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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANJUNATHA. G
Per Manjunatha G, Accountant Member: 1. This appeal in ITA No.43/CHNY/2019 by the assessee is directed against the order of Learned CIT(A), Chennai dated 11.10.2018 for Assessment Year 2015-16 challenging the addition on merit.
ITA No.43/Chny/2019 :- 2 -:
Although the assessee has taken seven grounds of appeal but in
substance the sole ground is as under for adjudication :-
“Whether CIT(A) was justified in disallowing Rs.14,50,110/- on basis estimate being the entire expenses incurred towards earning the agriculture income reported at Rs.25,00,110/- ?”
We have heard the learned representatives of both the parties,
perused the findings of the authorities below and the materials
available on record. The Ld. counsel for the assessee reiterated the
submissions made before the authorities below. The Ld. DR, relied
upon the Ld. CIT(A) order.
The assessee is in the business of running a restaurant and has
declared a business income of Rs.4,01,851/- whereas the income from
house property declares is at Rs. 23,97,498/-. The assessee is the
owner of about 30 acres of dry /wet agricultural land near Thani.
The assessee had declared agricultural income of Rs.25,00,110/-
and claimed exemption in the return of income filed. During the course
of assessment proceeding, Assessing officer directed the Assessee to
submit details with regard to the agriculture income like Pata, Chitta,
Adangal etc and proof for expenses towards agricultural activity along
with supporting evidence like bills and vouchers etc. It is undisputed
fact that the assessee has produced the agricultural land ownership
ITA No.43/Chny/2019 :- 3 -:
papers, Pata, Chitta and Adangal before the Assessing Officer but
could not submit any proof with regard to the expenses claimed.
Hence, Assessing officer added the expenses of Rs.15,80,000/- to the
returned income.
The addition was challenged before the ld. CIT(A) and it was
submitted by the assessee that the revenue records evidencing the
holding of agriculture lands to the extent of around 30 acres. Revenue
records evidence the cultivation of paddy, mangoes, coconuts,
vegetables including ladies finger etc. It was further submitted that due
to the nature of the trade / agriculture the entire details with reference
to the bills were not placed on record.
Ld. CIT(A) noted that none of the incomes have been received by
the cheque. All the expenditures claimed by the assessee are in cash,
therefore, the claim of Agriculture income of the assessee cannot be
believed in its entirety, hence he has estimated the agricultural
income. Ld. CIT(A) took a net average income of Rs.35,000/- per acre
and allowed the assessee a net agricultural income of Rs.10,50,000/-
and the balance of agricultural income of Rs.14,50,110/- is sustained
to taxation.
ITA No.43/Chny/2019 :- 4 -:
Before us, Ld. counsel for the assessee filed a judgement of this
Tribunal delivered in the case of Smt. Annakalanjiam Mathivanan Vs
The ACIT, Chennai, ITA No.2451/Chny/2018 dated 22.01.2019 and
submitted that in similar situation addition was deleted by the Tribunal.
We have gone through the judgement of this Tribunal referred
supra, and keeping in mind the entire facts, evidences placed on
record and nature of Trade / Agriculture, the addition made is on the
much higher side. CIT(A) has not given basis to arrive a net average
income of Rs.35,000/- per acre. In making guess work or estimate the
officer does not possess arbitrary powers to assess any figure as he
like. Though quasi judicial in nature these assessments are to be
based on the principles of justice, equity and good conscience.
Therefore, this Tribunal is unable to uphold the order of the lower
authority. The Tribunal in the case cited above, in para 8 held as
under:
“6. Moreover, for yield, there cannot be any other evidence other than estimation. A coconut tree may yield 100-120 nuts in a year. Now the Agriculture Department and Agriculture University invented hybrid coconut varieties which give 150-200 nuts in a year. Therefore, estimation of yield in agriculture is something difficult and which needs to be appreciated by the authorities who are performing judicial function. When agricultural produce including coconuts is traded in unorganized market like Uzhavar Sandhai and other local market, expecting the assessee to produce bills and vouchers is
ITA No.43/Chny/2019 :- 5 -:
nothing but asking the assessee to perform an impossible task. Therefore, this Tribunal finds no reason to disallow any claim of the assessee. Had the Assessing Officer found that the assessee has no land or he has not cultivated as claimed, the matter might have stood in a different foot. In this case, the Assessing Officer accepted the fact that the assessee has cultivated the land. The only reason for disallowance is that the assessee could not produce bills and vouchers for sale of agricultural produce and receipts for expenses. Apart from that, the assessee has established by producing copy of adangal extract that the land in question was subject to cultivation. In those circumstances, this Tribunal is of the considered opinion that there is no reason to disallow any part of claim. Therefore, this Tribunal is unable to uphold the order of the lower authority. Accordingly, orders of both the authorities below are set aside and the Assessing Officer is directed to delete the addition of ₹8,00,000/-. 7. In the result, the appeal filed by the assessee is allowed.”
Therefore, this Tribunal, in the facts and circumstances of the
case, case law referred and in order to secure the ends of justice, take
a reasonable a net average income of Rs.70,000/- per acre
aggregating to a net agricultural income of Rs. 21,00,000/-. Balance
agricultural income of Rs. 4,00,110/- is upheld.
In the result, the appeal of the assessee is partly allowed.
Order pronounced on 09th April, 2024.
Sd/- Sd/- (महावीर िसंह) (मंजुनाथ. जी) (Mahavir Singh) (Manjunatha. G) उपा�� / Vice President लेखा सद�य लेखा लेखा लेखा सद�य सद�य /Accountant Member सद�य चे�ई/Chennai, �दनांक/Dated: 09th April, 2024. EDN/-
ITA No.43/Chny/2019 :- 6 -:
आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकर आयु�/CIT 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF