Shital Nilesh Parakh Vs ITO (ITAT Pune)
In Shital Nilesh Parakh vs ITO, assessee declared business income u/s 44AD & agricultural income from onion cultivation. Gross agricultural receipts were Rs.89,50,214 & expenditure claimed was Rs.18,95,999 (21%), resulting in net agricultural income of Rs.70,54,215. AO treated entire agricultural receipts as income from other sources due to mismatch in land details, deposits & lack of books, completing assessment u/s 143(3) r.w.s 144B.
CIT(A)/NFAC rejected 21% expense & estimated 35% expenses, thereby treating Rs.12,36,575 as unexplained expenditure u/s 69C, relying on Roshan Di Hatti & Kale Khan Mohammad Hanif.
Before Tribunal, Assessee contended that 21% expenses were reasonable for onion cultivation. Tribunal observed that some increase in expenses was justified, but CIT(A)’s 35% was excessive. Tribunal estimated agricultural expenses at Rs.22,37,554 & directed AO to accept net agricultural income at Rs.67,12,660 out of the total receipts of Rs.89,50,214. Appeal partly allowed
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the assessee is directed against the order dated 27.11.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2020-21.
2. The appellant has raised the following grounds of appeal :-
“1. On the facts and in the prevailing circumstances of the case and in Law, the learned CIT(A)-NFAC erred in not accepting the agriculture income of Rs. 89,50,214 without appreciating the submission made by the assessee. Hence, the impugned order may please be set aside and the claim of the assessee may please be accepted.
2. On the facts and in the prevailing circumstances of the case and in Law. the learned CIT(A)- NFAC erred in invoking the addition of Rs. 12,36,575 on account of unexplained expenditure under section 69C without appreciating the submission made by the assessee. Hence, the impugned addition of Rs. 12,36,575 may please be deleted.
3. On the facts and in the prevailing circumstances of the case and in Law. the learned CIT(A) – NFAC erred in invoking the addition of Rs. 12,36,575 on account of unexplained expenditure under section 69C without providing the opportunity of being heard. Hence, the impugned addition of Rs. 12,36,575 may please be deleted.
4. The Appellate craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of the appeal, if deemed necessary at the time of hearing of the appeal.”
3. Facts of the case, in brief, are that the assessee is an individual and has furnished his return of income on 29.03.2021 declaring total income of Rs.3,23,460/- u/s 44AD of the Act from hair-dressing and other beauty treatment. Apart from this business income gross agricultural receipt from sale of onions of Rs.89,50,214/- was also disclosed and after claiming expenditure of Rs.18,95,999/- net agricultural income of Rs.70,54,215/- was shown. The case was selected for scrutiny through CASS to verify the issue of agricultural income. Statutory notice u/s 142(1) along with questionnaire was issued to the assessee. Assessee replied that he possess 9.06 acres of agricultural land and during the year onions were cultivated twice since onions permits cultivation on two occasions annually. The Assessing Officer found contradiction between figures of land in acres as disclosed in the income tax return and as per the reply held by the assessee. It was also observed by the Assessing Officer that in the bank account only Rs.61,52,300/- was deposited towards agricultural sale receipts and most of the expenses were incurred in cash. The Assessing Officer sought clarification on the above issue and also asked the assessee to furnish cash book but no reply or documents were furnished by the assessee despite due service of show cause notice and draft assessment order for proposed addition. Accordingly, the Assessing Officer vide order dated 19.09.2022 completed the assessment u/s 143(3) r.w.s. 144B of the Act by determining total income at Rs.92,73,670/- as against the income returned by the assessee at Rs.3,23,460/-. The above assessed income includes addition of Rs.89,50,214/- agricultural receipt treated as income from other sources.
