Ajay Ravjibhai Patel Vs ITO (ITAT Surat)
ITAT Surat held that addition under section 69C towards undisclosed income, alleging agricultural expense met from undisclosed income, not justified since the only source of income of the assessee is agricultural income. Accordingly, appeal allowed.
Facts- The assessee had filed his return of income on 19.07.2017, declaring total income of Rs.7,120/- and agricultural income at Rs.22,37,409/- and other exempt income of Rs.1,443/-. The case was selected for limited scrutiny through CASS. AO observed that the assessee had also from other sources and also from agricultural activities carried out during the year. The assessee furnished copies of sale bills of agricultural products amounting to Rs.22,37,409/-. The assessee had not debited any agricultural expenses for the year under consideration and therefore, genuineness of the same has not been proved. AO computed total agricultural income of Rs.22,37,409/- and 35% of agricultural receipts amounting to Rs.7,83,093/- was added as undisclosed income.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that AO has not brought any material or evidence on record to show that the assessee earned income from source different from agricultural. Therefore, if the income of the assessee is only agriculture in nature, merely by increasing the agricultural expenditure and reducing the agricultural income, which is exempt u/s 10(1) of the Act, will not automatically generate income from other sources. The decision in case of A. S. Srinath (HUF) is directly on the issue where the matter was decided in favour of assessee. Therefore, the proper course of action would be to reduce the exempted agricultural income by Rs.10,28,410/- in place of adding undisclosed income of Rs.7,83,093/- estimated by the AO. The AO is, accordingly, directed to accept agricultural income of Rs.12,08,639/- [Rs.22,37,049 (-) Rs.10,28,639] instead of Rs.22,37,049/- and delete addition of Rs.7,83,093/- towards undisclosed income.
