Erki Krishnamurthy HUF Vs ITO (ITAT Bangalore)
ITAT Bangalore deletes estimated addition on agricultural income; holds CIT(A) cannot dismiss appeal in limine & AO’s estimation arbitrary
In this case, the Bangalore ITAT dealt with partial taxation of agricultural income declared by a HUF (₹41.51 lakh), where the AO had estimated income at ₹60,000 per acre and treated the balance ₹15.19 lakh as income from other sources due to lack of detailed records.
The Tribunal first examined the action of the CIT(A), who had dismissed the appeal in limine for non-prosecution despite the assessee having filed a detailed statement of facts . The ITAT held that:
- The CIT(A) is duty-bound to adjudicate on merits, even in absence of appearance
- Summary dismissal without examining available material is legally unsustainable
On merits, the Tribunal observed:
- The AO himself accepted existence of agricultural land (31.39 acres + share in 35.10 acres) and agricultural activity
- Once agricultural operations are accepted, further estimation without scientific or comparable basis is arbitrary
- Crops like arecanut, coconut, etc., can yield higher income, and AO’s flat estimation ignored crop-specific realities
- Bank receipts from traders (e.g., Areca Enterprise, AR Traders) supported sale of produce
- No material was brought by Revenue to prove that income declared was bogus or inflated
Accordingly, the ITAT held that:
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