Can a person earn Agricultural income without agricultural Land: An issue before Chandigarh ITAT

 

Short  Overview  Where assessee claimed income from sale of mushroom spawn as being in the nature of agricultural and AO held the same as not being in the nature of agricultural income for the reason that mushroom was a fungi and not plant and it was grown in controlled condition and not on land. Matter was remanded back to AO with direction to first determine the fact whether spawn was actually grown by assessee and if so by what process. If it was found that assessee was indulging in the activity of growing spawns, issue of claim of exemption under section 10(1) would be thereafter decided in accordance with law.

Assessee claimed income from sale of mushroom spawn as being in the nature of agricultural income. AO held the same as not being in the nature of agricultural income for the reason that mushroom was a fungi and not plant and it was grown in controlled condition and not on land. Assessee explained the process of growing spawn as involving use of land for the purpose of germinating mushroom spores in soil where as a consequent thread like mycelium was formed and it was this mycelium which was further grown and developed and thereafter placed on steam sterilized grain through which it grew to form spawn. 

It is held that Matter was remanded back to AO with direction to first determine the fact whether spawn was actually grown by assessee and if so by what process. If it was found that assessee was indulging in the activity of growing spawns, issue of claim of exemption under section 10(1) would be thereafter decided in accordance with law.

Decision: Matter remanded.

 

IN THE ITAT CHANDIGARH ‘A’ BENCH

DIVA SINGH, J.M. & ANNAPURNA GUPTA, A.M.

Doon Valley Foods (P) Ltd. v. ITO

IT Appeal Nos. 164 to 167 (Chd.) of 2018

A.Ys. 2011-12 to 2014-15

5 November, 2019

Appellant by: Vinod Kumar Bindal, CA and Rinki Sharma

Respondent by: Chanderkanta, Sr. Departmental Representative

ORDER

Annapurna Gupta, A.M.

All the above appeals have been preferred by the same assessee challenging the consolidated order of the Commissioner (Appeals), Shimla ((in short referred to as Commissioner (Appeals)), dated 26-12-2017, relating to assessment years 2011-12 to 2014-15, passed under section 250(6) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’.

2. It was common ground that the issue involved was identical in all the appeals. They were all therefore taken up together for hearing and are being disposed off by this common consolidated order.

At the outset itself it was pointed out that the primary issue involved in all the appeals related to the determination of the nature of income earned by the assessee from sale of mushroom spawns whether qualifying as agricultural income and hence exempt from taxation. It was pointed out that while the assessments framed for assessment years 2012-13 to 2014-15 were regular assessments under section 143(3) of the Act denying the claim of exemption to the assessee, for assessment year 2011-12, the assessment was framed under section 147 of the Act, on account of the identical income having escaped assessment. The learned Counsel for the assessee pointed out that the issue was first dealt with in assessment year 2012-13 and, therefore, contended that the same be treated as the lead year for the purpose of deciding the issue. He, therefore, took up ITA No. 165/Chd/2018, relating to assessment year 2012-13, and discussed the facts therein.

ITA No. 165/Chd/2018 (A.Y. 2012-13) :–

3. Ground No. 1 raised by the assessee reads as under :–

“1. The Commissioner (Appeals) erred in law and on facts in confirming the assessment of the agricultural income of Rs. 98,46, 000 from sale of Mushroom Spawn grown by the appellant as business income of the appellant. The said amount should be assessed as agricultural income.”

4. The above ground agitates the denial of exemption claimed by the assessee on income earned from sale of mushroom spawns treating the same as being in the nature of agricultural income. Drawing our attention to the facts of the case, it was pointed out that the assessee was engaged in the business of sale of mushroom spawns and during the impugned year had declared income from the same of Rs. 99,14,280, which had been claimed as exempt, as per the provisions of section 10(1) of the Act, as being in the nature of agricultural income. That during assessment proceedings, when asked to substantiate its claim, the assessee contended that agricultural income included income derived from saplings or seedlings grown in nursery and the spawn being seed of mushroom, grown by carrying out operations including those on land necessary to qualify as agricultural produce, the same qualified as agricultural income. The assessee filed evidence of having taken a land on lease which was used in the process of growing spawn. The assessee also explained the entire process of growing spawns. That the assessing officer dismissed all the contentions of the assessee stating that the spawns were grown in controlled conditions in laboratory and no land was used for the purpose and therefore it did not qualify as seedling/sapling as per its dictionary meaning. That the assessing officer further held that even if land was used, since mushroom was neither plant nor animal but only fungus, the production of spawn could not be said to be agricultural produce. That he further carried out investigations and found that no land was taken on lease and that in any case on the land purportedly taken on lease no process for growing mushroom spawn was carried out. Accordingly he held that since the assessee had failed to prove that the income earned from sale of mushroom spawns was on account of agricultural activities carried out in terms of section 2(1A) of the Act, the assessee was not eligible to claim the said income exempt as agricultural income. Accordingly the same was added to the taxable income of the assessee.

5. The matter was carried in appeal before the learned Commissioner (Appeals) who upheld the order of the assessing officer that the produce of mushroom spawn required no operation on land and, therefore, did not fulfil the requirement of definition of agricultural income as per section 2(1A) of the Act. The learned Commissioner (Appeals) also relied upon the decision of the ITAT Chandigarh Bench in the case of Chander Mohan v. ITO (2014) 52 taxmann.com 203 (Chd) : (2015) 67 SOT 28 (Chd.–Trib.) : 2014 TaxPub(DT) 4777 (Chd-Trib)in which it had been held that growing of mushroom did not involve carrying out basic agricultural operations to qualify as agricultural income.

6. Aggrieved by the same the assessee has come up in appeal before us.

7. During the course of hearing before us the learned Counsel for the assessee contended that the primary reason for denying the claim of the assessee of sale of mushroom spawn as being in the nature of agricultural income was the reliance on the decision of the ITAT Chandigarh Bench in the case of Chander Mohan (supra) holding that the mushroom growing was not an agricultural activity. The learned Counsel for the assessee contended that this issue has since then been decided in favour of the assessee by the Special Bench of the I.T.A.T. in the case of Dy. CIT v. Inventaa Industries (P) Ltd. (2018) 95 taxmann.com 162 (Hyd) : (2018) 172 ITD 1 (Hyd.–Trib.) (SB) : 2018 TaxPub(DT) 4343 (Hyd-Trib). Copy of the order was placed before us in a Paper Book at pages 471 to 526. Taking us to para No. 16.5 of the said order it was pointed out by the learned Counsel for the assessee that the Special Bench had taken note of the fact that the ITAT Chandigarh Bench in the case of Chander Mohan (supra) had taken a view which was different from that of the Pune Bench and, therefore, the matter had been referred to the larger Bench. It was pointed out that the Special Bench had categorically held that the income arising from the sale of mushroom qualified as agricultural income exempt under section 10(1) of the Act. The learned Counsel for the assessee further contended that the fact that mushroom spawn were seeds of mushroom, has not been disputed by the Revenue and further that it stands confirmed by the certificate issued by the Directorate of Mushroom Research certifying the said fact copy of which was placed before the authorities below. The learned Counsel for the assessee contended that being seed of mushroom the activity of growing mushroom spawn thus qualified as agricultural produce as per the widened definition of the same provided in section 2(1A) of the Act, including the growing of seedlings and saplings in nursery as amounting to agricultural activity.

8. The learned Departmental Representative at this juncture pointed out to the findings of the Revenue that the activity of growing agricultural spawn did not involve the use of land since neither did the assessee own any land, nor was it found to have carried out any activity of growing agricultural spawn on leased land during assessment proceedings. Our attention was drawn to paras 5.2 and 5.3 of the assessment order as under :–

“5.2 Now coming to the claim of the assessee that it had sown spores obtained from mushroom gills on the leased land taken from Shri Budh Ram. Information under section 133(6) of the Income Tax Act, 1961, was called from the Tehsildar Paonta Sahib. In the Jamabandi and Girdawri report it has been mentioned that the land in question belonged to Shri Tarsem s/o Shri Raja Ram. Further this land was in the possession of Sh.Bakhtora s/o Shri Chuhra. As per Girdawri, during the relevant year only corn and wheat was sown on this land. In statement on oath, recorded during the course of assessment proceedings, Sh.Budh Ram was confronted on this factual position. Shri Budh Ram could not furnish any plausible explanation except “I do not want to say anything on this report”. Vide order sheet entry, dated 19-3-2015, counsel of the assessee was also confronted on this factual position. The counsel of the assessee submitted that report of the Tehsildar is inaccurate and reiterated that only mycelium was produced on the land. The counsel further submitted that the spores obtained from mushroom gills that were available with the assessee were used to grow mycelium. To a specific query, the counsel also submitted that no mycelium was sold but the same was used to produce mushroom spawn from wheat. The counsel of the assessee further submitted that no wheat was grown by the assessee.

5.3 From the analysis of above mentioned para it is clear that no land was taken by the assessee on lease as the land in question belonged to another person and the same was being used by them for agricultural purposes (corn and wheat was sown during the relevant period as per Tehsildar report). The assessee has made an attempt just to substantiate its claim by producing fabricated document and by producing a person named Shri Budh Ram who is also an employee in the assessee’s sister concern. The local enquiry made by this office also revealed that no such production was carried on such land. Hence, claim of the assessee that it has produced mycelium on agricultural land by carrying out basic agricultural operation is factually false and is therefore rejected. Even if, for the sake of argument it is assumed that mycelium was grown by the assessee, still the same cannot be held to be agricultural produce because it does not fall in the category of Saplings or Seedlings. Further, even if, the mycelium so produced were to be treated as sapling or seedlings, still the income in question cannot be treated as agricultural as admittedly, no mycelium was sold by the assessee as such. The picture produced by the assessee during the assessment proceedings, can easily be download from the net and have therefore, no evidential value in view of the Tehsildar report and on field enquiry. The assessee consumed 1102.94 Quintals of wheat to produce spawn during the year. Even the wheat was purchased from the market. In fact, it was wheat covered with mushroom mycelium that was sold by the assessee.”

9. Referring to the same it was pointed out that during assessment proceedings the assessing officer had investigated the claim of the assessee that it had grown mycelium on land taken on lease from one Shri Budh Ram and as per revenue records called from the Tehsildar of the said place, the land was not shown to be owned by Shri Budh Ram but belong Shri Tarsem S/o Shri Raje Ram and further that it was in the possession of Shri Baktora from Shri Chuhra. Further information collected from the Tehsildar showed that as per the girdawari, corn and wheat were grown in this land. It was pointed out that when the said information was confronted to Shri Budh Ram, he did not have anything to say on it.

10. To this the learned Counsel for the assessee contended that the findings of the assessing officer were incorrect. That the land was in the possession of Mr. Budh Ram since 2007 and had been subsequently purchased by him in 2015. Evidence by way of affidavit of Mr. Budh Ram stating the aforesaid facts on oath, copy of sale deed of the said land executed on 29-06-15, showing Budh Ram as purchaser and copy of Jamabandi of the said land recording the fact of sale to Budh Ram was placed before us.

11. To this the learned Departmental Representative contended that the same was fresh evidence and needed verification. He, therefore, pleaded that the matter be restored to the assessing officer to verify the claim of the assessee. The learned Counsel for the assessee did not object to the same.

12. We have heard the rival contentions. The issue to be adjudicated is whether income from sale of mushroom spawns qualifies as agricultural income exempt under section 10(1) of the Act.

13. As per Explanation-3 to section 2(1A) of the Act defining agricultural income, income from seedlings grown in a nursery qualifies as agricultural income. That spawn is a seed of mushroom has been certified by the Directorate of Mushroom Research and the said fact has not been disputed by the Revenue also. That mushroom is an agricultural produce has been held by the Special Bench of the I.T.A.T. in the case of Inventaa Industries (P) Ltd. (supra). No contrary decision of any higher authority has been brought to our notice. Therefore, undoubtedly income from mushroom (spawn grown in nursery qualifies as agricultural income as per section 2(1A), Expl. 3, and is therefore eligible for exemption under section 10(1)of the Act.

14. The contention of the Revenue for holding the same as not being in the nature of agricultural income for the reason that mushroom is a fungi and not plant, that it is grown in controlled condition and not on land and its reliance on the decision of the I.T.A.T. Bench in the case of Chander Mohan (supra) in this regard, we find, have all been dealt with and rejected by the Special Bench while dealing with the issue in the case of Inventaa (supra), wherein it was categorically held that soil placed on vertical space above land in trays was also land, in one sense of the term, for the purpose of determining whether activity carried out on such land is for production of an agricultural produce. The Special Bench also held that anything grown on land qualifies as produce even it is fungi and it need not necessarily be only a plant to qualify as agricultural produce. It was also held that merely because mushrooms were grown in controlled conditions, did not negate the claim of income arising therefrom being agricultural income.

15. Having said so, however, we find that in the present case the facts relating to the process employed by the assessee for growing spawns has not brought on record. While the assessee has claimed to have carried out operation on land, the Revenue has rejected the same on finding that no land was actually leased out and also on the basis of literature available on the subject, as per which no land was required for growing spawn. The Revenue has thereafter presumed that the spawn was grown in the trays and containers and has not cared to determine whether actually spawn was grown and if so how? In fact on the basis of facts before us we find the claim of the assessee of having grown spawn itself is questionable. The assessee, we have noted, had explained the process of growing spawn as involving the use of land for the purpose of germinating the mushroom spores in soil where as a consequence thread like mycelium was formed and it was this mycelium which was further grown and developed and thereafter placed on steam sterilized grain through which it grew to form spawn. The process as explained by the assessee in its submissions made before the learned Commissioner (Appeals) has reproduced at page 22 of his order is as under :–

“The appellant in his submissions while explaining the process has submitted as under :–

It is humbly and most respectfully submitted that the Appellant is engaged in the business of growing and sale of spawn (seeds of mushroom). This particular activity of spawn preparation has been treated as an Agricultural activity by the Appellant as it entails all the necessary steps involved in the preparation of a ‘seed’ for growing of mushroom. The various steps involved in spawn preparation would establish that such activity would fulfil all the parameters so as to qualify as ‘agricultural activity’.

Mycelium growing :–

The step by step process in mycelium growing is as under :–

(d) Mushroom spores are produced in the gills. Spores are microscopic spheres comparable to seeds of plants. These spores are produced in large numbers in the mushroom gills.

(e) Soil is prepared by de-weeding, cleaning, removing pests and bugs and free flowing with good humus content. Soil is irrigated to maintain good moisture and then the mushroom spores are evenly spread on the soil. Sterile mulch is used to protect loss of moisture and also protects from sunlight.

(f) Spores are germinated in the soil prepared as mentioned hereinabove and the said spores grow into thread like mycelium that is used to prepare spawn.

During the Assessment year under consideration, the Appellant had taken land on lease from one Shri Budh Ram s/o Shri Ruldhu Ram and carried out the mycelium growing activity on such land.

Copy of the lease deed of the said land is attached herewith.

Spawning

After the preparation of the mycelium on the agricultural land, the mycelium is used by a process called spawning to culminate into spawn-seeds of mushrooms. Once sufficiently developed, mycelium is placed onto steam sterlized grain and the mycelium then grows completely through the grain. The grain/mycelium mixture is called spawn and spawn is used to ‘seed’ the mushrooms.

It is reiterated that in the spawn production process, mycelium from a mycelial culture is placed onto steam sterilize grain and in time the mycelium completely grows through the grain. The grain/mycelium mixture is called spawn and spawn is used to ‘seed’ mushroom compost.

To put it differently, spawn is just equivalent to the seed of a plant, although it is only pure mushroom mycelium (vegetative part of fungus) growing on a sterlised grain medium.”

16. The (assessee had claimed that for the purpose of germinating mushroom spawn in soil for growing mycelium, it had used land leased out from one Shri Budh Ram. But, as pointed out by the learned Departmental Representative before us, the investigation carried out by the assessing officer revealed that Shri Budh Ram himself was not in possession of the impugned land and that in fact it belonged to some other person, Shri Tarsem Lal. So there was no question of Shri Budh Ram having leased out any land to the assessee. That further as per Girdawari of the said land, only corn and wheat was grown on this land and there was no evidence of any mycelium grown on the same as claimed by the assessee.

17. Clearly these findings of the Revenue call into question the very claim of the assessee that it had grown spawn. The learned Counsel for the assessee now has placed before us evidence to substantiate its claim of having taken land on lease from Shri Budh Ram during the impugned years in the form of affidavit of Shri Budh Ram stating so and further pointing out that the said land was subsequently purchased by Shri Budh Ram from Shri Tarsem Lal in 2015, evidencing the same by placing copies of sale deed and copy of Jamabandi recording the said fact. These evidences, we find, are material for assisting the assesses case of establishing the crucial fact that he had leased out land on which he had actually indulged in the activity of growing spawn. These evidences also need to be verified. We therefore consider it fit to restore the issue back to the file of the assessing officer with the direction to first determine the fact whether spawn was actually grown by the assessee, taking into consideration the evidences now filed before us after duly verifying the same, and if so by what process. If it is found that the assessee was indulging in the activity of growing spawns, the issue of claim of exemption under section 10(1) of the Act, be thereafter decided in accordance with law. Needless to add the assessee be given due opportunity of hearing and is free to adduce all evidences in support of its contention.

Ground of appeal No. 1 is therefore allowed for statistical purposes.

18. Ground No. 2 raised by the assessee reads as under :–

“2. The Commissioner (Appeals) erred in law and on facts in confirming the action of the assessing officer in assessing the amount of Rs 98,46,000 by including the said agricultural income therein as part of the book profit under section 115JB of the Act, though the same is not a part of the book profits as per audited accounts subject to permitted adjustments. The same should be excluded from the book profits for the purpose of MAT.”

19. In the above ground the assessee has challenged the action of the learned Commissioner (Appeals) in including the income from sale of mushroom spawn in the book profits of the assessee for the purpose of paying taxes under section 115JB of the Act. The assessing officer had held the said income as not being agricultural and thus not qualifying for exemption and accordingly therefore had included the same in the Book Profits for the purposes of paying taxes under section 115JB of the Act.

20. Since the issue regarding the nature of income earned from sale of spawns, whether agricultural or otherwise, has also been raised before us in ground No. 1 of the present appeal and has been restored back to the assessing officer for adjudication afresh, at para of our order above, and the impugned issue of inclusion of the said income in the Book Profits of the assessee for the purposes of paying Minimum Alternate Tax under section 115JB of the Act, being consequential to the determination of its nature, the same is to be decided along with the determination of the nature of income earned from sale of spawns. We therefore restore this issue also to the assessing officer to be decided along with ground No. l raised by the assessee.

Ground No. 2 is, therefore, allowed for statistical purposes.

21. Ground of appeal No. 3 raised by the assessee reads as under :–

“3. The Commissioner (Appeals) erred in law and on facts in confirming the amount of Rs 43,59,667 earned as long term capital gains on sale of equity shares (exempt income) for the purpose of determination of the Book Profit and calculation of MAT on book Profit in terms of section 115JB. The same should be excluded from the book profits for the purpose of MAT.”

22. The above ground was stated by the learned Counsel for the assessee as not being pressed before us.

23. Ground of appeal No. 3 is therefore dismissed as not pressed.

24. Ground No. 4 raised by the assessee reads as under :–

“4. The Commissioner (Appeals) erred in law and on facts is confirming the disallowance of an expenditure of Rs 24,30,043 (Rs 82,050 for salaries, Rs. 21,47,000 interest and Rs. 2,00,993 half per cent of the total average investments) in terms of the section 14A read with rule 8D, which should be deleted.”

25. The above ground challenges the disallowance of expenditure incurred for earning exempt income under the provisions of section 14A of the Act.

26. Briefly stated, during assessment proceedings the assessing officer had noted that the assessee had made investment in equity shares to the tune of Rs3.86 crore, and had earned exempt income by way of long-term capital gain to the tune of Rs. 43,59,667 He further noted that no expenditure in relation to the exempt income had been disallowed by the assessee. The assessing officer further found the contention of the assessee, that he had made investment in shares out of own funds, was incorrect. Accordingly he disallowed expenses amounting to Rs. 24,30,043, calculated by applying rule 8D of the Income Tax Rules, 1962. The same was upheld by the Commissioner (Appeals).

27. Before us the learned Counsel for the assessee contended that it had not earned any exempt income in the impugned investment made in shares and the only exempt income earned by it was agricultural income from the sale of mushroom spawn and that the expenses relating to the same had already been disallowed by the assessee while calculating it is taxable income. The learned Counsel for the assessee contended that in the absence of any exempt income earned from shares by way of dividend no disallowance was to be made under section 14A of the Act. Alternatively, it was pleaded that the disallowance was to be restricted in any case to the extent of any exempt income earned.

28. The learned Departmental Representative, on the other hand contended that the assessee had earned Long Term Capital Gains of Rs. 43,59,667 from the sale of shares which was claimed as exempt under section 10(38) of the Act and the provisions of section 14A were, therefore, applicable. The learned Departmental Representative further contended that in any case the agricultural income, if any, was treated as exempt, expenses in relation to the same was also to be disallowed under section 14A of the Act and the contention of the assessee that it had done so needed verification. He, therefore, pleaded that the matter be restored back to the assessing officer to verify whether any exempt income had been earned by the assessee and consequently the disallowance be computed under section 14A of the Act. The learned Counsel for the assessee fairly agreed to the same.

29. We have heard both the parties. The arguments made by the learned Counsel for the assessee challenging the disallowance of expenses under section 14A of the Act, we find, are of no consequence. The argument that no exempt income was earned by the assessee and therefore no disallowance under section 14A was warranted, we find, is incorrect on facts since it is a fact on record that the assessee had earned long-term capital gain on shares during the year amounting to Rs. 43,59,667 which was claimed as exempt under section 10(38))of the Act. Further the contention of the learned Counsel for the assessee that the disallowance in any case be restricted to the extent of exempt income earned is also of no consequence since the disallowance made in the present case does not exceed the exempt income. As per the facts before us, while the exempt income earned is Rs. 43,59,667 the disallowance made under section 14A of the Act is only Rs. 24,30,043, which being far less than the exempt income earned there remains no question of directing restriction of the same to the extent of exempt income earned. No other arguments were raised before us challenging the findings of the learned Commissioner (Appeals). We therefore see no reason to interfere in the order of the learned Commissioner (Appeals) upholding the disallowance of expenses under section 14A of the Act. But at the same time we find merit in the contention of the learned Departmental Representative that expenses incurred for earning income from sale of spawns, if found to be exempt on reconsideration by the assessing officer as directed in Ground No. 1 above by us, be also considered for the purpose of working out disallowance under section 14A of the Act, since obviously the same had not been considered originally because the said income had been held as not exempt by the assessing officer.

In view of the same while the disallowance made under section 14A of the Act, upheld by the learned Commissioner (Appeals) is confirmed by us but at the same time we direct the assessing officer to consider the disallowance of expenses under section 14A of the Act, pertaining to income earned from sale of spawns, along with the issue of determination of its nature as directed by us in Ground No. l raised by the assessee above. Needless to add the assessee be given due opportunity of hearing and the assessing officer is directed to decide the issue in accordance with law.

Ground of appeal No. 4 is dismissed with the above directions.

30. In effect appeal of the assessee is partly allowed for statistical purposes.

31. We shall now take up the appeal of the assessee relating to assessment year 2011-12, in ITA No. 164/Chd/18.

ITA No. l64/Chd/2018 (A.Y.2011-12) :–

32. Ground No. 1 raised by the assessee reads as under :–

“1. The Commissioner (Appeals) erred in law and on facts in confirming the action of the assessing officer to issue a notice under section 148 of the Act and then completing the assessment under section 147 of the Act though no new information was on record and the issue was well accepted by the revenue earlier. Thus, the impugned assessment order/must he annulled.”

33. In the above ground the assessee has challenged the validity of the assessment framed under section 147 of the Act. The sole argument of the assessee before us was that there was no new information in the possession of the assessing officer validly providing reasons to form the belief of escapement of income and thus assume jurisdiction to frame assessment under section 147 of the Act.

34. The Revenue, on the other hand, relied upon the order of the Commissioner (Appeals).

35. We have considered the contentions of both the parties. Since the assessee has contended that the reasons for reopening did not disclose any new material available with the assessee so as to form information of escapement of income, it is pertinent to go though the reasons recorded by the assessing officer for reopening the case. The same is reproduced hereunder :–

“During the course of assessment proceedings for the assessment year 2012-13, in the case of the assessee, it was noticed that the assessee had claimed Rs. 98,46,000 as the sale of ‘mushroom spawn’ as agricultural income and the same was treated as exempt under section 10. However, this claim of the assessee was not found to be tenable and income of Rs. 98,46,000 was treated as business income and therefore, was accordingly taxed. From the perusal of records for the assessment year 2011-12, it has been noticed that the assessee had shown agricultural income to the tune of Rs. 99,14,280 and claimed the same as exempt. In view of assessment completed for the assessment year 2012-13, it is held that the assessee has claimed income of Rs. 99,14,280 for the assessment year 2011-12, as exempt which is” wrong. Hence, in view of the facts narrated above, I have reasons to believe that the income of Rs. 99,14,280 has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961, for the assessment year 2011-12.

2. Therefore, I am of the opinion that it is a fit case to issue notice under section 148 of the Income Tax Act, 1961.”

36. On going through the above it is evident that reassessment proceedings were initiated in the impugned year on the basis of assessment proceedings for the assessment year 2012-13, wherein the claim of the assessee of income from mushroom spawn being exempt was found untenable and it was found that in the impugned year also the assessee had claimed identical income exempt. Clearly there was sufficient valid information in the possession of the assessing officer forming the basis of holding that the income of the assessee had escaped assessment. We, therefore, dismiss this contention of the learned Counsel for the assessee and uphold the order of the learned Commissioner (Appeals) upholding the validity of the assessment framed under section 147 of the Act. Ground of appeal No. 1 raised by the assessee is, therefore, dismissed.

37. Ground No. 2 raised by the assessee reads as under :–

“2. The Commissioner (Appeals) erred in law and on facts in confirming the assessment of the agricultural income of Rs 99,14,280 from sale of Mushroom Spawn grown by the appellant as business income of the appellant which should be assessed as agricultural income.”

38. It was common ground that the issue raised in the impugned ground was identical to that raised ground No. l of assessee’s appeal pertaining to assessment year 2012-13, in ITA No. 165/Chd/2018. Our decision rendered therein at paras 13 to 17 of our order above, will apply mutatis mutandis to this ground also. Accordingly Ground No. 2 is allowed for statistical purposes.

39. Ground No. 3 raised by the assessee reads as under :–

“3. The Commissioner (Appeals) erred in law and on facts in confirming the action of the assessing officer in assessing the book profit at Rs 1,07,45,202 by including the said agricultural income therein against the book profit of Rs 8,30,922 as per audited accounts subject to permitted adjustments which should be reversed.”

40. It is relevant to mention here that the issue raised in the impugned ground was identical to that raised ground No. 3 of assessee’s appeal pertaining to assessment year 2012-13, in ITA No. 165/Chd/2018. Our decision rendered therein at para 20 of our order above, will apply mutatis mutandis to this ground also. Accordingly Ground No. 3 is allowed for statistical purposes.

41. In effect, the appeal of the assessee is partly allowed for statistical purposes.

ITA Nos. 166 & 167/Chd/2018 (Assessment years 2013-14 & 2014-15) :–

42. In both the appeals identical grounds have been raised.

43. Ground No. 1 raised by the assessee in both the appeals reads to the identical issue of denial of exemption to income earned from sale of spawns. For the sake of convenience the ground of appeal raised in assessment year 2013-14, is reproduced hereunder :–

“1. That the Commissioner (Appeals) erred in law and on facts in confirming the assessment of the agricultural income of Rs. 51,81,000 (Rs. 1,12,21,000 in ITA No. 167/Chd/2018) from sale of Mushroom Spawn grown by the appellant as business income of the appellant which should he assessed as agricultural income.”

44. It was common ground that the issue raised in the impugned ground was identical to that raised ground No. 1 of assessee’s appeal pertaining to assessment year 2012-13, in ITA No. 165/Chd/2018. Our decision rendered therein at paras 13 to 17 of our order above, will apply mutatis mutandis to this ground also. Accordingly Ground No. l in both the appeals is allowed for statistical purposes.

45. Ground No. 2 raised by the assessee in both the appeals relates to the identical issue of inclusion of income earned from sale of spawns to the Book Profits of the assessee for the purposes of paying tax under section 115JB of the Act. For the sake of convenience the ground raised in assessment year 2013-14, is reproduced hereunder :–

“2. That the Commissioner (Appeals) erred in law and on facts in confirming the action of the assessing officer in assessing the hook profit at Rs. 52,63,760 (Rs. 1,19,90,760 in ITA No. 167/Chd/2018) including the said agricultural income therein against the book profit of Rs. 82,760 as per audited accounts subject to permitted adjustments which should be reversed.”

46. It was common ground that the issue raised in the impugned ground was identical to that raised ground No. 2 of assessee’s appeal pertaining to assessment year 2012-13, in ITA No. 165/Chd/2018. Our decision rendered therein at para 20 of our order above, will apply mutatis mutandis to this ground also. Accordingly ground No. 2 stands allowed for statistical purposes.

47. In effect, both the appeals are allowed for statistical purposes.

48. In the result, the appeals filed by the assessee in ITA No. 164/Chd/2018 & ITA No. 165/Chd/2018, are partly allowed for statistical purposes and the appeals of the assessee in ITA Nos. 166 & 167/Chd/2018 are allowed for statistical purposes.