2020 (6) TMI 561 - AT - Income Tax

Addition made u/s 69C - Unexplained huge expenditure to earn Agriculture income - assessee has used his own wells for irrigation and farm yard manure from his cattle shed, the estimated expenditure - HELD THAT - In this case, the agricultural land holding of the assessee is not in dispute and moreover, the agricultural income earned by the assessee was from coconut trees and mango trees and not from raising paddy, etc. for which various agricultural operations are to be carried out. AO has not shown any basis for estimating percentage of expenditure for the income from coconut trees and mango trees. Without making any physical verification of the number trees of coconut and mango, usage of water for irrigation purposes, etc. the AO was not justified in treating the agricultural income as excessive and proceed to make estimation. On similar views, the ld. CIT(A) has deleted similar addition made by the Assessing Officer for the assessment year 2013-14 in the case of assessee individual Dr. V. Anand vide order dated 30.09.2016. Over and above, once the assessee has not made any investment, the addition made under section 69C of the Act is illegal as has been rightly observed by the ld. CIT(A) - Decided in favour of assessee.

Summary

Issues:
Confirmation of addition made under section 69C of the Income Tax Act for the assessment years 2013-14 and 2014-15.

Analysis:
The appeals were against orders of the Commissioner of Income Tax (Appeals) confirming additions under section 69C of the Income Tax Act for the assessment years 2013-14 and 2014-15. The Assessing Officer had made additions for disallowance of agricultural income. The assessee argued that the agricultural income was earned from coconut and mango trees, which do not require significant expenses like other crops. The Tribunal found that the Assessing Officer did not provide a basis for estimating expenditure on income from coconut and mango trees, without verifying tree numbers or irrigation usage. The Tribunal noted a similar deletion of addition in a previous case. It was concluded that the addition made under section 69C was unjustified, especially when no investments were made by the assessee. Thus, the Tribunal allowed the appeals, deleting the additions for both assessment years.

Conclusion:
The Tribunal held that the Assessing Officer's addition under section 69C of the Income Tax Act for the assessment years 2013-14 and 2014-15 was unwarranted and baseless. The Tribunal found that the agricultural income from coconut and mango trees did not justify the estimated expenditure made by the Assessing Officer. As there was no verification of tree numbers or irrigation usage, the Tribunal concluded that the additions were unjustified and deleted them for both assessment years, allowing the appeals filed by the assessee.