Commissioner of Income Tax vs S.R.M. Cotton and Oil Mills

Satish Kumar Mittal, J.—The revenue has filed this appeal u/s 260A of the Income Tax Act, 1961 against the order dated 27-7-2007 passed by the Income Tax Appellate Tribunal, Delhi Bench A, New Delhi (hereinafter referred to as the Tribunal) in ITA No. 1375/Delhi/04 for the assessment year 1999-2000.

In the present appeal, the dispute is regarding the addition of Rs. 6,51,000 made by the assessing officer. The addition was made by the assessing officer, while treating the agricultural income shown by the assessee on account of sale of trees as "Income from other sources". The order of the assessing officer was upheld by the Commissioner (Appeals), Karnal. However, on appeal filed by the assessee, the Tribunal has deleted the said addition while observing as under:

We have considered the rival contentions, carefully gone through the orders of the authorities below and also deliberated on the case laws cited by the learned authoirsed representative in the context of factual matrix of the case. From the record, we found that the assessee has purchased agricultural land measuring up to six acres, and on a portion of it, factory building along with an office was constructed. On the vacant land, trees were planted in the financial years 1991-92 and 1992-93, the expenses so incurred on plantation were also debited in the books of account. The trees were claimed to be nurtured by the assessee with a view to earn the money by selling the same when these trees grow fully. During the year under consideration, i.e., 1999-2000, the same were sold to M/s. Shree Ram Trader; the sale consideration was received through account payee cheques which were deposited in the regular bank account of the assessee. Thus, the payment was collected through the assessees banker State bank of Patiala, Bhiwani which was deposited vide pay in slip dated 21-10-1998 and 26-10-1998. On asking by the assessing officer, the assessee has furnished documentary evidence regarding ownership of agricultural land, fact of growing of trees thereon in the financial years 1991-92 and 1992-93, copies of the vouchers of various expenditure incurred in connection thereto which were duly recorded in the books of account in those years. The assessee has also furnished billwise details of sale of trees to Shree Ram Trader. The amount was received as sales consideration through account payee cheques were deposited in the regular bank account and payment was realized through banking channel. As per our considered view, the assessee has discharged the primary onus casted on it, and once such documents and information were furnished to the assessing officer, the burden shifts on the revenue to show that documents/information furnished were not true. If after 3-4 years, the purchaser has left the place of his business, the assessee cannot be faulted and if while leaving the changed address has not been made known to the assessee, the assessee cannot be compelled to furnish the changed address. Once the genuineness of the transaction of sale is proved, the consideration of which was received through account payee cheques the assessee cannot be faulted if the assessing officer is unable to find out the bank address of the supplier. It is also not the case where payment was made in cash or through drafts which cannot be prepared by deposited cash, but on the contrary, the payment was received through account payee cheque of the purchaser for which there has to be a bank account.

In view of the above, we hold that assessee has discharged its primary onus, thereafter the burden has shifted to revenue, which it has failed to discharge. We, therefore, do not find any merit in the action of the lower authorities for disbelieving the income earned by the assessee without bringing 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:

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in holding that onus of proving the source and genuineness of transaction appearing in the account books of the assessee regarding agriculture income stands proved by ignoring the fact that the identity of the person to whom trees are alleged to have been sold remained unproved, and even the receipt in lieu of sale-consideration also remained unverified from the bankers?

Whether on the facts and in the circumstances of the case, the findings recorded by the Income Tax Appellate Tribunal are perverse and contrary to record as the assessee failed to discharge the onus?

Counsel for the appellant-revenue submits that the burden to prove the aforesaid transaction as genuine was on the assessee, but the assessee has failed to discharge the initial onus, because he could not produce M/s. Shree Rani Traders, who is alleged to have purchased the trees.

In the present case, it has been found by the Tribunal that the trees were planted in the vacant land in the financial years 1991-92 and 1992-93 and the expenses incurred on the plantation of those trees were also debited 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 the sale consideration was received through account-payee cheques, which was deposited in the regular bank account of the assessee. The assessee furnished bill, vide which the trees were sold to M/s. Shree Ram Traders. The identity of the purchaser has been duly disclosed. In these circumstances, the Tribunal has come to the conclusion that the assessee shifted the burden on the revenue, but the revenue failed to show that the documents/information furnished by the assessee were not true. Merely because after three or four years, the purchaser has left the place of his business, and the assessee could not furnish the correct address of the purchaser, it cannot be taken that the transaction of sale was genuine.

6.In view of these findings of facts, in our opinion, no substantial question of law arises from the impugned order.

Dismissed.