Income recorded on estimated basis supported with possible evidence is acceptable

Anupama Chandrakandath Vs ACIT (ITAT Cochin)

ITAT Cochin held that agricultural income recorded on estimated basis needs to accepted as it was supported by all the possible evidence for estimating income. Revenue has not brought anything on record to show the income estimated and the percentage of expense claimed is not correct.

Facts- The case of the assessee was selected for scrutiny under CASS and the notice u/s.143(2) was duly served on the assessee. During the course of assessment proceedings, AO noticed that the assessee has only estimated the agricultural income and accordingly called for further details.

AO, proposed to disallow a portion of the agricultural income returned as the assessee had only estimated the income and not based on books of accounts. The AO directed for an inspection to conduct the agricultural activities wherein the actual extent of crops cultivated, nature of rubber trees etc., were obtained by the inspector attached to the AO, who inspected the agricultural holdings and submitted their report. The inspector had also verified the katcha book maintained with regard to the rubber tapping, wages etc. However, the AO was of the opinion that these are not enough to justify the huge agricultural income. The AO held that the assessee had not maintained any books of accounts with regard to the agricultural activities giving actual details of agricultural income. Accordingly the AO estimated the agricultural income of the assessee at Rs.36,00,000 and made addition towards the difference amount of Rs.9,00,000. On further appeal the CIT(A) held that the estimation of agricultural income by the AO is reasonable since the assessee has not maintained any books of accounts and accordingly upheld the order of the AO. Aggrieved the assessee is in appeal before the Tribunal.

Conclusion- In our considered view when the assessee has submitted the possible evidence for estimating the income, the same cannot be brushed aside without recording any adverse finding. The revenue has not brought anything on record to show that the income estimated and the percentage of expense claimed by the assessee is not correct. The AO has also not recorded any supporting to show how the agricultural income is estimated at Rs.36,00,000. In view of these discussions and considering the facts of the case we are of the view that the addition made by the AO is purely based on surmise without recording any contrary finding and therefore should be deleted. Accordingly we hold that the addition of Rs.9,00,000 done both AY 2012-13 and 2013-14 to be deleted and the appeals are allowed in favour of the assessee.

Please become a Premium member. If you are already a Premium member, login here to access the full content.