Tribunal adjusts agricultural income, allows brick expenses inquiry, confirms labor charges.

The Tribunal partially allowed the assessee's appeal, reducing agricultural income by considering 30% of receipts as expenditure and directing the A.O. to re-compute accordingly. The disallowance of brick expenses was set aside for further inquiry based on additional evidence admitted, while the disallowance of labor charges was confirmed at a reduced amount of Rs. 30,000.

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Issues Involved:
1. Reduction of agricultural income.
2. Disallowance of brick expenses.
3. Disallowance of labor charges.

Summary:

1. Reduction of Agricultural Income:
The first issue concerns the reduction of agricultural income from Rs. 2,95,535/- to Rs. 1,77,323/-. The A.O. observed that the assessee did not furnish proof of agricultural income and expenditure during the assessment proceedings despite multiple opportunities. Consequently, the A.O. treated the entire agricultural income as undisclosed income. The CIT(A) partly allowed the appeal, reducing the agricultural income by considering 40% of the receipts as expenditure. The Tribunal, after hearing the arguments and considering the evidence, decided that 30% of the receipts should be considered as expenditure and directed the A.O. to re-compute the agricultural income accordingly.

2. Disallowance of Brick Expenses:
The second issue involves the disallowance of brick expenses amounting to Rs. 5,04,567/-. The A.O. treated the purchases as bogus due to non-response from the suppliers and lack of evidence from the assessee. The CIT(A) upheld the disallowance, not admitting additional evidence. However, the Tribunal admitted the additional evidence under ITAT Rule 29, noting that the A.O. had recorded statements from the brick suppliers during the remand report. The Tribunal directed the A.O. to make necessary inquiries and take a decision as per law, setting aside the CIT(A)'s order.

3. Disallowance of Labor Charges:
The third issue pertains to the disallowance of labor charges. The A.O. disallowed Rs. 50,000/- out of Rs. 59,38,958/- due to unverifiable cash payments through self-made vouchers. The CIT(A) restricted the disallowance to Rs. 30,000/-, considering the nature of the business. The Tribunal upheld the CIT(A)'s decision, finding it reasonable given the circumstances.

Conclusion:
The assessee's appeal is partly allowed, with directions for re-computation of agricultural income and further inquiry into the brick expenses, while the disallowance of labor charges is confirmed.

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