Mudubhagilu Krishna Murthy Divakar Vs ITO (ITAT Bangalore)
No Records, No Relief – Expenses Must Be Proven – Tribunal Confirms Disallowance on Estimate Basis- Agricultural Income Inflated, Expenses Unproved –Bang ITAT Dismisses Appeal
Bangalore ITAT examined addition made on account of understatement of agricultural expenditure. Assessee filed his return on 30.10.2018 declaring total income of ₹14.73 lakh & agricultural income of ₹75.82 lakh. On scrutiny, AO observed that agricultural expenditure claimed was substantially lower compared to earlier years, though agricultural turnover had risen. When called upon to furnish records, the Assessee admitted that no documentary evidence of agricultural expenses was maintained. AO therefore estimated expenses at 30% of agricultural income, i.e., ₹29.81 lakh, as against ₹23.54 lakh claimed. The difference of ₹6.26 lakh was treated as income from other sources.
On appeal, CIT(A) upheld AO’s view, holding that Assessee had failed to substantiate agricultural expenses despite repeated opportunities. Before Tribunal, Assessee argued that higher agricultural income was due to cyclical yield variations & increase in selling price through APMC, while expenses remained broadly constant. It was submitted that expenses like labour, manure, pesticides, irrigation & transport had been incurred though not supported by records. Revenue contended that since Assessee himself admitted non-maintenance of vouchers & bills, AO rightly adopted average expenses of 30% based on earlier years.
