2017 (1) TMI 1686 - AT - Income Tax

Disallowance of agricultural expenses - HELD THAT - Both the authorities below have disallowed the impugned agricultural expenses @35% of the gross agricultural income thereby enhancing assessee s expenses declared @16.5% (supra). The assessee fails to pinpoint any specific cogent evidence in the case file so as to buttress its case to have derived the impugned agricultural income at a net figure of 85% of the gross amount. Even details of the crops sold or evidence of the agricultural lands in question is not forthcoming in the case file. We thus find no reason to interfere with the CIT(A) s action upholding the impugned addition. Disallowing business expenses - CIT(A) observed that the assessee has not been able to demonstrate in any manner as to how the above expenses shown in the computation of income are incurred for the purpose of business and earning of the business income in question - HELD THAT - The assessee has not been able to file any evidence in the instant appeal so as to substantiate his claim of having incurred all heads of the above expenses by way of car loan interest, depreciation, bank commission, petrol expenses, car expenses, salary and telephone charges. There is not even a single piece of paper in the nature of a self-attested voucher to fortify any of the above claim of expenditure much less than the substantive evidence of ownership of the corresponding vehicles and their nexus with assessee s business income. We thus find no reason to agree with assessee s expenditure claim in question amounting to ₹ 6,44,023/-. We thus confirm the same. The assessee losses in its latter substantive ground as well.

Summary

Issues:
1. Challenge to unexplained agriculture expenses under section 69C of the Income Tax Act, 1961.
2. Disallowance of business expenses amounting to &8377; 6,44,023.

Analysis:

Issue 1: Challenge to unexplained agriculture expenses
The appellant contested the addition of &8377; 3,11,651 as unexplained agriculture expenses under section 69C of the Income Tax Act, 1961. The Assessing Officer increased the declared expenses from 16.5% to 35% of the gross agricultural income due to lack of specific evidence supporting the claimed expenses. The appellant failed to provide substantial evidence regarding factors influencing agricultural income, such as climate, soil type, crop quality, and market conditions. Both the CIT(A) and the Assessing Officer upheld the addition, emphasizing the lack of concrete evidence to justify the declared expenses. The Tribunal found no reason to interfere with the lower authorities' decision and rejected the appellant's challenge to the unexplained agriculture expenses.

Issue 2: Disallowance of business expenses
The appellant disputed the disallowance of business expenses amounting to &8377; 6,44,023, which included various expenditures like car loan interest, depreciation, bank commission, petrol expenses, car expenses, salary, and telephone charges. The Assessing Officer noted the absence of evidence regarding vehicle ownership and utilization for business purposes, as well as the lack of supporting vouchers and bills for other claimed expenses. The CIT(A) further highlighted the appellant's failure to demonstrate how the expenses were related to the business income. The Tribunal reviewed the findings of the lower authorities and observed that the appellant did not provide any evidence to substantiate the claimed expenses. There was a lack of documentation, such as vouchers or bills, to support the expenditure claims. Consequently, the Tribunal upheld the disallowance of &8377; 6,44,023 in business expenses, as the appellant could not establish a clear connection between the expenses and the business income. The appellant's challenge regarding business expenses was dismissed, and the appeal was ultimately rejected.

In conclusion, the Tribunal affirmed the decisions of the lower authorities regarding both the unexplained agriculture expenses and the disallowed business expenses, leading to the dismissal of the appellant's appeal.