2019 (12) TMI 662 - AT - Income Tax

Undisclosed income introduced in the form of agricultural income - HELD THAT - Issue involved in the assessee s appeal is identical as in the case of sister concern in case of M/s. Gullu Mal Gulachi Developers Pvt. Ltd. vs. ITO 2019 (12) TMI 628 - ITAT JAIPUR CIT (A) has taken a reasonable percentage of 15% expenditure of the gross agricultural income and that too the agricultural income from agricultural operations excluding the income from sale of trees. Hence in the facts and circumstances of the case as well as the prevailing conditions in the agricultural sector the claim of the assessee cannot be accepted. CIT (A) has taken a reasonable view in estimating the expenditure at 15% - No error or illegality in the order of the ld. CIT (A) in estimating the expenditure @ 15% of the gross agricultural income.

Summary

Issues:
1. Treatment of agricultural income as undisclosed income.

Analysis:
The appeal by the assessee was against the order of the ld. CIT (Appeals)-2, Jaipur for the assessment year 2015-16. The primary issue in this case was the treatment of agricultural income as undisclosed income by the ld. CIT (A). The assessee, a company engaged in agricultural activity, had filed its return of income declaring total income at Nil and agricultural income of ?33,94,942/-. During the scrutiny assessment, the AO estimated the expenditure for earning agricultural income at 30% of the gross agricultural income, whereas the assessee claimed it to be ?1,57,985/-. On appeal, the ld. CIT (A) reduced the addition by estimating the expenditure at 15% instead of 30%.

The Judicial Member considered the submissions and material on record. The issue was found to be similar to a case involving a sister concern. The ld. CIT (A) had correctly assessed the agricultural income and expenditure in that case. In the current appeal, the assessee's claimed expenditure of ?1,38,120/- against a gross agricultural income of ?32,72,999/- was deemed unrealistic. The ld. CIT (A) had considered this issue thoroughly and reasonably estimated the expenditure at 15% of the gross agricultural income, excluding income from the sale of trees. Given the circumstances in the agricultural sector, the Judicial Member upheld the ld. CIT (A)'s decision to estimate the expenditure at 15%.

Therefore, the Judicial Member found no error or illegality in the ld. CIT (A)'s order regarding the estimation of expenditure at 15% of the gross agricultural income. Consequently, the appeal of the assessee was dismissed, and the order was pronounced on 01/11/2019.