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Facts
The assessee, engaged in the retail business of agricultural products, declared total income and claimed exempt agricultural income. The Assessing Officer made an addition of Rs. 10,69,226/- to the taxable income, which was upheld by the CIT(A).
Held
The Tribunal held that the agricultural expenses were already provided for and submitted before the Assessing Officer, and any further disallowance would lead to skewed results. Therefore, the addition made by the Assessing Officer was erroneous.
Key Issues
Whether the addition of estimated expenses for agricultural income was erroneously made by the Assessing Officer without proper consideration of the assessee's claims and evidence.
Sections Cited
250, 143(3)
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
This appeal has been filed by the Assessee against the order passed by the Ld. ADDL/JCIT (A)-11, Delhi (hereinafter referred to as "CIT(A)" for short) dated 28.03.2025 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2017-18. 2. The assessee has raised the following grounds of appeal:-
1) That on facts, and in law, the learned Addl/JCIT (A)-11, Delhi has grievously erred confirming the addition of disallowance estimated expenses of Rs. 10,69,226/- allegedly incurred to earn exempt agricultural income. (2) That on facts and on evidence on record, the entire addition ought to have been deleted as it is made purely on assumption and without any basis at all.
3. The brief facts of the case are as follows: Jagdishkumar Manubhai Barot Vs. ACIT Asst. Year : 2017-18 - 2– The assessee is an individual, engaged in retailer business of agricultural products. The assessee has filed his return of income for the year under consideration on 05.09.2017 declaring total income at Rs. 2,13,280/- and claimed exempt income of Rs. 27,68,906/-. The case was selected for scrutiny assessment under CASS and the assessment u/s 143(3) of the Act was completed on 22.11.2019 at a taxable income of Rs. 12,82,510/- after making addition of Rs. 10,69,226/-. Being aggrieved with this order, the assessee filed appeal before the Ld. CIT(A) who dismissed the appeal of the assessee.
4. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.
5. Before us, the Ld. AR reiterated the submissions made before the lower authorities and emphasized that the agricultural land was cultivated through a cultivator who received 30% of the produce, supported by sworn affidavit and the agricultural expenses of Rs. 6,86,820/- were supported by bills. The Ld. AR submitted that the total agricultural expenses came to 55.60% of gross receipts; therefore, the Assessing Officer had erroneously treated the entire gross agricultural income as net exempt income and had estimated the expenses @ 40% without properly considering the assessee’s claims. The Ld. AR, therefore, submitted that the addition of Rs. 10,69,226/-, made by the Assessing Officer merely on presumptive basis without bringing any contrary evidence on record or effectively rebutting the assessee’s factual submissions, be deleted in the interest of justice.
The learned Departmental Representative relied on the orders of the lower authorities. Jagdishkumar Manubhai Barot Vs. ACIT Asst. Year : 2017-18 - 3–
We have heard the rival contentions and perused the material available on record. Since the agricultural expenses have already been provided for and submitted before the Assessing Officer, any further disallowance leads to be skewed results.
In the result, the appeal of the assessee is allowed.