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Kuldeep Katiyar, New Delhi vs. Acit, New Delhi - (Income Tax Appellate Tribunal) (17 May 2022)

Addition made purely on the basis of conjectures and surmises is not permissible under law


Direct Taxation

The assessee is an individual and is engaged as partner in the business of manufacturing of shoes under the name "Zoomtech Industries" who filed return of income declaring income at Rs.28,23,260. Subsequently, the case was selected for limited scrutiny through Notice under Section 143(2) of the Income Tax Act, 1961 was issued and duly served upon the assessee. Another notice under 142(1) of the Act was issued to the assessee.

During the course of assessment proceedings, in order to verify the correctness of income/expenditure claimed by the assessee, necessary documents/details were called for and examined accordingly. On perusal of the same, it was noticed that the assessee had claimed agricultural income of Rs.26,28,420. The Assessing Officer ("AO") did not accept the quantum of agricultural income and restricted the same on the basis of data collected from the website of Directorate of Economics and Statistics, Ministry of Agricultural and Family Welfare. Thereby, the AO treated the excessive agricultural income amounting to Rs.13,07,933 as income from undisclosed sources.

Aggrieved against this, the assessee preferred appeal before Learned CIT(A), who dismissed the appeal of the assessee and further made enhancement of income of Rs.4,49,990. Aggrieved against the order of Learned CIT(A), the assessee preferred appeal before the Tribunal. The effective ground is against sustaining the addition of Rs.13,07,933 treating the agricultural income as income from other sources and further enhancement of addition amounting to Rs.4,49,990.

The assessee produced certain evidences in support of his claim regarding earning of agricultural income. The AO without verifying the correctness of claim and rebutting the evidences based his finding on certain statistical data. No material is brought on record by the Revenue to rebut the claim of assessee, regarding having higher yield of crops.

The statistical data may reflect the trend but cannot be a conclusive proof regarding crop yield. There remains a sharp decline and rise in the yield of crops influenced by various factors. The AO ought to have verified by making necessary inquiry about the correctness of claim of the assessee. No finding is given on the evidences filed by the assessee regarding the genuineness of evidences filed by the assessee. Hence, looking to the totality of facts, the addition was made purely on the basis of conjectures and surmises. Such action is not permissible under law. The Revenue ought to have brought adverse material on records to rebut the claim of the assessee. In the absence of such evidence, the impugned additions cannot be sustained. Hence, the AO is hereby directed to delete the addition. The appeal of the assessee is allowed.


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