2016 (12) TMI 1746 - AT - Income Tax

Estimation of income from running of a wine shop at 5% of the goods put to sale - Held that - As the assessee relied upon the decision of the Coordinate Bench of this Tribunal in the case of Secunderabad Wines vs. ITO 2016 (7) TMI 1449 - ITAT HYDERABAD wherein the Tribunal has upheld the estimation of income at 3% of the cost of goods sold. Both of us are signatories to the said order. Respectfully following the same, we direct the AO to estimate the income of the assessee also at 3% of the cost of goods put to sale. Agricultural income OR income from other sources - nature of receipt - Held that - Assessee owns 4.33 acres of agricultural land and his parents also owned more than 16 acres of agricultural land at Gurajala, near Guntur District. Though the assessee has not given the details of the crops grown and the yield of such crops, earning of agricultural income cannot be ruled out. At the time of hearing, the learned Counsel for the assessee agreed for restricting the agricultural income to 50% of the agricultural income claimed by the assessee. Taking into consideration the extent of land held by the assessee, we are inclined to accept the assessee s contention and we restrict the agricultural income to ₹ 1.00 lakh for the relevant A.Y and the ground of appeal No.3 is accordingly treated as partly allowed for statistical purposes. The balance amount of ₹ 1,35,200 shall be treated as income from other sources and brought to tax accordingly

Summary

Issues:
1. Condonation of delay in filing the appeal before the Tribunal.
2. Estimation of income from running a wine shop.
3. Treatment of agricultural income as income from "other sources."

Condonation of Delay:
The assessee filed an appeal for the A.Y 2010-11, facing a delay of 16 days, attributing it to health issues. The delay was opposed by the DR. The Tribunal, after considering the contentions, condoned the delay, citing reasonable cause for the delay due to health issues preventing the assessee from filing the appeal within the specified time.

Estimation of Income from Wine Shop:
The AO estimated the income from a wine shop at 5% of goods sold, a decision upheld by the CIT (A). The assessee, in 2nd appeal, relied on a Tribunal decision for a lower estimation. The Tribunal directed the AO to estimate the income at 3% of the cost of goods sold, aligning with the precedent. Consequently, the assessee's appeal on this ground was allowed.

Treatment of Agricultural Income:
The assessee claimed ?2,35,200 as agricultural income but failed to provide detailed evidence. The AO treated it as income from "other sources" due to lack of supporting documentation. The CIT (A) affirmed this decision. In the 2nd appeal, the assessee presented evidence of land ownership but lacked details on crops grown and yield. The Tribunal acknowledged the land ownership but restricted the agricultural income to ?1.00 lakh, with the remaining amount treated as "income from other sources." The appeal on this ground was partly allowed, with the balance amount brought to tax accordingly.

In conclusion, the Tribunal partly allowed the assessee's appeal, condoning the delay in filing, adjusting the estimation of income from the wine shop based on a precedent, and restricting the agricultural income claimed by the assessee, treating the balance as income from other sources.