SRI DODDANARA MALLAPPA MANJUNATHA ,SHIVAMOGGA V. INCOME TAX OFFICER, WARD-1 & TPS, SHIMOGA

ITA 2018/BANG/2024

AI Insights

The case revolves around an appeal by Sri Doddanara Mallappa Manjunath against the order of the CIT(A)/NFAC, which upheld the Assessing Officer's decision to add Rs.7,48,000/- to the assessee's income for the assessment year 2021-22, under the head 'Income from Other Sources'. This addition was based on the claim of double expenditure on agricultural activities, which the Assessing Officer believed was claimed both in the individual and the firm's accounts. The Tribunal, after reviewing the submissions and evidence, concluded that the agricultural expenses were legitimately claimed and recorded, and thus, the addition to the income was incorrect.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126096 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH R GALE; STANDING COUNSEL
• Assessee Lawyers: SUNAINA BHATIA
• Section: 143(3); 142(1); 250; 73; 10; 72

Judgement Text

"ITA No.2018/Bang/2024 Sri DoddanaraMallappaManjunath, Shivamogga IN THE INCOME TAX APPELLATE TRIBUNAL “C’’BENCH: BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.2018/Bang/2024 Assessment Year: 2018-19 Sri Doddanara Mallappa Manjunath Partner M/s. D.M. Manjunath & Sons No.16, Ground Floor, B-Block APMC Yard Shivamogga 577 204 PAN NO : AIMPM5797L Vs. ITO Ward-1 & TPS Shimoga APPELLANT RESPONDENT Appellant by : Smt. Sunaina Bhatia, A.R. Respondent by : Sri Ganesh R Gale, Standing Counsel for department Date of Hearing : 23.01.2025 Date of Pronouncement : 21.04.2025 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 27.08.2024 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1068027254(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2021-22. 2. The assessee has raised the following grounds of appeal: 1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The learned CIT[A] is not justified in sustaining the addition of Rs. 7,48,000/- made under the head Income from \"Other Sources\" in respect of the agricultural expenses incurred and claimed by the appellant on the mistaken notion that there was a double claim of ITA No.2018/Bang/2024 Sri DoddanaraMallappaManjunath, Shivamogga Page 2 of 6 expenditure under the facts and in the circumstances of the appellant's case. 2.1. The learned CIT[A] ought to have appreciated that the agricultural expenses debited to the current account of the appellant in the books of the firm M/S. DM Manjunath & Sons, where the appellant is a partner, does not amount to a double claim of expenditure for making any disallowance in the hands of the appellant under the facts and in the circumstances of the appellant's case. 3. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. 3. Brief facts of the case are that the assessee is an individual and deriving income from partnership firm M/s. D. M. Manjunath & Sons, Arecanut Merchants & Commission Agents, Shimoga amounting to Rs.80,320/- and also has agricultural income of Rs.46,35,180/-. The case was selected for limited scrutiny to verify the agricultural income for the AY 2018-19. Accordingly, notices u/s.143(2) and 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, the Assessing Officer noticed that the assessee has claimed Rs.7,48,000/- towards expenditure on agricultural income, however, all the related expenditure was already claimed in the Firm's account on monthly basis, which shows the double claim of expenditure. In this regard, the AO asked the assessee to submit the details of expenditure along with the documentary evidences, however, the assessee has not submitted any documentary evidence, in spite of giving several opportunities. Therefore, the AO completed the assessment u/s. 143(3) r.w.s. 143(3A) & 143 (3B) of the Act on 09.03.2021 by disallowing the expenditure of Rs.7,48,000/- and treated the same as income from “other sources” and added to the total income of the assessee. ITA No.2018/Bang/2024 Sri DoddanaraMallappaManjunath, Shivamogga Page 3 of 6 4. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld. CIT(A)/NFAC. 5. During the course of the Appellate proceedings, the assessee did not file any details/documentary evidences in support of the grounds of appeal despite giving sufficient time and multiple opportunities of being heard. Under the circumstances, in the absence of any details or documentary evidence forthcoming from the assessee, the ld. CIT(A) held that the AO rightly made the impugned addition warranting no interference of the appellate authority. Further, the grounds raised by the assessee were also adjudicated by the ld. CIT(A)/NFAC on merits also after considering the impugned assessment, Statement of facts & Grounds of Appeal. Finally the ld. CIT(A)/NFAC dismissed the appeal of the assessee. 6. Aggrieved by the order of ld. CIT(A)/NFAC, the assessee filed the present appeal before this Tribunal. The assessee has also a paper book comprising 73 pages containing therein various documents/records in order to buttress his case. 7. Before us, the ld. A.R. of the assessee vehemently submitted that the AO on the mistaken note that there was a double claim of expenditure, added an amount of Rs.7,48,000/- under the head income from other sources. Further, ld. A.R. of the assessee submitted that the authorities below failed to appreciate that the agricultural expenses debited to the Capital account as drawings of the assessee in the books of the Partnership firm does not amount to double claim of expenditure for making any disallowance in the hands of the assessee. ITA No.2018/Bang/2024 Sri DoddanaraMallappaManjunath, Shivamogga Page 4 of 6 8. The ld. D.R. on the other hand relied upon the order of the authorities below. 9. We have heard the rival submissions and perused the materials available on record. On going through the order of assessment, we observe that the genuineness of the agricultural land holding and produce and agriculture income earned by the assessee is accepted by the AO and there is no dispute regarding this. Further, the AO observed that all the expenditure relating to the payments to gardener and watchman, labour payments, local manure, mud and transportation expenses and cultivation expenses were booked in the firm’s account only on monthly basis. The ld. AO is of the view that since the firm is not having any other land holding, the expenditure shown in the individual capacity appeared to be a double claim as the same was already claimed in the firm’s capacity. Accordingly, the ld. AO disallowed the expenditure of Rs.7,48,000/- in the hand of the individual & added under head “Income from Other Sources” as the AO was of the view that the same were claimed in the firm’s account also. 9.1 Further, on going through the order of ld. CIT(A)/NFAC, ld. CIT(A) observed that assessee did not file any details/documentary evidence in support of grounds of appeal despite giving sufficient time and multiple opportunities and therefore, in the absence of any details or documentary evidence, the ld. CIT(A)/NFAC is of the opinion that the AO rightly made the impugned addition warranting no interference of the appellate authority and accordingly dismissed the appeal of the assessee. 9.2 On going through the profit & loss account of the partnership firm namely M/s. D.M.Manjunatha & Sons placed at page 69 of the ITA No.2018/Bang/2024 Sri DoddanaraMallappaManjunath, Shivamogga Page 5 of 6 paper book, we take a note of the fact that the Partnership firm in which the assessee is a partner had neither declared any agriculture Income nor claimed any agricultural expenses such as gardener and watchman, labour, local manure, mud and transportation, cultivation, fertilizer and pesticides, arecanut processing wages etc. by way of debiting to the profit & loss account and therefore, we are of the considered opinion that as rightly contended by the ld. A.R. of the assessee, the AO has misdirected himself in holding that all the above agricultural expenditure were booked in the firm’s account only on monthly basis. Further, on going through the capital account of the partner Mr. D.M. Manjunath, placed in page no.71 to 72 of the paper book, we observe that all the above agricultural expenses were booked in the Current capital account as drawings of the partner and not as expenses of the partnership firm as alleged by the AO. In the present case, the agricultural income of Rs.46,35,180/- has been claimed by the assessee in his individual capacity as exempt under section 10 of the Act as the assessee is the owner of the agriculture land and we also find that the source of meeting these agriculture expenses were drawing from the capital of his firm namely M/s. D.M. Manjunath & Sons. Therefore, we are of the considered opinion that the assessee has not claimed the amount of agricultural expenditure twice as alleged by the AO. We agree with the contention of the AR that the AO on a mistaken note had treated the drawings of the assessee from the partnership firm as the claim of expenditure in the firm’s capacity, which is not so. Further, we are of the opinion that as the source of agricultural income is not doubted, genuineness of the agricultural land holding and produce is also not doubted, therefore, the disallowance made on the wrong footing that the agricultural expenditure of Rs.7,48,000/- had been claimed twice, one in the firm’s capacity and another in individual capacity is not correct. In ITA No.2018/Bang/2024 Sri DoddanaraMallappaManjunath, Shivamogga Page 6 of 6 fact we find that the source of these agriculture expenses are genuine as all are by way of drawings from the Partnership Firm. In view of the above, we have no hesitation to delete an amount of Rs.7,48,000/- added as income on the alleged ground of double claim of agriculture Expenditure. 10. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 21st Apr, 2025 Sd/- (Waseem Ahmed) Accountant Member Sd/- (Keshav Dubey) Judicial Member Bangalore, Dated 21st Apr, 2025. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "