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of <h1>Tribunal rules in favor of assessee on stock discrepancy, deletes Rs. 2.18 lakhs addition; mixed decisions on agricultural income.</h1> <h3>Tarikere Pandurangarao Manjunath (T.P. Manjunath) Versus ITO Ward-1 & TPS, Shivamogga</h3> Tarikere Pandurangarao Manjunath (T.P. Manjunath) Versus ITO Ward-1 & TPS, Shivamogga - TMI Issues Involved:1. Addition due to discrepancy in closing stock.2. Addition of income assessed as agricultural income.Summary:1. Addition due to discrepancy in closing stock:The assessee filed a return of income declaring total business income of Rs. 1,55,910/- and net agricultural income of Rs. 8,29,710/-. The AO made an addition of Rs. 2.18 lakhs due to a discrepancy in closing stock. The AO found a mistake in the manually prepared stock inventory, which was later corrected and computerized by the assessee. The AO did not accept the rectified inventory, considering it an after-thought. However, the tribunal found no basis for this allegation and noted that the Gross Profit (GP) rate was consistent with previous years. The tribunal concluded that the addition made towards the discrepancy in stock inventory was not proper and deleted the addition of Rs. 2,18,000/-.2. Addition of income assessed as agricultural income:The AO observed that the assessee declared agricultural income from lands taken on 'Land Tenancy' but found this claim to be in violation of the Karnataka Land Reforms Act, 1974. The AO issued summons to the agriculturists and recorded their statements, concluding that the assessee camouflaged other income as agricultural income. The tribunal reviewed the evidence and statements of the landowners:- B.P. Shadaksharaiah (Rs. 96,515/-): Confirmed giving land to the assessee. Addition deleted.- Hyder Ali Khan (Rs. 1,99,760/-): Denied giving land on lease. Addition confirmed.- J.L. Jayasheela (Rs. 2,03,260/-): Did not appear due to medical reasons. Issue remitted to AO for fresh consideration.- Mallappa Shankarappa (Rs. 1,78,400/-): Did not confirm. Issue remitted to AO for fresh consideration.- Mallikamba (Rs. 61,400/-): Confirmed via letter and medical certificate. Addition deleted.- S. Mallappa Shekarappa (Rs. 89,275/-): Did not confirm. Addition confirmed.The tribunal partially allowed the appeal for statistical purposes, remitting some issues back to the AO for fresh consideration. The order was pronounced in the open court on 15th June, 2023.
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