriculture, which means gross receipts minus the expenses incurred for purchase of seeds manures etc. As against the evidence produced by the Assessee, no contrary material was brought on record by the AO to prove that the claim made by the Assessee was fabricated. The CIT(A) thus rightly noted that the Assessee had discharged the onus of proving the agricultural income and on such a proof the onus shifted on the Department and the Department failed to discharge the burden of disproving the claim of the Assessee. 7. The findings which have been recorded by the CIT(A), in respect of the agricultural income are based upon the evidence on record. The Tribunal has rightly noted these factual findings in the order of CIT(A) and it was not controverted by the revenue that there was agricultural income though the extent was subject to verification but no effort was made by the AO to verify the same. 8. The issue, which Appellant is trying to raise in respect of the agricultural income of the Assessee is already concluded by the factual finding recorded by the CIT(A), as affirmed by the Tribunal and such an issue does not involve any question of law requiring consideration under Section of the Act. It is also worth noting that since the agricultural income of the Respondent-Assessee is proved, therefore, the investment of shares and the immovable property made from the agricultural income cannot be held to be unsustainable. 9. Learned Counsel appearing for the Appellant further submitted that the deletion of the addition of Rs. 11,65,000 on account of unexplained investment in Hundies is unsustainable. 9. Learned Counsel appearing for the Appellant further submitted that the deletion of the addition of Rs. 11,65,000 on account of unexplained investment in Hundies is unsustainable. Such an argument advanced by the counsel for the Appellant is an argument on facts, which is already concluded by the factual findings recorded by CIT(A) as affirmed by Tribunal. The CIT(A) has found that during the course of search and seizure operations Hundies worth Rs. 5,50,000 were seized. These Hundies belonged to different persons whose names have been mentioned in the order of CIT(A). It has been found by the CIT(A) that these Hundies were lying with the Respondent-Assessee in his capacity as broker since he was engaged in the activity as a finance broker and the Hundi transactions reflected loans arranged by him for borrower from various lenders. A finding of fact has been recorded that Hundies were lying with the Assessee in his capacity as a broker. It was undisputed before the CIT(A) that the Assessee was carrying on the activity of finance broker. the Assessee was assessed by the AO for income from the Dalali and commission for the block period. 10. These findings which have been recorded by the CIT(A) have been affirmed by the Tribunal by noting that: Admittedly, all these facts clearly prove that Mr. Patni was engaged in the activity of a finance broker and arranging loan. These Hundies were claimed to be lying with him in the capacity of a broker only. Hundies worth Rs. 1 lac pertaining to M/s Industrial Metals were verified by the AO from the books of accounts. Identical explanation was given by the Assessee while recording his statement by the authorities during search operation. Even the AO also accepted that the Assessee was carrying on the business as finance broker as he has himself assessed the income from Dalali for the block period at Rs. 1,22,000. It is also an admitted fact that the brokerage is an inter-mediatory with no clear title of the property in his favour. The AO has not made any effort to ascertain the factual position about these Hundies and it is proved beyond doubt that the Assessee is working as a finance broker, therefore, he cannot be held to be actual owner of these Hundies until and unless the allegations are proved. Consequently, the impugned addition was rightly deleted. 11. The AO has not made any effort to ascertain the factual position about these Hundies and it is proved beyond doubt that the Assessee is working as a finance broker, therefore, he cannot be held to be actual owner of these Hundies until and unless the allegations are proved. Consequently, the impugned addition was rightly deleted. 11. The aforesaid analysis indicates that the issue, which the Appellant is trying to raise in respect of deletion of the addition of Rs. 11,65,000 on account of the investment in Hundies is concluded by the findings of fact recorded by the CIT(A) as well as Tribunal. The ground which is raised before this Court is a purely factual ground and it does not involve any question of law. 12. Thus, the appeal preferred by the revenue has no merit and the same is accordingly, dismissed.