2022 (2) TMI 1196 - AT - Income Tax

Addition of agricultural expense on presumptive basis - AY 2014- 15 - HELD THAT - We have perused case file as well as paper books furnished by assessee. We find no substance in the arguments of ld AR of the assessee. The ld AR instead of giving proper justification has roamed here and there. We have gone through the findings of ld CIT(A) and observed that Ld CIT(A) after considering the evidences and documents submitted by assessee has deleted part addition and granted appropriate relief to the assessee. We have gone through the order of ld CIT(A) and noted that Ld. CIT(A) has passed a reasoned and speaking order after considering the submission made by assessee. The ld CIT(A) has examined the assessee s facts and evidences, and has granted appropriate relief. That being so, we decline to interfere with the order of Id. CIT(A), his order on this issue is, therefore, upheld and the grounds of appeal of the assessee are dismissed. For A.Y. 2015- 16 - We note that assessee is blowing hot and cold. The assessee as per his own wish showing more agricultural income and when assessee is caught by income tax authorities, then showing less agricultural income If someone blows hot and cold, they keep changing their attitude towards something, sometimes being very enthusiastic and at other times expressing no interest at all. The assessee under consideration has not explained with cogent evidence that how and why he has reduced agricultural income. We note that in the appellate proceedings, the assessee reiterated that affidavits filed before the AO to claim reduced agriculture income of ₹ 7,81,363/-only as against ₹ 31,42,190/- shown in the ROI filed on 27.03.2016. From the assessment order, it is apparent that the assessee had filed affidavit at the fag end of assessment proceedings as the assessment order is dated 20.09.2017 and the affidavit dated 20.09.2017 appear to be have been filed on the same date. This fact clearly indicates that the assessee was not in a position to explain the agriculture income and as an afterthought, the affidavit could have been filed in response to final show cause notice by the AO. CIT(A) observed that there are various decisions of Hon'ble ITAT Benches and courts whereby disallowance in the range of 30% to 40% of the net agriculture income shown in the return of income was considered fair and reasonable. Accordingly, net agriculture income of ₹ 31,42,190/- was reduced by ₹ 9,42,657/-(30% of ₹ 31,42,190/-) to account for agriculture expenses. Hence, ld CIT(A) restricted the addition from ₹ 25,03,302/-, to ₹ 9,42,657/- (30% of ₹ 31,42,190/-), only. Therefore, we note that a reasonable relief has already been provided by the ld CIT(A). Hence, we do not find any infirmity in the order of ld CIT(A) - Decided against assessee.

Summary

Issues Involved:
1. Addition of agricultural expense on a presumptive basis for AY 2014-15.
2. Addition of agricultural expense on a presumptive basis for AY 2015-16.

Detailed Analysis:

Issue 1: Addition of Agricultural Expense on Presumptive Basis for AY 2014-15

Facts and Proceedings:
The assessee, an individual, declared agricultural income of ?22,09,020 in his return for AY 2014-15. The Assessing Officer (AO) noticed discrepancies and asked for supporting documents, which were not fully provided. The AO found it improbable to earn such income from 2.66 hectares of land and treated ?7,04,686 as unexplained investment. The AO also estimated agricultural expenses at 40% of ?15,04,334 received from Gandevi Sugar, totaling ?6,01,733, and added this to the income from other sources.

Appeal to CIT(A):
The assessee appealed, stating that the agricultural activities were financed through loans, thus the income of ?22,09,020 was net. The CIT(A) partly allowed the appeal, reducing the addition by considering 30% of the agricultural income as expenses, thus allowing 70% as net agricultural income.

Tribunal's Findings:
The Tribunal upheld the CIT(A)'s decision, noting that the CIT(A) had passed a reasoned and speaking order after considering the evidence. The Tribunal found no merit in the arguments of the assessee's AR and confirmed the CIT(A)'s order, dismissing the appeal.

CIT(A)'s Reasoning:
The CIT(A) considered the AO's remand report and the assessee's rejoinder. The AO's remand report indicated that the assessee did not provide sufficient evidence to justify the large agricultural income. The CIT(A) followed precedents from ITAT benches, allowing 70% of the agricultural income as net income and disallowing 30% as expenses, thus restricting the total addition to ?6,62,706.

Issue 2: Addition of Agricultural Expense on Presumptive Basis for AY 2015-16

Facts and Proceedings:
For AY 2015-16, the assessee initially declared agricultural income of ?31,42,190, which was later revised to ?7,81,363. The AO questioned the reduction and added ?25,03,302 to the income due to lack of evidence supporting the revised figures.

Appeal to CIT(A):
The CIT(A) noted that the revised return and affidavit reducing agricultural income were not substantiated with evidence. The CIT(A) applied a similar approach as in AY 2014-15, reducing the net agricultural income by 30% to account for expenses, thus restricting the addition to ?9,42,657.

Tribunal's Findings:
The Tribunal agreed with the CIT(A), noting that the assessee had not provided cogent evidence for the revised figures. The Tribunal found the CIT(A)'s approach fair and reasonable, confirming the order and dismissing the appeal.

CIT(A)'s Reasoning:
The CIT(A) observed that the assessee's action of filing revised returns was a tactic to avoid tax. The CIT(A) followed judicial precedents, disallowing 30% of the agricultural income as expenses and allowing 70% as net income, thus providing reasonable relief.

Conclusion:
Both appeals filed by the assessee for AY 2014-15 and AY 2015-16 were dismissed. The Tribunal upheld the CIT(A)'s orders, which provided reasonable relief by disallowing 30% of the agricultural income as expenses and allowing 70% as net income. The Tribunal found no merit in the assessee's arguments and confirmed the additions made by the AO and partially sustained by the CIT(A).