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2017 (11) TMI 1470 - AT - Income TaxRejection of books of accounts - non maintenance of day to day Stock Register - trading addition - Held that - It is a factual aspect that the assessee was not maintaining day to day stock register, therefore, it was not possible to verify the closing stock vis a vis quantity of purchase and sale of sugar. Therefore, sustain the rejection of books of account. The ld. CIT(A) records that the G.P. declared by the assessee was .46% while it was .64% in comparison to .71% of preceding year. Therefore, the addition sustained by the ld. CIT(A) is higher side. In view of this fact, sustain the addition only of ₹ 50,000/- - Decided in favour of assessee partly. Addition treating the agricultural income declared by the appellant as being income from undisclosed sources - Held that - The assessee was not able to submit necessary documents in support of the contention that the assessee was having agricultural income of ₹ 22,900/- during the year under consideration. Therefore, in absence of any supporting document, sustain the order of the ld. CIT(A) on this issue.- Decided against assessee.
Issues:
1. Rejection of books of account and trading addition 2. Treatment of agricultural income as business income Issue 1 - Rejection of books of account and trading addition: The appeal was filed by the assessee against the order of the ld. CIT(A)-3, Jaipur for the A.Y. 2012-13. The Assessing Officer rejected the books of account of the assessee due to the absence of a stock register and made a lump sum addition of ?2.00 lacs. The ld. CIT(A) reduced the trading addition to ?1.00 lac and sustained the addition on account of agricultural income of ?22,900. The assessee challenged the rejection of books and the trading addition before the ITAT. The ITAT upheld the rejection of books due to the absence of a stock register but reduced the trading addition to ?50,000, considering the GP rate and lack of specific unverifiable sale or purchase. The ITAT dismissed ground No. 1 of the appeal and partially allowed ground No. 1.1. Issue 2 - Treatment of agricultural income as business income: The second issue pertained to the treatment of agricultural income of ?22,900 as business income by the ld. CIT(A). The ITAT sustained the addition, noting that the assessee failed to provide evidence supporting the earning of agricultural income from the agricultural land. The appellant contended that the agricultural income had been consistently declared in previous years and should not be treated as undisclosed income. However, the ITAT upheld the ld. CIT(A)'s decision, stating that the appellant did not submit sufficient documents to prove the agricultural income. Therefore, the addition of ?22,900 as business income was sustained. In conclusion, the ITAT partially allowed the appeal of the assessee, reducing the trading addition but upholding the treatment of agricultural income as business income. The judgment highlighted the importance of maintaining proper records and providing adequate evidence to support income declarations, emphasizing compliance with tax regulations and the burden of proof on the taxpayer.
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