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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: Shri Mahavir Prasad & Shri Amarjit Singh
Revenue by: Shri L.P. Jain, Sr. D.R. Assessee by: Ms. Urvashi Shodhan, A.R. Date of hearing : 08-07-2019 Date of pronouncement : 15-07-2019 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s appeal for A.Y. 2011-12, arises from order of the CIT(A), Ahmedabad-5 dated 08-10-2015, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.
The assessee has raised following grounds of appeal:-
1. Ld. CIT (A) erred in law and on facts in confirming action of AO by treating agriculture income of Rs. 9, 79, 490/- as income from undisclosed source ignoring various evidences submitted by the appellant solely relying on the decision of Hon'ble ITAT ignoring factual aspects of appellant's case. Ld. CIT (A) ought not to have treated agricultural income as undisclosed income considering various evidences submitted by the appellant. It be so held now.
Page No 2 Dhruv Dipakbhai Panchal vs. ITO
2. Ld. CIT (A) erred in law and on facts in giving direction to AO to treat speculation loss as business loss after verifying conditions mentioned in section 43(5)(d) of the Act ignoring fact that relevant records were duly submitted during the course of assessment proceedings. Ld. CIT (A) ought to have allowed speculation loss as business loss as relevant records were already before him. It be so held now.
3. Ld. CIT (A) erred in law and on facts in confirming addition of Rs. 1, 80, 000/- of household expenses on estimate basis ignoring submissions of the appellant. Ld. CIT (A) ought not to have confirmed estimated addition as appellant has demonstrated sufficient household withdrawals for family as a whole. It be so held now. 4. Levy of interest u/s 234B & 234D of the Act is unjustified. 5. Initiation of penalty proceedings u/s 271(1)(c) of the Act is unjustified.”
The fact in brief is that return of income declaring income of Rs. 1,40,030/- was filed on 28th Sep, 2011. The case was selected under scrutiny by issuing of notice u/s. 143(2) of the act on 6th August, 2012. During the course of assessment proceedings, on verification of computation of the income, the assessing officer noticed that assessee has shown agricultural income of Rs. 26,67,129/- claimed as exempt from tax. However, he has noticed that assessee has claimed only total expenses of Rs. 1,45,000/- incurred towards earning agricultural income of Rs. 28,12,729/-. The assessee explained that he was having arrangement of Bhagiya between assessee and Shri Thakkar Jagdish Natwarlal residing at Dholka. The assessee has filed notarized declaration of this agreement of the above cited understanding dated 26th March, 2014. The assessee has stated that he has given the agricultural land to the aforesaid person for cultivation and after deducting the share of agricultural proceeds the remaining proceeds of agriculture was taken as assessee’s share. The assessing officer has not accepted the explanation of the assessee and he was of the view that the ratio of agricultural income and expenditure should be in the ratio 60 to 40%. The assessing officer has also quoted the decision of ITAT however he could not made available its copy as asked by the assessee, therefore, the difference of Rs. 9,79,490/- was added to the total income of the assessee treating the same as income from undisclosed source.
Page No 3 Dhruv Dipakbhai Panchal vs. ITO
The aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.
During the course of appellate proceedings before us, the ld. counsel has furnished paper book comprising declaration of cultivator, copy of P & L account of Devdeep Farm and bills/ledger of agricultural proceeds, detail of agricultural land holding and detail of submissions made before the assessing officer and ld. CIT(A). The assessing officer was of the view that ratio of agriculture income to expenditure should be 60 to 40% therefore he has made an addition of Rs. 9,79,490/- as income from undisclosed source and added to the total income of the assessee. It is noticed that there was an arrangement with sharer who had looked after the agricultural activity of the assessee as per arrangement. The sharer was allowed to take agricultural proceeds to the extent of 35%. In view of the above fact, the assessee has submitted that the total expenditure incurred towards agricultural was worked out to 40% of agricultural income after considering the 3.5% agricultural proceeds taken by the sharer. It is further submitted that assessee had voluntarily incurred expenses of Rs. 1,45,600/- towards fertilizer, pesticides, labour, seeds, plugging, diesel which worked to be 5.17% of agriculture income of the assessee after including 35% of the agriculture proceeds taken by the sharer. The total expenses claimed by the assesee worked to 40.17% agricultural income. The assessee has also submitted the copy of arrangement with the cultivator (sharer) who was looking after the agriculture activities and he was allowed to take agricultural produce to the extent of 35%. During the course of assessment proceedings, the assessee has also submitted the detail and copies of bill of Page No 4 Dhruv Dipakbhai Panchal vs. ITO sale of agricultural produce, copy of P & L account of Devdeep Farm Proprietor Dhruv Panchal Farm of the sharer party etc. Looking to the facts and material on record, we have observe that assessing officer has determined the quantum of agriculture expenses on assumption basis without contravened the relevant material furnished by the assessee and without disproving the genuineness of arrangement made by the assessee with the sharer Shri Thakkar Jagish Natwalal. After considering the above facts and material on record, we do not justify the decision of ld. CIT(A). Therefore, the appeal of the assessee on this ground is allowed.
Ground No. 2 regarding directing the assessing officer to verify the contract notes for allowing losses suffered in trading in derivatives is not pressed, therefore, the same stands dismissed.
Ground No. 3 regarding addition of Rs. 1,80,000/- of household expenses 7. During the course of assessment , the assessing officer has noticed that assessee has shown total withdrawal of Rs. 12,500/- only which was considered for making a part of LIC premium. The assessing officer has computed household expenses @ 15,000/- per month after taking into consideration that there were four members in the family with parents of the assessee. Accordingly, an amount of Rs.1,80,000/- was added to the total income of the assessee on account of low household withdrawal. The ld. CIT(A) has dismissed the appeal of the assessee on this issue.
We have heard the rival contentions and perused the material on record carefully. It is noticed that assessee has failed to substantiate with Page No 5 Dhruv Dipakbhai Panchal vs. ITO supporting evidences for showing meager household withdrawal. The assessee has also failed to prove his submission that household expenses were born by the parents with relevant supporting materials. In the light of the above facts and material on record, we are of the view that it will be reasonable to restrict the disallowance on account of low household withdrawal to the extent of Rs. 1,20,000/- as against Rs. 1,80,000/- sustained by the CIT(A). Therefore, the appeal of the assesse is partly allowed.
In the result, the appeal of the assessee is partly allowed.