BHUPENDRA MAGANLAL NAIK,NA vs. ARIVS.ITO, WARD -1, NAVSARI

Appellant represented by Shri Suresh K. Kabra, CA Respondent represented by Shri J.K. Chandani, Sr. DR Date of hearing 05/05/2022 Date of pronouncement 19/07/2022 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals), Surat [in short, the ld. CIT(A)] dated 21/09/2021 for the Assessment year (AY) 2015-16. The assessee has raised following grounds of appeal: “1. The Learned CIT(A) failed to accept the evidences submitted by us at the time of assessment stage as well as appellate stage for Rs. 2,40,830/-.

2. The Learned CIT(A) erred in confirming the addition of Rs. 2,40,830/- as our non-agriculture income and not as the agricultural income considered by us on estimated basis Bhupendra Maganlal Naik HUF Vs ITO without accepting the explanations, calculations and evidences.

3. The Learned CIT(A) erred in wrongly considered the amount of Rs. 2,50,000/- for the deduction of agriculture expense for the first time. In fact, it was a part already considered by us to find net agriculture income.

4. The Learned CIT(A) is failed to pass the order within the time prescribed as per the circular issued by the CBDT.

5. The LAO has not charged correctly the interest u/s 234A/B/C/.

6. The appellant craves leave to amend, alter or delete any of the above grounds of appeal.”

2. Facts in brief are that the assessee while filing the return of income for assessment year (A.Y.) 2015-16 on 26/09/2015, declared income of Rs. 12,18,830/-. In the computation of income, the assessee was shown agricultural income of Rs. 23,15,830/- for rate purpose. The case was selected for scrutiny. During the assessment, the Assessing Officer has noted that the assessee has shown agricultural income of Rs. 23,15,830/- after showing deduction of expenses of Rs. 2,50,000/-. Out of total gross receipt of Rs. 25,65,830/-, the amount of Rs. 19,40,830/- received by cash and Rs. 6,25,000/- by cheque. On making further enquiry, the assessee disclosed that in Income Discloser Scheme-16 (IDS- 2016), the assessee disclosed amount of Rs. 35.00 lacs which includes Rs. 17.00 lacs for agricultural purpose. The assessee was asked to produce various bills and vouchers for supporting the balance amount of Rs. 8,65,380/- (25,65,830- Bhupendra Maganlal Naik HUF Vs ITO 17,00,00=8,65,3800). In response to show cause notice of Assessing Officer, the assessee filed his reply dated 22/12/2017 and furnished the proof of agricultural income of Rs. 6,25,000/- in the following way Amount –Rs. Date of receipt Source of receipt/ income 2,10,000/- 05/4/2014 Gadat VVKS Mandal Ltd 3,50,000/- 16/08/2014 Gadat VVKS Mandal Ltd 65,000/- 04/02/2015 Gadat VVKS Mandal Ltd 6,25,000/- (Total) 3. On the basis of the above details the Assessing Officer noted that the assessee has not furnished any evidence in the form of bills or vouchers. Accordingly, the amount of Rs. 2,40,830/- was treated as unexplained income of the assessee and added to the income of assessee.

is accordingly denied. The addition in this respect is confirmed.”

6. Further aggrieved, the assessee has filed the present appeal before the ld. CIT(A).

7. We have heard the submissions of ld. authorised representative (AR) of the assessee and the ld. Senior Departmental representative (Sr. DR) for the revenue and have gone through the orders of the authorities below. The ld. AR of the assessee submits that the gross receipt of agricultural income of assessee is Rs. 25,65,830/-. The assessee has already shown deduction on account of expenses of Rs. 2.50 lacs and offered net agricultural income of Rs. 23,15,830/-. The Assessing Officer has not doubted the expenses rather made additions of Rs. 2,40,830/- for want of evidence. The assessee before the lower authorities has clearly stated that the assessee has declared amount of Rs. 35.00 lacs under IDs 2016 which includes the amount of Rs. 17.00 lacs for agricultural purpose. The Assessing officer has not considered the size of land holding and cash receipt on account of coconut, fanas, mango and chiku. The assessee also filed copy of Talati certificates about the nature of crops grown in the agricultural holding. The ld. AR of the assessee furnished the following working about the gross receipts of agricultural income, amount declared Bhupendra Maganlal Naik HUF Vs ITO in IDS 2016, agricultural expenses and the balance, if any was to be added in the following manner: Gross receipt 25,65,830/- Less: Declared under IDS 2016 17,00,000/- 8,65,830/- Less: Agriculture expense 2,50,000/- Net Agriculture Income 6,15,830/- LAO has shown net agricultural income 6,25,000/- Balance to be added of Rs. 9,170/- 9,170/- and not Rs. 2,40,830/-(There is no discussion of Rs. 9,170/- in the order of the LAO) Thus, the ld. AR of the assessee in his alternative and without prejudice submission submitted that the addition if any was to be added was only Rs. 9,170/-.

Bhupendra Maganlal Naik HUF Vs ITO confirmed the action of Assessing Officer by holding that the assessee has not submitted any documentary evidence either to Assessing officer or before him. However, we find that the ld. CIT(A) after confirming the addition, disallowed the deduction of agricultural expenses thereby made an enhancement by taking a view that the agricultural expenses is claimed for the first time. We find that enhancement made by the ld. CIT(A) is without not only issuing show cause notice but contrary to the fact that the assessee claimed expenses for the first time. The assessee right from the beginning in his computation of income has claimed expenses. Therefore, the enhancement made by ld. CIT(A) is deleted.