2022 (11) TMI 659 - AT - Income Tax

Unexplained agricultural income under the head income from other sources - HELD THAT - Since the assessee has not filed any documentary evidence in compliance to the queries raised by the AO in support of the agricultural income claimed during the assessment year under consideration. The appellant assessee has failed to furnish any documentary evidence in support of its claim of agriculture income by way of ownership document of size of agricultural land holding, details of expenses incurred on carrying out cultivation activities, nature of agriculture activities, contract of agricultural lands given on lease if any and bills of agriculture produce either before the CIT appeal or before us. Therefore, we find no infirmity or perversity on the facts, in the observation and finding of the learned CIT appeal in treating as unexplained agricultural income under the head income from other sources. We find no merit and substance in the contention of the appellant assessee regarding addition on account of unexplained agricultural income under the head income from other sources. Accordingly, the order of the CIT appeal confirming the addition on account of income from other sources is hereby sustained.

Summary

Issues:
1. Disallowance of business expenses by AO and confirmation by CIT(A)
2. Disallowance of agriculture income by AO and confirmation by CIT(A)

Issue 1: Disallowance of Business Expenses

The appellant challenged the addition of Rs.1,62,728 made by the AO on account of certain expenses, and the CIT(A) confirmed the same. The AO disallowed expenses claiming lack of business expediency and supporting vouchers. The CIT(A) restricted the disallowance to 10% of the expenses claimed. The tribunal found the AO's disallowance without specific evidence or adverse material unjustified. Citing a previous case, the tribunal ruled the ad hoc disallowance baseless and deleted the addition of Rs.1,62,728.

Issue 2: Disallowance of Agriculture Income

The AO treated Rs. 6,50,000 declared as agriculture income by the appellant as income from other sources due to lack of supporting evidence. The CIT(A) confirmed an addition of Rs. 3,50,000 as income from other sources, treating Rs. 3,00,000 as agriculture income. The tribunal noted the appellant's failure to provide evidence like land ownership or cultivation contracts. As the appellant did not substantiate the agricultural income claim, the tribunal upheld the CIT(A)'s decision to treat Rs. 3,50,000 as income from other sources. Consequently, the addition of Rs. 3,50,000 on account of unexplained agricultural income was sustained.

In conclusion, the tribunal disposed of the appeal by deleting the addition of Rs.1,62,728 related to business expenses and sustaining the addition of Rs.3,50,000 for unexplained agriculture income. The decision emphasized the importance of providing supporting evidence to substantiate income claims and highlighted the tribunal's role in ensuring fair and just outcomes in tax matters.