H L Shankaranarayana Bhat , Sagara V. Income TAx Officer Ward-3 , Shimoga

ITA 2043/BANG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4735 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 23-10-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABIRAMA KARTHIKEYAN IRS
• Assessee Lawyers: A R VIVEK
• Keywords: Gross profit estimation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO S . 2043 & 2045/BANG/2017 ASSESSMENT YEAR S : 2007 - 08 & 2008 - 09 SHRI H.L. SHANKARA NARAYANA BHAT, M/S. SRI VIJAYA ELECTRICALS, GOWTHAM COMPLEX, FOREST OFFICE ROAD, SAGAR 577 401. SHIVAMOGGA DISTRICT. PAN: AOOPS2976M VS. THE INCOME TAX OFFICER, WARD 3, SHIMOGA. APPELLANT RESPONDENT APPELLANT BY : SHRI A.R. VIVEK, ADVOCATE RESPONDENT BY : SHRI ABI RAMA KARTHIKEYAN, IRS (DR) DATE OF HEARING : 0 2 . 0 5 .2018 DATE OF PRONOUNCEMENT : 01 . 06 .201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AND TH ESE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT(A), DAVANGERE BOTH D ATED 05.05.2017 FOR ASSESSMENT YEARS 2007-08 AND 2008-09. BOTH THESE A PPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2007- 08 IN ITA NO. 2043/BANG/2017 ARE AS UNDER. 1. THE ASSESSING OFFICER AND CIT(A)WAS NOT JUSTIFIE D IN ASSESSING THE TOTAL INCOME OF THE APPELLANT AT RS.7,07,630/- AS A GAINST THE RETURNED INCOME OF THE APPELLANT. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.63,319/- ON DISALLOWAN CE OF AGRICULTURE EXPENSES ON THE FACTS AND CIRCUMSTANCES OF THE CASE . 3. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT, THE EXPENSE RELATE TO AGRICULTURE ACTIVITY AN D NO NEW MATERIAL WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER TO S HOW THE SAME AS NON AGRICULTURE INCOME HENCE THE ADDITION WAS BAD I N LAW ON THE FACTS AND CIRCUMSTANCE OF THE CASE. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.3,488/- BEING TELEPHON E EXPENSES, ITA NOS.2043 & 2045/BANG/2017 PAGE 2 OF 9 3,400/- BEING VEHICLE EXPENSES AND RS12,256/- SADIL WAR ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.10,196/- BEING OPENING UNPROVED CREDITORS ON THE FACTS AND CIRCUMSTANCES OF THE CAS E. 6. THE APPELLANT CRAVE THE LEAVE OF THE COURT TO AD D AND SUBSTITUTE SUCH GROUNDS AS RELEVANT DURING THE TIME OF HEARING . 7. THE APPELLANT PRAYS THAT THIS HON'BLE TRIBUNAL B E PLEASED TO ALLOW THE APPEAL OF IN THE INTEREST OF JUSTICE AND EQUITY . 3. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2008- 09 IN ITA NO. 2045/BANG/2017 ARE AS UNDER. 1. THE ASSESSING OFFICER AND CIT(A)WAS NOT JUSTIFIE D IN ASSESSING THE TOTAL INCOME OF THE APPELLANT AT RS.15,94,560/- + A GRICULTURE INCOME RS.2,50,000/- AS AGAINST THE RETURNED INCOME OF THE APPELLANT. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE ESTIMATION OF GROSS PROFIT AT 8.26% INSTEAD OF 4.16% AS CLAIMED BY THE APPELLANT. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE RATE OF SELLING OF NUT WAS SUBSTANTIALLY D OWN AS COMPARED TO LAST YEAR HENCE THERE WAS A DECREES IN GROSS PROFIT PERCENTAGE. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.20,000/- ON ACCOUNT OF PAYMENT MADE TO JYOTHI SERVICE STATION ON THE FACTS AND CIRCUMSTANC ES OF THE CASE. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.8,329/- ON ACCOUNT OF TRANSFER TO SADILWAR ACCOUNT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.1,896/- ON ACCOUNT OF DIFFERENCE IN THE CASE BOOK ON THE FACTS AND CIRCUMSTANCES OF THE CAS E. 7. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.80,198/- BEING OPENING BALANCE RELATING TO LAXMINARAYAN BHAT MUNDIGESARA ON THE FACTS AND C IRCUMSTANCES OF THE CASE. 8. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.38,010/- ON ACCOUNT OF DIFFERENCE IN PURCHASE PRICE FROM ASLAM TRADERS ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.15,468/- BEING DISALLO WANCE UNDER SECTION 40(A)(IA) ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 10. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THE EXPLANATION OF THE APPELLANT THAT THE AMOUNT TH AT WAS PAID TO PERSONS WAS NOT THE AGENT OF THE APPELLANT AND THER E WAS NO AGENT MASTER RELATIONSHIP BETWEEN THEM TO ATTRACT THE PRO VISION OF TDS. 11. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NO T JUSTIFIED IN CONFIRMING AN ADDITION OF RS.1,45,328/- BEING UNEXP LAINED INVESTMENT ITA NOS.2043 & 2045/BANG/2017 PAGE 3 OF 9 ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 12. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NO T JUSTIFIED IN CONFIRMING AN ADDITION OF RS.3,35,121/- BEING EXCES S AGRICULTURE INCOME ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 13. THE COMMISSION OF INCOME TAX (APPEALS) FAILED T O APPRECIATE THE DATE PROVIDED TO JUSTIFIED THE EXCESS AGRICULTURE I NCOME FOR THE SAID FINANCIAL YEAR ON THE FACTS AND CIRCUMSTANCE OF THE CASE. 14. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE GIVEN THE BENEFIT OF TELESCOPING OF INCOME ON THE FACTS A ND CIRCUMSTANCES OF THE CASE. 15. THE APPELLANT CRAVE THE LEAVE OF THE COURT TO A DD AND SUBSTITUTE SUCH GROUNDS AS RELEVANT DURING THE TIME OF HEARING . 16. THE APPELLANT PRAYS THAT THIS HON'BLE TRIBUNAL BE PLEASED TO ALLOW THE APPEAL OF IN THE INTEREST OF JUSTICE AND EQUITY . 4. THE LEARNED AR OF THE ASSESSEE FIRST ARGUED THE APPEAL FOR ASSESSMENT YEAR 2008-09. FOR THIS YEAR, HE SUBMITTED THAT GROUND N OS. 2, 3, 9, 12 AND 13 ARE PRESSED AND THE REMAINING GROUNDS ARE NOT PRESSED. ACCORDINGLY THE REMAINING GROUNDS ARE REJECTED AS NOT PRESSED. 5. REGARDING GROUND NOS. 2 AND 3, HE SUBMITTED THAT THE ISSUE INVOLVED IN THESE TWO GROUNDS IS REGARDING THE ESTIMATION OF GP OF AS SESSEE BY THE AO AT 8.26% ON THE BASIS OF PRECEDING YEAR AS AGAINST THE GP RE PORTED BY ASSESSEE IN THE PRESENT YEAR OF 4.16%. IN THIS REGARD, MY ATTENTIO N WAS DRAWN TO PARA 4A OF THE ORDER OF CIT(A) AND IT WAS POINTED OUT THAT IN THIS PARA, THE CIT(A) HAS REPRODUCED THE SUBMISSIONS MADE BY THE ASSESSEE IN RESPECT OF REASONS FOR LOWER GROSS PROFIT AS EXPLAINED BEFORE THE AO. HE POINTED OUT THAT IT WAS EXPLAINED THAT THE OPENING STOCK VALUE WAS RS. 6861 /- PER QTL. AND THE QUANTITY WAS 512.70 QTLS. AND IN THE FIRST HALF OF THE PRESE NT YEAR, THE ARECANUT WAS SOLD AT AVERAGE PRICE OF RS. 6734/- PER QTL. AND HENCE, IT IS SEEN THAT THERE WAS LOSS ON SALE OF OPENING STOCK OF 512.70 QTLS. @ RS. 127 PER QTL. AND SUCH LOSS AMOUNTED TO RS. 65,112.90/-. HE ALSO SUBMITTED THA T IN THE WHOLE YEAR, THE SALE OF 1665.75QTLS. IS FOR A VALUE OF RS. 1.06 CRO RES AT AVERAGE SALE PRICE OF RS. 64.09 PER KG. HE FURTHER SUBMITTED THAT IF SAL E VALUE OF RS. 34,52,521.80/- IN RESPECT OF SALE OF OPENING STOCK OF 512.70 QTLS. IS REDUCED FROM THE ENTIRE SALE VALUE OF THE PRESENT YEAR I.E. RS. 1,06,77,360 /- THEN THE REMAINING SALE IS OF RS. 72,24,832.20/- ONLY OUT OF PURCHASES AND SAL E OF THE PRESENT YEAR. HE ITA NOS.2043 & 2045/BANG/2017 PAGE 4 OF 9 FURTHER POINTED OUT THAT AFTER SETTING OFF OF THE LOSSES IN RESPECT OF SALE OF OPENING STOCK AT LOWER PRICE, THE ASSESSEE HAS REPO RTED GROSS PROFIT OF RS. 4,44,394/-. THE GP RATE ON A SALE OUT OF THE P URCHASES AND SALE OF THE PRESENT YEAR COMES TO 6.15% AND IN RESPECT OF THIS SALE OUT OF PURCHASES AND SALE OF PRESENT YEAR ALSO, IT HAS TO BE CONSIDERED THAT THE PRICES ARE REGULARLY FALLING AND SINCE PURCHASES IS TO BE EFFECTED FIRST AND THE SALE IS AFTERWARDS, THE PROFITABILITY IS AFFECTED AND HENCE, THE GP REPORTE D BY ASSESSEE SHOULD BE ACCEPTED. THE LD. DR OF REVENUE SUPPORTED THE ORDE RS OF AUTHORITIES BELOW. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT THE AO HAS SIMPLY GONE BY COMPARING THE GP RATE OF PRESENT YEAR WITH THAT OF THE PRECEDING YEAR IN SPITE OF THE EXPLANATION OF THE ASSESSEE THAT THE RATES ARE FALLING IN THE PRESENT YEAR, HE HAS NOT EXAMINED THE VERACITY OF THE EXPLANATION. ON PAGE NO. 2 OF THE ASSESSMENT ORDER, THE AO HAS NOTED THAT THE OPENING STOCK WAS VALUED AT RS. 6861/- PER QTL. WHEREAS THE PURCHASES ARE MADE @ RS . 5882/- PER QTL. AND SALES ARE MADE @ RS. 6410/- PER QTL. AND HENCE, THI S IS APPARENT FROM THE ASSESSMENT ORDER ALSO THAT THE PRICES ARE FALLING I N THE PRESENT YEAR. IT IS ALSO SEEN THAT OUT OF TOTAL OF SALE OF RS. 1,06,77,360/- , THERE IS SALE OF RS. 34,52,521.80/- OUT OF OPENING STOCK AT AN AVERAGE P RICE OF RS. 6734/- PER QTL. AS PER THE EXPLANATION OF THE ASSESSEE AND ON SUCH SALE AGAINST OPENING STOCK, THE ASSESSEE HAS IN FACT INCURRED THE LOSS OF RS. 6 5,113/-. IF THIS LOSS IS ADDED TO THE OVER ALL GP REPORTED BY ASSESSEE OF RS. 4,44 ,394/-, THE TOTAL GP IN RESPECT OF PURCHASES AND SALE OF PRESENT YEAR COMES TO RS. 5,09,507/- AND THE EFFECTIVE GP RATE IN RESPECT OF SALE OF RS. 72,24,8 38.20/- OUT OF PURCHASES AND SALE OF PRESENT YEAR, COMES TO 7.05% AS AGAINST 8.6 2% IN THE PRECEDING YEAR. THIS IS ALSO TRUE THAT IN A YEAR WHERE THE PRICES A RE RISING, THE PROFIT INCREASES BUT IN A YEAR, WHERE PRICES ARE FALLING, THE PROFIT DECREASES BECAUSE PURCHASES ARE EFFECTED FIRST AND SALE IS EFFECTED AFTERWARDS. CONSIDERING ALL THESE FACTS, IN MY CONSIDERED OPINION, NO ADDITION IS CALLED FOR IN RESPECT OF LOWER GP SHOWN BY ASSESSEE OF RS. 4,44,394/-. HENCE THIS ADDITION IS DELETED. GROUND NOS. 2 AND 3 ARE ALLOWED. ITA NOS.2043 & 2045/BANG/2017 PAGE 5 OF 9 7. REGARDING GROUND NO. 9 IN RESPECT OF DISALLOWANC E OF RS. 15,468/- U/S. 40(A)(IA), IT IS SUBMITTED BY LD. AR OF ASSESSEE TH AT AS PER THE PROVISIONS OF APMC ACT, COPY OF RELEVANT SECTIONS AVAILABLE ON PA GES 15 TO 17 OF PAPER BOOK, IT IS SEEN THAT THE LICENSE IS GRANTED TO AGE NTS U/S. 72 OF THIS ACT AND SUCH COMMISSION AGENT CAN CHARGE COMMISSION ONLY FROM BU YER @ 2% AND THEREFORE, THERE IS NO RELATIONSHIP OF AGENT AND PR INCIPAL IN THE PRESENT CASE AND THEREFORE, THE TDS WAS NOT REQUIRED TO BE DEDUCTED BY ASSESSEE. AT THIS JUNCTURE, THE BENCH MADE A SPECIFIC QUERY AS TO WHE THER ANY SECTION OF IT ACT PROVIDES EXEMPTION FROM TDS UNDER SUCH SITUATION, T HE LD. AR OF ASSESSEE COULD NOT POINT OUT ANY SUCH PROVISION U/S. 194H OF IT ACT. THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 8. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, I REPRODUCE THE PROVISIONS OF SECTION 194H OF IT ACT WHICH READS AS UNDER. 194H. ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING, ON OR AFTER THE 1ST DAY OF JUNE, 2001, TO A RESIDENT, ANY INCOME BY WAY OF COMMISSIO N (NOT BEING INSURANCE COMMISSION REFERRED TO IN SECTION 194D) O R BROKERAGE, SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT OF SUCH INCOME IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME-TAX THEREON AT THE RATE OF 62 [FIVE] PER CENT : PROVIDED THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION IN A CASE WHERE THE AMOUNT OF SUCH INCOME OR, AS THE CASE MAY BE, THE AGGREGATE OF THE AMOUNTS OF SUCH INCOME CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR TO TH E ACCOUNT OF, OR TO, THE PAYEE, DOES NOT EXCEED 63 [FIFTEEN THOUSAND RUPEES] : PROVIDED FURTHER THAT AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHOSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LI MITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURI NG THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WH ICH SUCH COMMISSION OR BROKERAGE IS CREDITED OR PAID, SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER THIS SECTION: PROVIDED ALSO THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION ON ANY COMMISSION OR BROKERAGE PAYABLE BY BHARAT SANCH AR NIGAM LIMITED OR MAHANAGAR TELEPHONE NIGAM LIMITED TO THE IR PUBLIC CALL OFFICE FRANCHISEES. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (I) 'COMMISSION OR BROKERAGE' INCLUDES ANY PAYMEN T RECEIVED OR RECEIVABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACT ING ON BEHALF OF ITA NOS.2043 & 2045/BANG/2017 PAGE 6 OF 9 ANOTHER PERSON FOR SERVICES RENDERED (NOT BEING PRO FESSIONAL SERVICES) OR FOR ANY SERVICES IN THE COURSE OF BUYI NG OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING, NOT BEING SECURITIES; (II) THE EXPRESSION 'PROFESSIONAL SERVICES' MEANS SERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON A LEGAL, M EDICAL, ENGINEERING OR ARCHITECTURAL PROFESSION OR THE PROF ESSION OF ACCOUNTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DE CORATION OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD F OR THE PURPOSES OF SECTION 44AA; (III) THE EXPRESSION 'SECURITIES' SHALL HAVE THE M EANING ASSIGNED TO IT IN CLAUSE (H) OF SECTION 2 OF THE SECURITIES CON TRACTS (REGULATION) ACT, 1956 (42 OF 1956); (IV) WHERE ANY INCOME IS CREDITED TO ANY ACCOUNT, WHETHER CALLED 'SUSPENSE ACCOUNT' OR BY ANY OTHER NAME, IN THE BOO KS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME, SU CH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SECTION SHALL APPL Y ACCORDINGLY. 9. IN MY CONSIDERED OPINION, THIS IS NOT RELEVANT A S TO WHO IS GIVING LICENCE TO ACT AS AGENT AND EVEN IF LICENCE OF A PERSON TO ACT AS COMMISSION AGENT IS GIVEN IN APMC ACT, IT IS BEYOND DOUBT THAT ASSESSEE IS PAYIN G COMMISSION TO SUCH PERSON AND THEREFORE, ASSESSEE WAS REQUIRED TO DEDU CT TDS BECAUSE THERE IS NO SUCH EXEMPTION PROVIDED TO ASSESSEE UNDER THIS S ECTION. HENCE ON THIS ISSUE, I FIND NO REASON TO INTERFERE IN THE ORDER O F CIT(A). GROUND NO. 9 IS REJECTED. 10. AS PER GROUND NOS. 12 AND 13, THE ISSUE INVOLVE D IS REGARDING THE ADDITION OF RS. 3,35,121/- BEING EXCESS AGRICULTURE INCOME SHOW N BY THE ASSESSEE IN THE CAPITAL ACCOUNT OF THE ASSESSEE. IN THIS REGARD, T HE LD. AR OF ASSESSEE SUBMITTED THAT THE RELEVANT COPY OF CAPITAL ACCOUNT IS AVAILABLE ON PAGE NO. 14 OF PAPER BOOK AND AS PER THE SAME, IT CAN BE SEEN T HAT ALTHOUGH THERE IS CREDIT OF RS. 5,85,121/- IN THE SAME ACCOUNT FOR AGRICULTU RE INCOME, THERE ARE VARIOUS DEBITS ON ACCOUNT OF AGRICULTURAL EXPENSES OF WHICH THE DETAILS ARE ALSO GIVEN ON PAGE NO. 5 OF THE PAPER BOOK OF THE TOTAL DEBITS OF RS. 2,96,449/-. IF THESE DEBITS ARE REDUCED FROM CREDIT OF RS. 5,85,121/-, T HE NET CREDIT IS ONLY OF RS. 2,88,672/- AND THE ASSESSEE HAS ALREADY DECLARED IN COME OF RS. 2.50 LAKHS ITA NOS.2043 & 2045/BANG/2017 PAGE 7 OF 9 AND THEREFORE, NO ADDITION IS JUSTIFIED ON THIS ACC OUNT. THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 11. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIN D THAT ON PAGE NO. 6, IT IS NOTED BY THE AO THAT THE ASSESSEE DECLARED NET AGRICULTURAL INCOME OF RS. 2.50 LAKHS WHEREAS THE ASSESSEE HAS CREDITED RS. 5,85,121/- T O HIS CAPITAL ACCOUNT AS AGRICULTURAL INCOME. THE AO HAS ALSO NOTED THAT TH E ASSESSEE HAS NOT AT ALL FURNISHED THE DETAILS OF CROPS GROWN AND DETAILS OF EXPENSES. ON THIS BASIS, THE AO MADE THE ADDITION OF RS. 3,35,121/- BEING THE AM OUNT CREDITED IN CAPITAL ACCOUNT OF RS. 5,85,121/- IN EXCESS OF AGRICULTURAL INCOME DECLARED OF RS. 2.50 LAKHS. BEFORE LD. CIT(A) ALSO, THE SAME ARGUMENTS WERE MADE THAT THERE ARE DEBITS IN CAPITAL ACCOUNT. I FIND THAT AS PER THE COPY OF CAPITAL ACCOUNT AVAILABLE ON PAGE 14 OF PAPER BOOK, THERE IS DEBIT OF RS. 69, 706.41/- ON ACCOUNT OF BAGAYATHA ACCOUNT AND THERE IS DEBIT OF RS. 36,827 /- WITH THE NOMENCLATURE LF-12-HULEGAR HOUSE. THERE ARE OTHER DEBITS IN RES PECT OF VARIOUS MOBILE NUMBERS AND PHONE NUMBERS. THERE IS DEBIT OF RS. 3 ,43,537/- ON ACCOUNT OF MARRIAGE EXPENSES AND RS. 1,21,107/- ON ACCOUNT OF OTHER EXPENSES / DRAWINGS. HENCE IT IS SEEN THAT THESE DEBITS ARE N OT IN NATURE OF AGRICULTURAL EXPENSES AND THEREFORE, THERE IS NO MERIT IN THE EX PLANATION OF THE ASSESSEE THAT THE EXCESS CREDIT IS ON ACCOUNT OF GROSS AGRIC ULTURAL INCOME AND THE DEBITS ARE REGARDING AGRICULTURAL EXPENSES. HENCE ON THIS ISSUE ALSO, I FIND NO REASON TO INTERFERE IN THE ORDER OF CIT(A). GROUND NOS. 1 2 AND 13 ARE ALSO REJECTED. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2008-09 IS PARTLY ALLOWED. 13. REGARDING ASSESSMENT YEAR 2007-08, IT WAS SUBMI TTED BY LD. AR OF ASSESSEE THAT GROUND NOS. 2 AND 3 ARE PRESSED AND THE REMAIN ING GROUNDS ARE NOT PRESSED AND ACCORDINGLY, THE REMAINING GROUNDS ARE REJECTED AS NOT PRESSED. 14. REGARDING GROUND NOS. 2 AND 3, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT IN THIS YEAR, THE AO HAS STATED IN THE ASSESSMENT ORDE R THAT THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME OF RS. 5,17,255/- AND EXP ENSES ARE DEBITED OF RS. ITA NOS.2043 & 2045/BANG/2017 PAGE 8 OF 9 91,858/- WHICH WORKS OUT TO 18% OF SUCH AGRICULTURA L INCOME AND THE SAME IS ON LOWER SIDE. THE AO HAS WORKED OUT THE EXPENSES AT 30% OF SUCH INCOME AND COMPUTED IT AT RS. 1,55,177/- AND THE DIFFERENC E IS OF RS. 63,319/- AND IT WAS ADDED BACK. THE LD. AR OF ASSESSEE SUBMITTED T HAT SUCH ADDITION IS NOT JUSTIFIED AND EVEN IF IT IS HELD THAT SOME ADDITION HAS TO BE MADE, THE SAME HAS TO BE MADE AS AGRICULTURAL INCOME AND NOT AS OTHER INCOME. THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 15. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE R ELEVANT PARA IS PARA NO. 5 OF THE ORDER OF CIT(A) WHICH IS REPRODUCED HEREINBELOW FOR THE SAKE OF READY REFERENCE. 5. IN GROUND NO. 4, DISALLOWANCE. OF AGRICULTURAL EXPE NSES AMOUNTING TO RS.63,319/- IS CONTESTED . THE ASSESSEE HAD SHOWN AGRICULTURAL RECEIPTS AT RS.5,17,255/- AND HAD DEBI TED EXPENSES OF RS.91,858/- BEING 18%. THE AO UPON VERIFICATION OF DETAILS OF LAND HOLDINGS, CROPS GROWN ETC., HELD THAT THE EXPENSES CLAIMED WAS ON A LOWER SIDE AND HELD THAT IT WOULD BE PROPER IF THE AVERAGE COST OF AGRICULTURAL PRODUCTION WORKS OUT TO AROUND 30% BEI NG RS.1,55,177/-. THE AO TREATED THE DIFFERENCE AMOUNT OF RS.63,319/- AS NON- AGRICULTURAL INCOME AND BROUGHT IT TO TAX. IN MY OPINION, THE AO IS JUSTIFIED IN ARRIVING AT T HE EXPENSES AT 30% OF AGRICULTURAL RECEIPTS SHOWN. THEREFORE, NO INTERFER ENCE IS CALLED FOR ON THIS ISSUE. THUS, THE GROUND FAILS . 16. FROM THE ABOVE PARA OF THE ORDER OF CIT(A) AND FROM THE ASSESSMENT ORDER, IT COMES OUT THAT AS PER THE DEPARTMENT, FOR CULTIVATI NG THE LAND OF 11 ACRES AND 19 GUNTAS, INCURRING OF THE EXPENSES OF RS. 1,55,1 77/- FOR EARNING GROSS AGRICULTURAL INCOME OF RS. 5,17,255/- IS REASONABLE . NOTHING HAS BEEN SHOWN BY LD. AR OF ASSESSEE THAT SUCH ESTIMATION OF EXPEN SES BY THE AO IS UNREASONABLE OR EXCESSIVE. ONCE THE EXPENSES OF RS . 1,55,177/- IS ACCEPTED, THE ASSESSEE HAS TO SHOW THE SOURCES OF SUCH EXPENS ES AND SINCE THE ASSESSEE HAS SHOWN EXPENSES OF ONLY RS. 91,858/-, I T HAS TO BE ACCEPTED THAT THE BALANCE EXPENDITURE OF RS. 63,319/- WAS INCURRE D OUT OF OTHER INCOMES WHICH IS LIABLE TO TAX AND THEREFORE, I FIND NO INF IRMITY IN THE ORDER OF CIT(A) ON THIS ISSUE IN THIS YEAR. ACCORDINGLY, GROUND NOS. 2 AND 3 ARE REJECTED. ITA NOS.2043 & 2045/BANG/2017 PAGE 9 OF 9 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 IS DISMISSED. 18. IN THE COMBINED RESULT, THE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 IS DISMISSED AND FOR ASSESSMENT YEAR 2008-0 9 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED: 01.06.2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.