2023 (3) TMI 1353 - AT - Income Tax

Agricultural income - assessee produced agricultural income certificate from the Village Revenue Officer (VRO) in support of his claim before the AO - CIT(A) restricted the agricultural income for the agricultural land to the extent of Ac.23.91 cnts, taking into account the proposition that any agricultural land with commercial / cash crop will fetch net income of Rs.20,000/- per acre - AR contended that the AO without verifying the records and without bringing any contrary facts on record, rejected the agricultural income of the assessee - HELD THAT - CIT(A) viewed that it is an accepted proposition that any agricultural land with commercial / cash crop would fetch net income of Rs.20,000/- per acre. The agricultural land of the assessee, being Ac.23.91 cnts, the CIT(A) viewed that it is reasonable to earn Rs.4,78,200/- (i.e. Rs.20,000/- x Ac.23.91 cnts) as the ownership was not in doubt. CIT(A) therefore, directed the AO to restrict the addition to Rs.4,78,200/- and disallow Rs.71,800/-. We find, that the Ld.CIT(A) has rightly estimated the agricultural income of the assessee basing on the valid proposition. Hence, we do not find any infirmity in the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee on this ground. Unexplained cash deposits - HELD THAT - Since the assessee has no regular source of income and could not explain the sources of cash deposits, the assessee treated the amount of Rs.1,98,000/- as unexplained income and brought to tax - HELD THAT - After verifying the return of income filed by the assessee admitting income from auto consultancy and agriculture and bank account statements, CIT(A) has rightly considered the cash deposits of Rs.15,000/- as explained, as in the earlier years, the agricultural income earned by the assessee is reasonable and treated the cash deposits to the extent of Rs.1,33,000/- as unexplained. Since, the assessee could not furnish any corroborative evidence either during the appellate proceedings or before the Tribunal except the confirmation letter for the gift received, we are inclined to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee on this ground. Investment towards insurance premium - assessee contended that insurance premium was made out of gross earnings received through agriculture and auto consultancy - HELD THAT - AO has made an addition of cash deposit of Rs.90,000/- and the payment made to Insurance Company as unexplained. The bank statement shows that cash deposits were made on 12th and 13th and made cheque payment of Rs.90,000/- to the Insurance Company for insurance premium. Then only one addition should be made. Hence, the insurance premium amount of Rs.90,000/- cannot be sustained. Therefore, the AO is directed to delete the said amount of Rs.90,000/-. Hence, we set aside the order of the Ld.CIT(A) and allow the appeal of the assessee on this ground.

Summary

Issues Involved:
- Condonation of Delay
- Assessment Year 2008-09, 2009-10, 2012-13
- Agricultural Income Dispute
- Unexplained Cash Deposits
- Alleged Unexplained Expenditure on Insurance Premium

Condonation of Delay:
The appellant filed appeals against the CIT(A) orders for multiple assessment years with a delay of 54 days, citing the illness of the father who managed the affairs as the reason. The delay was condoned by the Tribunal after finding a reasonable cause beyond the appellant's control. The appeals were admitted for hearing.

Assessment Year 2008-09, 2009-10, 2012-13:
The appellant, an individual deriving income from agriculture and business, faced assessment issues following a search operation under the Income Tax Act. Disputes arose regarding the rejection of agricultural income and cash deposits by the Assessing Officer. The CIT(A) partly allowed the appeal, leading to further appeals before the Tribunal for different assessment years.

Agricultural Income Dispute:
The appellant contested the rejection of agricultural income by the Assessing Officer, presenting evidence of land lease and crop cultivation. The Tribunal upheld the CIT(A)'s decision to restrict the agricultural income based on the land size and crop type, dismissing the appeal on this ground.

Unexplained Cash Deposits:
The appellant faced additions to income due to unexplained cash deposits in bank accounts. The CIT(A) partially sustained the addition, considering corroborative evidence of a gift received. The Tribunal upheld the CIT(A)'s decision, as the appellant failed to provide sufficient evidence for the cash deposits, leading to the dismissal of the appeal on this ground.

Alleged Unexplained Expenditure on Insurance Premium:
Regarding the alleged unexplained expenditure on insurance premium, the appellant contended that the payment was made from earnings through agriculture and consultancy. The Tribunal found discrepancies in the AO's treatment of the cash deposits and insurance premium payment, directing the deletion of the amount towards insurance premium. The appeal was allowed on this ground for the relevant assessment year.

Conclusion:
The Tribunal dismissed the appeal for the assessment year 2010-11 but partly allowed the appeal for the assessment year 2012-13, based on the specific grounds related to agricultural income and insurance premium expenditure. The decision was pronounced in open court on 29th March 2023.