MAULESH D. UKANI,RAJKOT-GUJARAT vs. THE ASSTT. COMMR. OF INCOME TAX, CIR.-2(1), RAJKOT-GUJARAT

Assessee has raised following grounds of appeals.

In response to the notice of hearing no one has come in present on behalf of the assessee.With the assistance of Ld.DR, we have gone through the record carefully and proceed to deicide this appeal ex party qua assessee.It emerges out from the record that assessee has filed its return of income declaring total income of Rs.68,86,375/-. On scrutiny of the accounts it reveals that assessee owned agriculture land of 11.62 hectare. He has shown gross agriculture receipts of Rs.74,34,748/- and after taking expenses of Rs.12,80,587/- he has shown net agriculture income at Rs.61,54,161/-.Ld.AO observed that agriculture expenses in the ratio of gross receipts is 17.22 percent which is on lower side. He further observed that in earlier years such agriculture expenses were estimated at 26% of the gross agriculture receipts. Therefore, in this year also he treated the gross agriculture expenses at 26% of gross receipt and disallowed from the gross agriculture income. This

Appeal to the CIT(A) did not bring any relief to the assessee.

On due consideration of the above facts and circumstances we are of the view that Ld.AO failed to appreciate the whole controversy. Assessee is an agriculturist, he has disclosed gross agriculture receipts vis-à-vis net agriculture receipts. The Ld.AOwithout assigning any reasons observed that in an agricultural activity an assessee should have estimated 26% of the gross receipts towards agricultural expenses because in his understanding this much expenditure were considered in earlier year. To our mind he totally failed to appreciate the activity itself. The expenditure in an agricultural activities cannot be calculated according to the mathematical formula. For example the assessee has grown groundnuts in a particular year, there was deficit in rain and he irrigated his groundnuts with the help of tube well, the expenditure on account of fuel would be higher. Similarly, in a particular year there is attack of insect and assessee was required to spray pesticides again expenditure would be on higher side. In other words outcome of agricultural produce is dependent upon weather condition, natural calamities etc. The AO should also demonstrate what is the other source of income to a farmer before partly treatinghis agriculture income as income from other source, if a assessee is only agriculturist and he has no other source of income then without referring those circumstances which could give rise to earning of income from other source, how, Ld.AO treated such agriculture income as income from other sources. All these aspects are missing in the assessment order. Therefore, we are of the view that addition made to the total income of the assessee are not

In the result, appeal of the assessee is allowed.