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Facts
The assessee challenged an estimated addition of Rs. 7,28,830/- to agricultural income, confirmed by the CIT(A), which was made under Section 147 / 143(3) of the Income Tax Act. The assessee contended that the 25% addition applied by the lower authorities, based on previous years' orders, was excessive given the smaller quantum of agricultural income in the current year.
Held
The Tribunal acknowledged that while a 25% addition had been directed in prior years, the same ratio could not be applied due to the reduced quantum of agricultural income in the current year. To meet the interest of justice, the Tribunal restricted the disallowance to 12.5% and directed the AO to recalculate the addition accordingly.
Key Issues
Whether the estimated addition to agricultural income at a fixed percentage (25%) was justified, or if a lower percentage was appropriate given the reduced quantum of agricultural income in the current assessment year.
Sections Cited
147, 143(3), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABY T VARKEY & SHRI AMITABH SHUKLA
Years: 2017-18 Janakiraman Muthulakshmi, Deputy Commissioner of Income Tax, No.38, Kaveri Street, Rajaji Nagar, Corporate Circle-1, Villivakkam, Chennai-600 049. Chennai [PAN: AGOPM0835D] (प्रत्यर्थी/Respondent) (अपीलार्थी/Appellant) अपीलार्थी की ओर से/ Assessee by : Shri P.M.Kathir, Advocate प्रत्यर्थी की ओर से /Revenue by : Shri Keerthi Narayanan, JCIT सुिवाई की तारीख/Date of Hearing : 26.12.2024 घोर्णा की तारीख /Date of Pronouncement : 12.02.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M :
This appeal is filed against the order bearing DIN & Order No.ITBA/NFAC/S/250/2024-25/1067490710(1) dated 09.08.2024 of the Learned Commissioner of Income Tax [herein after “CIT(A), National Faceless Appeal Center[NFAC], Delhi, for the assessment years 2017- 18. Through the aforesaid appeal the assesse has challenged order u/s 250 dated 09.08.2024 passed by NFAC, Delhi.
2.0 The Ld. Counsel for the assessee informed that the only issue in the case is regarding an estimated addition of Rs.7,28, 830/- made by the Ld. AO in respect of agricultural income u/s 147 / 143(3) of the act. The Ld. CIT(A) confirmed the addition made by the Ld.AO. The Ld. Counsel submitted that the Ld. AO has made the addition keeping into consideration its case history of earlier years whereby Hon’ble Coordinate Bench of this tribunal had directed the Ld. AO in assessee’s own case vide dated 08.11.2017 to consider 25% of agricultural income as other sources. The Ld. Counsel submitted that as compared to earlier years the agricultural income during the year under consideration is very small and hence the addition @ of 25% is excessive. A request was made to delete the same. The Ld. DR argued that ITAT has already decided the threshold limit of disallowance to be made @ 25% and that there is therefore no infirmity in the order of the Ld AO.
3.0 We have heard rival submissions in the light of material available on records. We have noted that in the past, Hon’ble Coordinate Bench of this tribunal had directed the Ld. AO to consider 25% of agricultural income as other sources. The action of lower authorities therefore can not be wholly found to be incorrect. We however also find force in the argument of the assessee that given the shortfall in the quantum of agricultural income the same ratio cannot be applied. Be that as it may be we are of the view that the interest of justice would be met, considering fall in total agricultural income, if we restrict the disallowance to 12.5%. Accordingly, the order of the lower authorities is set aside and the Ld.AO is directed to recalculate the addition by adopting the figure of 12.5%. Accordingly, all the grounds of appeal raised by the assessee is partly allowed.
9.0. In the result, the appeal of the assesse is partly allowed.