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Income Tax Appellate Tribunal, PUNE BENCH, ‘B’ PUNE
Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI
आदेश / ORDER
PER R.S. SYAL, VP : This appeal by the assessee is directed against the order dated 19-07-2021 passed by the National Faceless Appeal Centre (NFAC), Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2014-15.
M/s. Shrikrishna Khandsari Sugar Mills
The only issue raised in this appeal is against the confirmation of disallowance of Rs.4,19,970/- made by the Assessing Officer (AO) in respect of agricultural expenses.
Briefly stated, the facts of the case are that the assessee has been engaged in manufacturing and trading in Khandsari sugar and jiggery and also in power generation. It continued to earn agricultural income in the year under consideration as well. The assessee declared gross agricultural receipts of Rs.47,78,862/- and agricultural expenses amounting to Rs.12,52,631/-. The Assessing Officer (AO) found the expenses to be on lower side by considering the general market trend for agricultural expenses being incurred at 35% of gross agricultural income. He, thus, enhanced the amount of agricultural expenses to Rs.16,72,601/- resulting into disallowance of Rs.4,19,970/-. The ld. CIT(A) sustained the disallowance, against which the assessee has come up in appeal before the Tribunal.
We have heard the rival submissions and gone through the relevant material on record. It is seen that the assessee declared gross agricultural receipts at Rs.47,78,862/- and agricultural expenses at Rs.12,52,631/-, which account for more than 26%
M/s. Shrikrishna Khandsari Sugar Mills of the gross receipts. The assessee has furnished year-wise details of gross receipts and expenses on account of agricultural operations, that has been captured at pages 25 and 26 of the impugned order. For the immediately preceding assessment year, the expenses stood at 33.04%, whereas for the A.Y. 2012- 13 the expenses were at 21.38% and for the A.Y. 2011-12 at 15.44%. The AO has simply rejected the assessee’s claim of agricultural expenses being on the lower side on the basis of a yardstick of 35% being “trend of current year”. It is not understandable as to where from such ‘trend’ came into vogue.
If the percentage of agricultural expenses shown by the assessee for the year under consideration is lower than that of the immediately preceding year, it is better than that for the two years immediately prior thereto. Here is a case in which the assessee maintained complete details of agricultural expenses, which have not been faulted with by the AO. If the expenses were inadequate or wanting in any respect, the AO ought to have rejected such expenses by giving some plausible reasons, whereafter, he could have gone ahead with making a best judgment on some rational basis. Having not done so and simply making the addition on the basis of some ‘trend’, we
M/s. Shrikrishna Khandsari Sugar Mills find no reason to sustain the disallowance. For the foregoing reason, we are satisfied that the authorities below were not justified in making and sustaining the addition in such an ad hoc manner. The same is directed to be deleted.
In the result, the appeal is allowed.
Order pronounced in the Open Court on 20th June, 2022.