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Facts
The assessee, an individual, declared income from hair-dressing and agricultural income from onions. The Assessing Officer (AO) noted discrepancies in land details and cash transactions, treated a portion of onion sale receipts as unexplained expenditure, and added it to the income. The CIT(A) partly allowed the appeal.
Held
The Tribunal found that the assessee's claimed expenditure of 21% of gross receipts was appropriate, differing from the CIT(A)'s 35% estimation. The Tribunal estimated the agricultural expenses and directed the AO to allow the expenditure accordingly.
Key Issues
Whether the expenditure claimed by the assessee on agricultural operations was correctly estimated and whether the addition made by the AO and sustained by CIT(A) for unexplained expenditure was justified.
Sections Cited
142(1), 143(3), 144B, 69C, 44AD
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
Assessment Year : 2020-21 Shital Nilesh Parakh, Vs. ITO, Ward-2, 1, Main Road, Vambori, Ahilyanagar. Tal. Rahuri, Dist. Ahilyanagar- 413704. PAN : APTPP5302G Appellant Respondent Assessee by : Shri Prasad Bhandari Revenue by : Shri Shashank Ojha Date of hearing : 19.08.2025 Date of pronouncement : 12.11.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 27.11.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2020-21.
The appellant has raised the following grounds of appeal :-
1. On the facts and in the prevailing circumstances of the case and in Law, the learned CIT(A)-NFAC erred in not accepting the agriculture income of Rs. 89,50,214 without appreciating the submission made by the assessee. Hence, the impugned order may please be set aside and the claim of the assessee may please be accepted.
2. On the facts and in the prevailing circumstances of the case and in Law. the learned CIT(A)- NFAC erred in invoking the addition of Rs. 12,36,575 on account of unexplained expenditure under section 69C without appreciating the submission made by the assessee. Hence, the impugned addition of Rs. 12,36,575 may please be deleted.
3. On the facts and in the prevailing circumstances of the case and in Law. the learned CIT(A) - NFAC erred in invoking the addition of Rs. 12,36,575 on account of unexplained expenditure under section 69C without providing the opportunity of being heard. Hence, the impugned addition of Rs. 12,36,575 may please be deleted.
4. The Appellate craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of the appeal, if deemed necessary at the time of hearing of the appeal.”
Facts of the case, in brief, are that the assessee is an individual and has furnished his return of income on 29.03.2021 declaring total income of Rs.3,23,460/- u/s 44AD of the Act from hair-dressing and other beauty treatment. Apart from this business income gross agricultural receipt from sale of onions of Rs.89,50,214/- was also disclosed and after claiming expenditure of Rs.18,95,999/- net agricultural income of Rs.70,54,215/- was shown. The case was selected for scrutiny through CASS to verify the issue of agricultural income. Statutory notice u/s 142(1) along with questionnaire was issued to the assessee. Assessee replied that he possess 9.06 acres of agricultural land and during the year onions were cultivated twice since onions permits cultivation on two occasions annually. The Assessing Officer found contradiction between figures of land in acres as disclosed in the income tax return and as per the reply held by the assessee. It was also observed by the Assessing Officer that in the bank account only Rs.61,52,300/- was deposited towards agricultural sale receipts and most of the expenses were incurred in cash. The Assessing Officer sought clarification on the above issue and also asked the assessee to furnish cash book but no reply or documents were furnished by the assessee despite due service of show cause notice and draft assessment order for proposed addition. Accordingly, the Assessing Officer vide order dated 19.09.2022 completed the assessment u/s 143(3) r.w.s. 144B of the Act by determining total income at Rs.92,73,670/- as against the income returned by the assessee at Rs.3,23,460/-. The above assessed income includes addition of Rs.89,50,214/- agricultural receipt treated as income from other sources.
Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. After considering the reply of the assessee and remand report of the Assessing Officer, Ld. CIT(A)/NFAC partly allowed the appeal filed by the assessee by observing as under :- “4.13 I am of the considered view that, at least 35% of the income earned by way of said agricultural activity is attributable to the earning of the said income by considering the facts and circumstances of the case for the current year that even though the sale price of the onion during the period of December 2019 was more, the production of the onion during the Kharif period of the year was affected by adverse weather conditions and also the processing and storage cost of the Onion was correspondingly more. 4,14 Since, the appellant has not furnished the complete details of the agricultural expenses incurred for earning the same, the AO is directed to quantify the said expense incurred by the appellant by considering 35% of the said receipt of Rs.89.50,214/- Accordingly, the excess expenditure incurred by the appellant amounting to Rs. 12.36.575/- (Rs.31,32,575/- (-) Rs 18,95,999/-) is to be treated as unexplained expenditure u/s 69C of the Act, which was earned by the appellant from undisclosed sources. In other words, the income shown by way of agriculture has been inflated to the extent of Rs.12.36,575/- by way of receipt from undisclosed sources. Reliance in this regard is also placed on the decision of the Honourable Supreme Court in the case of Roshan Di Hatti vs CIT (107 ITR 938) & in the case of Kale Khan Mohammad Hanif Vs CIT (50 ITR 1). 4.15 Accordingly, the AO is directed to allow exemption of agriculture income amounting to Rs. 5817639/- and add an amount of Rs. 12.36,575/- (Rs.31,32,575/-(-) Rs. 18.95,999/-) as unexplained expenditure u/s 69C of the Act. Thus, the grounds of appeal
filed by the appellant on this issue is partly allowed.
5. The grounds of appeal filed by the appellant related to the levy of interest in being consequential in nature, the same is not adjudicated separately.
6. In the end result, the appeal of the appellant is partly allowed.”
5. Again being aggrieved with the above order passed by Ld. CIT(A)/NFAC the assessee is in appeal before this Tribunal.
6. We have heard Ld. counsels from both the sides and perused the material available on record including the paper book furnished by the assessee. The whole controversy revolves around the claim of expenditure by the assessee at 21% as against determination of the same at 35% by Ld. CIT(A)/NFAC. In this regard, we find that the assessee has shown gross onion sale receipt at Rs.89,50,214/- and declared net agricultural income of Rs.70,54,215/- after claiming expenditure of Rs.18,95,999/- which is 21% of gross agricultural sale proceeds. As per Ld. CIT(A)/NFAC, the percentage of expenditure should not be less than 35% of gross agricultural sale proceeds. On the other hand, 21% expenditure is quite appropriate as per the assessee.
Considering the totality of the facts of the case and in the light of arguments advanced by both the parties & material produced before us, we deem it appropriate to estimate the expenses towards agricultural operations of onions for the period under consideration at Rs.22,37,554/-. Accordingly, we set-aside the order passed by Ld. CIT(A)/NFAC and direct the Assessing Officer to accept net agricultural income of Rs.67,12,660/- after allowing expenditure of Rs.22,37,554/- out of total agricultural sale proceeds of