2018 (3) TMI 1837 - AT - Income Tax

Tribunal denies deduction for operating expenses, treats agricultural income as other sources, dismisses appeal due to lack of evidence.

The Tribunal upheld the CIT(A)'s decision to disallow the deduction of operating expenses under section 57 of the IT Act, treating agricultural income as ... Disallowance of deduction of operating expenses u/s 57 - HELD THAT:- The assessee has remained unable to explain the operating expenses claimed at ₹ 5,94,630/-. The break-up furnished before the Authorities below has not been supported by any evidence. Apropos the cash deposit also, no evidence has been furnished. So far as regards the agricultural income of ₹ 1,50,000/-, the position remains much the same, as qua this claim also, no evidence has been filed. So much so, that even in the written submissions filed before the CIT(A), no grievance in this regard was raised by the assessee. CIT(A) has duly taken into consideration the break-up of the operating expenses. No merit therein, the grievance sought to be raised by the assessee by way of ground no.1, ground no.1 is rejected. Issues:1. Disallowance of deduction of operating expenses under section 57 of the IT Act.2. Treatment of agricultural income as income from other sources.3. Unexplained cash deposit in bank account.Analysis:1. The appellant contested the disallowance of operating expenses amounting to Rs. 5,94,630 under section 57 of the IT Act. The appellant argued that the expenses were legitimate and supported by evidence, which could not be presented during the initial hearing due to medical reasons. The appellant requested allowance of the expenses based on Rule 46A and principles of natural justice. The CIT(A) forwarded these submissions to the Assessing Officer (AO) for a remand report. The AO confirmed the disallowance, stating that the appellant failed to provide sufficient evidence to support the claimed expenses. The CIT(A) upheld the AO's decision, emphasizing the lack of evidence for the expenses and the absence of a proven nexus between the expenses and income from other sources. The Tribunal found no error in the CIT(A)'s order, as the appellant failed to substantiate the claimed expenses with evidence.2. The AO treated Rs. 1.5 lakh shown as agricultural income as income from other sources. The appellant failed to provide evidence to support this claim, and the CIT(A) confirmed the addition. The Tribunal noted that no evidence was furnished to substantiate the agricultural income claim, and the appellant did not contest this issue effectively. Consequently, the Tribunal upheld the CIT(A)'s decision regarding the treatment of agricultural income.3. An addition of Rs. 1,90,600 was made by the AO for an unexplained cash deposit in the appellant's bank account. The appellant did not provide any evidence to explain this deposit. The CIT(A) upheld this addition, and the Tribunal concurred with the decision. The appellant's failure to substantiate the source of the cash deposit led to the confirmation of the addition by the Tribunal.In conclusion, the Tribunal dismissed the appellant's appeal, upholding the CIT(A)'s order on all grounds. The Tribunal found no merit in the appellant's contentions regarding the operating expenses, treatment of agricultural income, and unexplained cash deposit. The appeal was dismissed, and the stay application was deemed infructuous.