Loading judgment…
Facts
The assessee filed their return declaring total income and agriculture income. The case was selected for scrutiny, and during assessment, the AO added agricultural income and tuition income as unexplained income. The CIT(A) upheld the AO's order.
Held
The Tribunal found merit in the assessee's contention that the AO had not specifically identified defects in the submitted evidence. However, it was also noted that the assessee had not provided sufficient supporting documents for agricultural and tuition income. Therefore, the Tribunal directed the AO to make an addition at the rate of 10% on the total of the disallowed amounts.
Key Issues
Whether the addition of agricultural income and tuition income as unexplained income by the Assessing Officer was justified, and if not, to what extent relief should be granted.
Sections Cited
143(3), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC”
Before: DR. ARJUN LAL SAINI
िनधा�रती की ओर से/Assessee by : Shri Vimal Desai, Ld. AR राज�की ओर से / Revenue by : Shri Abhimanyu Singh Yadav, Ld. Sr. DR सुनवाई की तारीख /Date of Hearing : 03/12/2025 घोषणा की तारीख /Date of Pronouncement : 04/12/2025 आदेश/ORDER Per, Dr. Arjun Lal Saini, A.M
Captioned appeal filed by the assessee, pertaining to Assessment Year 2016- 17, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income-tax (Appeals) (‘CIT(A)’), dated 28.02.2024, which in turn arises out of an assessment order passed by Assessing Officer u/s. 143(3) of the Act, on 24.12.2018.
The Grounds of appeal
raised by the assessee are as follows: “1. The assessment order u/s. 143(3) of the Act is bad in law.
2. The learned Assessing Officer has erred in law as well as on facts for making an addition of gross receipt of agricultural income of Rs. 8,15,200/-as unexplained income. The ld. CIT(A) has erred in law as well as on facts in confirming the same.
3. The learned Assessing Officer has erred in law as well as on facts for treating the tuition income of Rs. 5,75,800/-, as unexplained income. The ld. CIT(A) has erred in law as well as on facts in confirming the same.”
The facts of the case which can be stated quite shortly are as follows: The assessee has e-filed return of income on 17/10/2016, declaring the total income of Rs. 3,99,350/- and agriculture income of Rs 4,95,050/-, for the year under consideration and the same was processed u/s 143 (1) of the I.T. Act. Thereafter, assessee`s case was selected for complete scrutiny under CASS and statutory notice u/s 143(2) was issued on 04/7/2017. Further notice u/s 142(1) r.w.s. 129 dated 08/09/2018 was issued due to change of incumbent and the same was issued upon the assessee along with the details questionnaire asking assessee to furnish certain details in relation to the year under scrutiny, which was duly served upon the assessee. In response to the above notices and questionnaire, an authorized representative of the assessee, made the submission. The reply and explanation filed by the assessee were verified by assessing officer. The assessee also submits copy of accounts for the assessment year (A. Y.) 2016-17 along with computation, bank statement, cash book, details of business. Form 10DB from the books of the broker etc, details were called upon by issuing notice u/s 133(6) from the share broker and bank, which were received by the assessing officer. The assessee is deriving tuition income, agriculture income, interest income from deposits in bank, share business income, rent income from house property etc, during the year under consideration. Necessary details and confirmations have been obtained by the assessing officer. Page 2 of 7 On verification, it was found that assessee is having agriculture income. The assessee had submitted on abstract of 7/12 and 8A utara and agriculture income and expenses ledger. The assessee has not submitted sales bills of the agriculture products sales thereof to prove the genuineness of the agriculture income. The assessee has not furnished the bills or vouchers of dava expenses, khatar expenses, labour expenses, biyaran expenses etc. The assessee is also having tuition income and just furnished the ledger showing student's name and amount for about two months but assessee has not submitted any documents regarding details of students class-wise, fees taken from the student class-wise, qualification of the tutor, mode of payment etc. However, it was found by the A.O. that assessee is incurring house property rent income by rendering the building to the schools.
4.In view of the above facts, the A.O. noticed that why agriculture income should not be treated as diversion of income received by the assessee as undisclosed sources under the guise of agricultural income in view to cut down the tax liability and further tuition income should not be treated as income from the undisclosed sources. Therefore, with a view to protect the interest of revenue, a show -cause notice dated 12/12/2018 was issued and served to the assessee proposing addition of Rs 4,95,050/- on account of agriculture income and tuition fee income of Rs. 5,75,800/- as income from some other source, not disclosed in return of income.
From the above, the A.O. noticed that the agriculture income is nothing but the assessee's own undisclosed income which is diverted under the guise of agricultural income. Merely furnishing the copy of 7/12, 8-A and income and expenditure account, it is not proved that the assessee has made agricultural activities and earned the agricultural income. The assessee has no evidences of earning of agriculture Page 3 of 7 income. The onus lies on the assessee to prove the genuineness of the transaction, assessee has not submitted any supporting evidence regarding sale of agriculture product, the bills or vouchers of dava expenses, khatar expenses, labour expenses, biyaran expenses etc. In addition to that the assessee has not furnished /offered any explanation in response to the show -cause notice. In view of the above, the amount of Rs.8,15,200/- was treated as income received by the assessee from undisclosed sources and added to the total income of the assessee during the year under consideration.
Regarding tuition income, the assessing officer noticed that the assessee is having tuition income and just furnished the ledger showing student's name and amount for about two months but assessee has not submitted any documents regarding details of students class-wise, fees taken from the student class-wise, qualification of the tutor, mode of payment etc. The onus lies on the assessee to prove the genuineness of transaction and to submit the details and supporting evidences to cross verify the source of income. Therefore, the amount of Rs.5,75,800/- was treated as received by the assessee from undisclosed sources and added to the total income of the assessee during the year under consideration.
Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the CIT(A) who has confirmed the action of the assessing officer. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before this Tribunal.
Learned Counsel for the assessee, submitted that during the assessment proceedings, the assessee has submitted the proof of agricultural income and also Page 4 of 7 submitted the evidences relating to holding of agricultural land, such as copy of 7/12 and copy of 8A and income and expenditure account. The assessee also submitted the entire possible evidences, for income from tuition, therefore, no addition should be made in the hands of the assessee.Learned Counsel, without prejudice to the above, also submitted that the assessee, being a farmer, has submitted all the possible evidences, however if the Bench wants 10% adhoc addition may be made in the hands of the assessee.
9.On the other hand, the ld. D.R. for the Revenue did not raise any objection about estimated addition to be made, however, he stated that due to smallness of the amount and in order to protect the interest of Revenue 15% adhoc, estimated addition is sufficient.
I have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. I note that in order to explain the genuineness of the agriculture income, the assessee submitted before the lower authorities, the copy of 7/12, and copy of 8-A and income and expenditure account. About tuition income, the assessee submitted all the possible explanations. However, assessing officer, ignoring all these evidences made the addition in the hands of the assessee. I note that the assessee is a small farmer and during the assessment proceedings the assessee submitted all the possible evidences such as copy of 7/12 and 8A to prove the holding of the agricultural land and also submitted income and expenditure account in respect of agricultural income. I note that the total of both the additions of Rs. 8,15,200/- and Rs. 5,75,800/-, come to Rs. 13,91,000/-. I also find that the Page 5 of 7 assessing officer, had not specifically identified any specific defects in the purported evidences and also taking note of the fact that the assessing officer, has not held that these evidence filed by the assessee, are bogus. Therefore, I find some merit in the contention of the ld. Counsel for the assessee. Therefore, I find that while the case of the assessee merits some relief, at the same time entire relief cannot be permitted to the assessee. In my view the ends of justice would be met, if a net profit rate of 10% is adopted on both the additions, since the same would take care of the inconsistencies, in the various documents and evidences submitted before the lower authorities. Therefore, in order to plug the leakage of revenue, I direct the assessing officer to make addition at the rate of 10% of Rs.13,91,000/-, in the hands of assessee, which comes to Rs. 1,39,100 /-.
Before parting, it is made clear that instant adjudication is made due to smallness of the amount and the fact that both the parties have agreed for such adhoc disallowance, therefore, the instant adjudication shall not be treated as a precedent in any preceding or succeeding assessment year.
In the result, appeal filed by the assessee is partly allowed in above terms.
Order pronounced in the open court on 04/12/2025.