SATYAJIT PRAVINSINH KUMPAWAT,GANDHINAGAR vs. THE INCOME TAX OFFICER, WARD-4, GANDHINAGAR
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMARSHRI T.R. SENTHIL KUMAR
PER: DR. B.R.R. KUMAR, VICE PRESIDENT:
This appeal has been filed by the assessee against the order of the Ld.
Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre
(NFAC), Delhi (hereinafter referred to as "CIT(A)" for short) dated
14.02.2024, passed u/s 250 of the Income-tax Act, 1961, (hereinafter referred to as "the Act" for short) for the Assessment Year (AY) 2020-21. 2. The core ground raised by the assessee is as under:
“[1] The Ld. CIT(A), NFAC, Delhi is grievously erred in determining the disallowance of the balance amount of Rs. 14,33,983/- at the rate of 15% of agriculture income out of the total disallowance of Rs. 28,67,967/- being the estimate of 30% expenses of net agriculture income is quite illegal and unreasonable and wrong concept.
….”
Asst. Year : 2020-21
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3. The brief facts of the case are that the assessee is engaged in agricultural activities and has filed his return of income for the year under consideration on 30.03.2021 determining income of Rs. 9,80,080/- and declaring agricultural income of Rs. 95,59,891/-. The Assessing Officer completed the assessment u/s 143(3) r.w.s. 144B of the Act on 28.09.2022, assessing the income of the assessee at Rs.38,48,047/- and agricultural income of Rs.66,91,924/-. The findings of the Assessing Officer are as follows:-
“3.8 ..Considering the above facts and circumstances, it is inferred that the assessee has failed to prove in establishing the fact of low expenditure incurred for producing large agricultural income. On verification of the earlier returns, it is seen that the assessee is regularly showing agricultural income in his return of income and own agricultural land. It is appropriate to make an addition at 30% of net agricultural income on account of undisclosed expenses incurred for earning this agricultural income seems to be reasonable and meet the ends of justice. Since the assessee has suppressed the agricultural expenses thereby disclosing large agricultural income, it is inferred that assessee has deliberately and willfully shown large agricultural income. Assessee failed to explain the undisclosed expenses incurred for producing large agricultural income from his unexplained credits.
Since, the assessee failed to substantiate his claim of low expenditure incurred, an amount @ 30% of the net agricultural income, which comes to Rs.28,67,967/- added to the total income of the assessee u/s68
of the Act being unexplained cash credit. Since, the addition of Rs.28,67,967/- is made under cash credit u/s.68 of the Act, tax will be computed @ special tax rate as per the provisions of section 115BBE of the Act.”
Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A) who restricted the disallowance to 15% of the agricultural income of Rs.95,59,892/-, resulting in confirming the addition of Rs.14,33,984/- u/s 68 of the Act. Asst. Year : 2020-21 - 3–
Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.
We have heard the rival contentions and perused the material available on record. We find that the Assessing Officer made an addition at the rate of 30% of net agricultural income of Rs.95,59,891/- i.e. Rs.28,67,927/-, being unexplained cash credit u/s 68 of the Act, since the assessee has failed to substantiate his claim of low expenses incurred of Rs.5,90,797/- to earn agricultural receipts of Rs.1,01,50,689/-. The Ld. CIT(A), however, restricted the disallowance to 15% of the net agricultural income, thereby confirming an addition of Rs.14,33,984/- u/s 68 of the Act. We have perused the particulars of income of the assessee for the last three years as available in the statements of facts. The same is as under:-
Particulars
AY 2018-19
AY 2019-20
AY 2020-21
Interest Income
13,50,746
11,36,200
11,36,027
Gross Agri. Income
70,00,000
47,00,000
1,01,60,689
Expense incurred on agricultural
18,90,000
16,50,000
5,90,797
Net Agricultural Income
51,10,000
30,50,000
95,59,892
% of expenses incurred to be gross agricultural income
27.00%
35.10%
5.82%
% of expenses incurred to the net agricultural income
36.98%
54.09%
6.17%
The Assessing Officer held that the percentage of expenses incurred to the gross agricultural income is only 5.82% is very low in compare to last two years. As per the A.O. the expenditure in comparison to the agriculture income earned is unrealistic. The Assessing Officer held that in India the Satyajit Pravinsinh Kumpawat Vs. ITO Asst. Year : 2020-21 - 4– average rate of expenditure to earn agricultural income is around 40% of the gross income received and in conclusion the Assessing Officer disallowed 30% off the agricultural income as expenses. The Ld. CIT(A) restricted it to 15%. We find that the assessee has submitted a list of agricultural produce, details of preparation of soil, fertilizer, irrigation, water, electricity charges etc. The Ld. AR also submitted that the assessee had minimal requirement of labour and owned water facility. Hence, the expenses were minimal. The details of sale are neither doubted nor in question. The agricultural produce consists of mango, sapota, wheat, chickpea, corn, moong, guwar, juwar, tuvar, bajari which are regular commercial food crops grown in this area. The average agricultural income per acre on these crops’ ranges from Rs.25,000/- to Rs.30,000/-. The total acreage held by the assessee is approximately 40 acres. Since the sale receipt has not been disputed by the Revenue, we hold that restricting the expenditure to 15% by the Ld. CIT(A) is quite reasonable and no interference is called for on this issue. Appeal of the assessee is dismissed.
In the result, the appeal of the assessee is dismissed.
This Order pronounced in Open Court on 02.05.2025 (T.R. SENTHIL KUMAR)
VICE PRESIDENT
Ahmedabad; Dated 02.05.2025
**btkITA No. 695/Ahd/2024
Asst. Year : 2020-21
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आदेश क त ल प अे षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबंधत आयकर आयुत / Concerned CIT
4. आयकर आयुत(अपील) / The CIT(A)-
5. वभागीय
त नध, आयकर अपील!य अधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड' फाईल / Guard file.
आदेशानुसार/ BY ORDER,उप/सहायक पंजीकार (Dy./Asstt.