2017 (4) TMI 351 - AT - Income Tax

Unexplained investment in the capital of the firm - Held that - No evidence before us to explain the source of investment of ₹ 1,00,000/- in the capital of the firm being ₹ 50,000/- each made on 15.5.2008 and 30.6.2008. Therefore, do not find any good and justifiable reason to interfere with the order of the CIT(A) and hence, this ground of appeal of the assessee is dismissed. Disallowing agricultural income - Held that - Assessing Officer has not considered the income of ₹ 60,240/- shown by the assessee as agricultural income but treated the same as income from other sources of the assessee on the ground that the assessee failed to produce evidence of sugar cane cultivation and sale of sugar cane. Before me also the assessee has failed to produce any evidence in this regard. Therefore, find no good and justifiable reason to interfere with the orders of the lower authorities and dismiss the ground of appeal of the assessee. Estimating the interest on term deposit in bank - as contended that interest income of fixed deposit was offered to tax by consistently following method of offering interest income to tax in the year of receipt - Held that - When questioned by the Bench what is the evidence that the assessee has offered to tax the interest income on fixed deposit of ₹ 1,05,000/- in the year on receipt, ld Authorised Representative of the assessee expressed his inability to produce any such evidence. In absence of the same, the argument of the ld A.R. of the assessee cannot be accepted.

Summary

Issues:
1. Addition of investment in the capital of the firm
2. Disallowance of agricultural income
3. Estimation of interest on term deposit in bank

Issue 1: Addition of investment in the capital of the firm
The Assessing Officer added ?6,00,000 to the income of the assessee as unexplained investment in the firm, as the returns of income were filed after a survey was conducted. The CIT(A) referred the matter back to the Assessing Officer, who stated that the investment could not be explained during assessment proceedings. The CIT(A) observed that the assessee sold a house for ?21,00,000, and this amount was available for investment in the firm. He noted that the assessee contributed amounts before the sale proceeds were available, deleting ?5,00,000 and sustaining ?1,00,000 addition. The appeal was partly allowed.

Issue 2: Disallowance of agricultural income
The Assessing Officer disallowed ?60,240 as agricultural income, as the assessee could not produce details of agricultural activity. The CIT(A) held that the burden was on the assessee to prove agricultural income, citing a Supreme Court decision. The CIT(A) found discrepancies in the claim, as no evidence was provided for sugar cane cultivation or sale. The addition was upheld, dismissing the appeal.

Issue 3: Estimation of interest on term deposit in bank
The Assessing Officer estimated interest on a fixed deposit at 10% and added ?10,500 to the income of the assessee. The CIT(A) upheld the addition, stating that the interest accrues by the end of the year. The assessee argued for deletion based on the cash system of accounting. The appeal was dismissed as the interest income was not shown in the return, and the estimated interest was deemed reasonable.

In conclusion, the appeal filed by the assessee was dismissed, with the tribunal upholding the decisions of the lower authorities on all three issues.