2022 (9) TMI 966 - AT - Income Tax

Addition considering the exempt agriculture income as income from other sources - HELD THAT - The assessee has submitted before assessing officer, various details and evidences in support of agricultural income, vide letter dated 28.03.2016. That is, during the assessment proceedings, assessee submitted sale bills, Vouchers, details of expenses. The books of accounts were also produced by assessee along with photographs of Crop before the AO. We note that assessing officer has not refuted or discredited these evidences and documents. AO does not mention why he is not accepting these evidences. On the contrary, the assessing officer has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. Hence, we are not inclined to accept the contention of the AO in any manner and hence the addition so made is deleted. Hence this ground of the assessee is allowed. Claim of depreciation denied - eligibility of assessee for set off of carry forwarded losses - HELD THAT - We have heard both the parties and noted that if the assessee is eligible to claim depreciation and set off of carry forwarded losses of proceeding years, it should be allowed to him as per law, therefore, we remit these issues back to the file of the assessing officer with the direction to examine the eligibility of the assessee to claim depreciation and eligibility of assessee for set off of carry forwarded losses of proceeding years and then after adjudicate these issues in accordance with law. For statistical purposes, these two grounds raised by the assessee are treated to be allowed.

Issues Involved:

1. Addition of Rs. 33,77,626/- by considering exempt agriculture income as income from other sources.
2. Denial of depreciation claim amounting to Rs. 44,58,403/-.
3. Denial of set off of carry forwarded losses of preceding years.
4. Condonation of delay in filing the appeal.

Issue-wise Detailed Analysis:

1. Addition of Rs. 33,77,626/- by considering exempt agriculture income as income from other sources:

The assessee, a limited company engaged in the business of sale of agricultural products, declared exempt agriculture income of Rs. 41,27,626/- in its return for AY 2013-14. During scrutiny, the Assessing Officer (AO) estimated the agricultural income at Rs. 7,50,000/- and treated the balance Rs. 33,77,626/- as "income from other sources." This addition was confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)].

The assessee argued that in past years, its agricultural income had been accepted by the Department without any additions. The assessee provided documents such as past assessment orders, audited financial statements, and other relevant evidence to support its claim. The Tribunal noted that in previous assessment years 2012-13 and 2011-12, the AO had accepted the agricultural income without any additions. Citing the principle of consistency as upheld by the Supreme Court in Radhasoami Satsang vs. CIT, the Tribunal held that there was no change in facts to justify a different treatment in AY 2013-14. The Tribunal also observed that the AO had not refuted or discredited the evidence provided by the assessee.

Therefore, the Tribunal deleted the addition of Rs. 33,77,626/-, allowing this ground of appeal.

2. Denial of depreciation claim amounting to Rs. 44,58,403/-:

The assessee contended that the AO erred in not allowing the depreciation claim as per the Income Tax Act, 1961, amounting to Rs. 44,58,403/-, which is mandatory under Explanation 5 to section 32(1) of the Act. The Departmental Representative (DR) argued that this issue was not raised before the CIT(A) and should be remitted back to the AO for fresh adjudication.

The Tribunal agreed that if the assessee is eligible to claim depreciation, it should be allowed as per law. Therefore, the Tribunal remitted this issue back to the AO to examine the eligibility of the assessee for the depreciation claim and adjudicate accordingly.

3. Denial of set off of carry forwarded losses of preceding years:

The assessee argued that the AO erred in not allowing the set off of carry forwarded losses of preceding years. The DR suggested remitting this issue back to the AO as it was not raised before the CIT(A).

The Tribunal directed the AO to examine the eligibility of the assessee for the set off of carry forwarded losses and adjudicate the issue in accordance with law. This ground was allowed for statistical purposes.

4. Condonation of delay in filing the appeal:

The appeal was filed with a delay of 997 days. The assessee attributed the delay to the mistake of its Authorized Representative (AR), who failed to communicate the next course of action. The assessee also sought an alternative remedy under section 154 of the Act, contributing to the delay. The DR opposed the condonation of delay.

The Tribunal observed that the delay was due to the AR's mistake and the assessee's bona fide belief that the AR was handling the tax matters. Citing the Supreme Court's judgment in Collector, Land Acquisition vs. Mst. Katiji, the Tribunal preferred substantial justice over technical considerations. The Tribunal found the reasons for the delay convincing and constituted reasonable and sufficient cause. Therefore, the delay was condoned, and the appeal was admitted for hearing.

Conclusion:

The Tribunal allowed the appeal partly for statistical purposes. The addition of Rs. 33,77,626/- was deleted, and the issues regarding the depreciation claim and set off of carry forwarded losses were remitted back to the AO for fresh adjudication. The delay in filing the appeal was condoned.

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