1983 (1) TMI 178 - AT - Income Tax

Summary

Issues:
1. Reduction of net income estimation from the sale of sugarcane by the AAC.
2. Admission of evidence not produced before the ITO regarding the nature of the cane plantation by the AAC.

Analysis:
1. The main issue in this case was the reduction of the assessee's net income estimation from the sale of sugarcane by the AAC. The department contended that the AAC erred in reducing the ITO's estimation from 40% to 25%, resulting in a decrease in the assessee's total income for the relevant years. The AAC based the reduction on the expenses per acre provided by the assessee, supported by certificates from two factories. The AAC accepted the plea of the assessee and directed the profit on the sale of sugarcane to be taken at a lower figure than estimated by the ITO.

2. Another issue raised was the admission of evidence not produced before the ITO regarding the nature of the cane plantation by the AAC. The department argued that this action by the AAC was in contravention of rule 46A. The departmental representative emphasized the reasonableness of the ITO's estimation of 40% profit on sugarcane sale proceeds and sought restoration of the ITO's orders for the relevant years. However, the AAC's decision to admit new evidence and consider the expenses per acre supported by certificates was crucial in determining the reduction in the assessee's income estimation.

3. Upon careful consideration of the orders of the authorities below, the Member found that the ITO had not provided reasoning for adopting 40% on sugarcane sale proceeds. The absence of comparable cases or prior notification to the assessee was noted. The AAC's reliance on the certificates issued by the factories to support the assessee's expenses per acre was deemed essential evidence. The Member accepted the AAC's reasoning for reducing the ITO's estimation, concluding that the AAC's decision was well-founded. Consequently, the departmental appeals were dismissed, upholding the AAC's order and the reduction in the assessee's income estimation from the sale of sugarcane.