What did the Tribunal hold?

The Tribunal held that the Assessing Officer disallowed the agricultural expenses without proper justification. Expenses incurred for earning agricultural income should not be added to the total income.

The Assessing Officer disallowed agricultural expenses of Rs. 2,49,830/- claimed by the assessee for purchasing fertilizer, considering them non-genuine as the crop was ready for sale. The CIT(A) upheld this disallowance.

What were the issues?

Whether agricultural expenses claimed by the assessee for earning agricultural income are genuine and deductible.

Shri Ambalal Chimanlal Patel vs DCIT | ITAT Ahmedabad 2019

Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH

Before: Shri Rajpal Yadav & Shri Amarjit Singh

For Appellant: Shri D.K. Parikh, A.R

For Respondent: Ms. Jaya Chaudhary, Sr. D.R, Shri D.K. Parikh, A.R

आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-

This assessee’s appeal for A.Y. 2014-15, arises from order of the CIT(A)-2, Ahmedabad dated 24-08-2017, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.

I.T.A No. 2135/Ahd/2017 A.Y. 2014-15 Page No 2 Shri Ambalal Chimanlal vs. Dy. CIT

The solitary ground of appeal of the assessee is against the decision of ld. CIT(A) in confirming the addition of Rs. 2,49,830/- made in taxable income in respect of expenses incurred for earning agricultural income treating the same expenditure to be non-genuine.

The fact in brief that is that during the course of assessment, the assessing officer has noticed that assessee has provided voucher claiming expenses of Rs. 2,49,830/- incurring for earing agricultural income to the amount of Rs. 24,29,202/- during the year under consideration. On verification of the voucher of expenditure, the assessing officer has obseved that assessee has paid expenditure for purchase of organic fertilizer as under:- 13/11/2013 Rs.66870 for Fertilizer 14/11/2015 Rs,71200 for Fertilizer 19/11/2013 Rs.94300 for fertilizer 25/11/2013 Rs,17460 To cultivate After analysis of above expenditure, the assessing officer has observed that the agricultural crop of the assessee was ready to sell on or before 25-11- 2013, therefore, there was no use of such fertilizer for the crop. Therefore, the assessing officer has disallowed the aforesaid expenses of Rs. 2,49,830/- as non-genuine and added to the total income of the assesee.

Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the asseessee.

During the course of appellate proceedings before us, ld. counsel contended that ld. CIT(A) has incorrectly sustained the aforesaid addition

I.T.A No. 2135/Ahd/2017 A.Y. 2014-15 Page No 3 Shri Ambalal Chimanlal vs. Dy. CIT

stating that assessee was agreed for such addition during the course of assessment proceedings. He has further submitted that assessee has claimed total agricultural expenses of Rs. 2,49,830/- from the agricultural income of Rs. 26,79,032/- resulting in the net agricultural income of Rs. 24,29,202/- and by disallowing the total fertilizer expenses of Rs. 2,49,830/- the net agricultural income will be increased to Rs. 26,79,032/-. However, the assessing officer has incorrectly added the amount of Rs. 2,49,830/- to the tatal income. On the other hand, ld. departmental representative has supported the order of lower authorities.

5.1 In light of the above facts and circumstances, we are of the view that assessing officer has disallowed the agricultural expenses of Rs. 2,49,830/- without any reason and added the same to the total income of the assessee. In this respect, we observed that agricultural expenses are related to earing of agricultural income, therefore, the lower authorities are not justified in adding the same to the total income of the assessee, therefore, we are not inclined with the decision of ld. CIT(A). Accordingly, the appeal of the assessee is allowed.

In the result, the appeal of the assesse is allowed.

Order pronounced in the open court on 21-02-2019

Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 21/02/2019

I.T.A No. 2135/Ahd/2017 A.Y. 2014-15 Page No 4 Shri Ambalal Chimanlal vs. Dy. CIT

आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद

SHRI AMBALAL CHIMANLAL PATEL,AHMEDABAD vs. DY. CIT, CIRCLE-2(1)(2), AHMEDABAD

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