2012 (8) TMI 678 - AT - Income Tax

Addition on disbelieving the income from agriculture - Held that - There is no dispute with regard to the factum of agricultural activities carried out by the assessee, though there is minor difference with regard to the land holding of the assessee and CIT(A) was not justified in not admitting the additional evidence sought to be filed by the assessee for the first time before him, notwithstanding the objections of the AO in the remand report, which are too technical to brush aside the very validity of the certificates filed - If there is any doubt about the competency or the technical knowledge of the persons who issued the certificates in question, the same could have been got verified or the assessee could have been asked to produce similar certificates from the competent Revenue authorities - set aside the impugned order of the CIT(A) and restore the matter to file of the AO for fresh consideration duly considering the additional evidence - in favour of assessee for statistical purposes. Addition on unproved credits - Held that - Since the address of the creditor given in the confirmation letter is that of the USA and it is beyond verification by the Indian Income tax Officers and in view of the statement of the assessee that the said creditor has returned to India, and the assessee would be in a position to establish the genuineness of the transaction, duly establishing identity of the creditor and his creditworthiness, in the interests of justice it just and proper to set aside this issue for adjudication - restore the matter to the file of AO for fresh adjudication - in favour of assessee for statistical purposes. Disallowance of expenditure on car - asset used for both personal land professional purposes - Held that - This is a case where provisions of S.38(2)will apply where any building, machinery, plant or furniture is not exclusively used for the purposes of the business or profession, the deductions shall be restricted to a fair proportionate part thereof which the AO may determine, having regard to the user of such building, machinery, plant or furniture for the purposes of the business or profession - estore the matter to the file of the assessing officer, for re-consideration - in favour of assessee for statistical purposes.

Summary

Issues Involved:
1. Addition of Rs.12,11,200 disbelieving agricultural income.
2. Addition of Rs.54,65,500 on the ground of unproved credits.
3. Addition of Rs.1,11,401 being the disallowance of expenditure on car.

Detailed Analysis:

1. Addition of Rs.12,11,200 disbelieving agricultural income:

The assessee claimed an agricultural income of Rs.15,51,000 for the assessment year 2008-09. After deducting expenses, the net agricultural income was Rs.15.51 lakhs. The assessing officer questioned the details provided by the assessee, including the ownership of 18.40 acres of land (considered as 6.94 acres by the officer) and the income per acre. Due to discrepancies and lack of satisfactory evidence, the officer estimated the agricultural income at Rs.20,000 per acre, resulting in an addition of Rs.12,11,200 to the income from other sources.

On appeal, the CIT(A) did not admit additional evidence from the Sarpanch and MPTC, citing their lack of technical expertise. The Tribunal found fault with the CIT(A) for not admitting the additional evidence and suggested that the certificates could have been verified or similar certificates from competent authorities could have been requested. Thus, the matter was remanded back to the assessing officer for fresh consideration, allowing the assessee to present additional evidence.

2. Addition of Rs.54,65,500 on the ground of unproved credits:

The assessing officer identified unexplained credits in the bank account, including Rs.50 lakhs claimed to be received as an advance for property sale, which was later returned. The officer found the evidence provided insufficient, as it lacked complete addresses, PAN details, and other necessary information to establish the identity and creditworthiness of the creditors.

On appeal, the CIT(A) called for a remand report but upheld the addition due to the lack of substantial evidence. The Tribunal, considering the assessee's request for another opportunity to prove the genuineness of the transactions, remanded the matter back to the assessing officer. The Tribunal emphasized the need for the assessee to establish the identity, creditworthiness, and genuineness of the transactions, especially since the creditor had returned to India.

3. Addition of Rs.1,11,401 being the disallowance of expenditure on car:

The assessing officer disallowed 25% of the total car expenditure, including depreciation and other expenses, due to personal usage. The CIT(A) upheld this disallowance. The Tribunal referred to the provisions of S.38(2) of the Act and the decision of the Special Bench of the Tribunal in the case of Gulati Saree Centre, which supports disallowance based on a certain percentage for assets used for both personal and professional purposes. The matter was remanded back to the assessing officer for reconsideration in light of the Special Bench decision and after providing a reasonable opportunity of hearing to the assessee.

Conclusion:

The Tribunal allowed the appeal for statistical purposes, remanding all the issues back to the assessing officer for fresh consideration, ensuring that the assessee is given a reasonable opportunity to present additional evidence and substantiate their claims.