2012 (11) TMI 582 - AT - Income Tax

Appeal allowed for delay, vehicle expenses remanded, interest ground dismissed, income addition partially reduced

Chandrakant Ramakant Pise Versus ACIT, Circle-2, Solapur

Chandrakant Ramakant Pise Versus ACIT, Circle-2, Solapur - TMI Issues Involved:1. Dismissal of appeal on the grounds of limitation.2. Deduction of depreciation and petrol expenses of the vehicle.3. Disallowance of interest payment claimed as deduction under Section 57.4. Addition of unproved agricultural income.Detailed Analysis:1. Dismissal of Appeal on Grounds of Limitation:The appellant argued that the CIT(A) dismissed the appeal primarily due to the delay in filing. The appellant claimed that the delay of 86 days was due to unavoidable circumstances, including the severe medical conditions of his elder brother and father, which required his full attention and prevented him from complying with legal formalities. The Tribunal acknowledged the reasonable cause for the delay, given the critical health conditions of the appellant's family members. Consequently, the delay was condoned, and the matter was remanded to the CIT(A) to decide the appeal on its merits, ensuring the appellant is given an opportunity to be heard.2. Deduction of Depreciation and Petrol Expenses of Vehicle:The appellant sought a deduction of Rs. 1,78,582/- for depreciation and petrol expenses related to a vehicle used in connection with his partnership in M/s. S.P. Wines. The Assessing Officer disallowed the claim, citing a lack of nexus between the vehicle expenses and the remuneration received from the partnership firm. The CIT(A) upheld this disallowance, stating that the expenses were not incurred for earning the said income as the remuneration and interest were independent of the vehicle's usage. The Tribunal referred to the Special Bench decision in Vishnu Anant Mahajan vs. ACIT, which clarified that a firm and its partners are separate assessable entities and that expenses related to non-taxable income should be disallowed under Section 14A. The Tribunal restored the issue to the Assessing Officer for reconsideration in light of the Special Bench decision.3. Disallowance of Interest Payment Claimed as Deduction under Section 57:The appellant did not press this ground during the hearing, and hence, it was dismissed as not pressed.4. Addition of Unproved Agricultural Income:The appellant declared a net agricultural income of Rs. 2,09,805/-. The Assessing Officer found discrepancies in the books of accounts, which appeared to be written in one sitting and lacked genuine supporting documents for expenses like fertilizers, seeds, and labor charges. Additionally, the crops claimed to be sold did not match the 7/12 extracts. Consequently, the Assessing Officer accepted only Rs. 1,00,000/- as genuine agricultural income and added the remaining Rs. 1,00,000/- as income from other sources. The CIT(A) reduced this addition to Rs. 69,805/-. The Tribunal upheld the CIT(A)'s decision, noting that the appellant failed to correlate the agricultural income with the crop records accurately.Conclusion:The appeal concerning the delay in filing was allowed, and the matter was remanded to the CIT(A) for a fresh decision. The issue regarding the deduction for vehicle expenses was also remanded for reconsideration. The ground related to interest payment was dismissed as not pressed. The addition of unproved agricultural income was upheld, partially allowing the appeal.