2020 (5) TMI 510 - AT - Income Tax

ITAT Reduces Disallowance in Appeals for A.Y. 2003-04 & 2004-05

Shri Vithalbhai H. Patel, C/o Sarvodaya Hospital Versus The ITO, Ward-4, Nadiad

The ITAT partly allowed the appeals for A.Y. 2003-04 & 2004-05, reducing the total disallowance amount in each case. The assessing officer's addition ... Addition showing excess agricultural income of production of kismis - assessee did not furnish any evidence of carrying out agricultural operation - AO has computed total income from sale of kismis after taking highest rate of ₹ 60 per kg reported by the Director, National Research Centre for Grapes, Pune and difference was treated as income earned from undisclosed sources - HELD THAT:- Neither the assessee has given the break up and supporting detail of different varieties and quantities of kismis produced and sold during the year at different rates and nor the assessing officer has given the detail of kind of varieties to which the rates in the range of ₹ 55 to 60 per k.g are to be applied. In view of the facts and circumstances, we observed that it will be appropriate to take average of the rate as per the rate quoted by the assessee and average rate adopted by the assessing officer at ₹ 67 per kg. (₹ 76 + ₹ 58). After taking average of rate adopted by the assessee and average rate adopted by assessing officer at ₹ 67 per kg the total income from sale of ₹ 28,370 kg of kismis is determined at ₹ 1900790/- (28370 x67) as against sale price of kismis adopted by the assessee at ₹ 21,59,111/-, therefore, we restrict the disallowance to the extent of ₹ 2,58,321/- as against disallowance of ₹ 4,56,911/-made by the assessing officer. - Decided partly in favour of assessee. Issues:Appeals for A.Y. 2003-04 & 2004-05 regarding addition of excess agricultural income of production of kismis.Analysis:1. The appeals were based on the addition of Rs. 4,56,911 made by the assessing officer due to excess agricultural income shown by the assessee. The assessing officer restricted the agricultural income to Rs. 2.5 lakhs and added the balance to the total income. The CIT(A) sustained this addition, leading to the appeals.2. The assessee claimed that the kismis income for A.Y. 2003-04 was from the closing stock of the previous year and no new production occurred. The assessing officer calculated the income from kismis at Rs. 21,59,111, but after verification, found discrepancies in the rates quoted by the assessee. The assessing officer treated the difference of Rs. 4,56,911 as income from undisclosed sources.3. The ITAT had previously remitted the case to the assessing officer for re-examination of the land holding issue. The assessing officer was required to re-evaluate the agricultural income earned by the assessee. The assessing officer collected information from the National Research Centre for Grapes to verify the sale price of kismis. The ITAT, after considering the rates quoted by both parties, restricted the disallowance to Rs. 2,58,321, partly allowing the appeal.4. In a separate appeal, the total disallowance was determined at an average rate of Rs. 66 per kg. The ITAT restricted the addition of income from undisclosed sources to Rs. 90,000, partly allowing this appeal as well.5. In conclusion, both appeals of the assessee were partly allowed by the ITAT, with the total disallowance amount being reduced in each case based on the re-evaluation of the agricultural income and sale price of kismis.This detailed analysis of the judgment highlights the key issues, the arguments presented by the parties, the findings of the assessing officer and the ITAT, and the final decision regarding the addition of agricultural income from kismis.