Income Tax Addition cannot be based on Conjectures and Surmises: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench, while quashing an assessment under the Income Tax Act, 1961, has held that the income tax addition cannot be based on the conjectures and surmises.

During the course of assessment proceedings, the Assessing Officer asked the assessee, Mr. Kuldeep Katiyar to submit documents in order to verify the correctness of income/expenditure claimed in the income tax return. On perusal of the same, it was noticed that the assessee had claimed agricultural income of Rs.26,28,420/-. The Assessing Officer, however, 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.

The assessee approached the Tribunal since the first appellate authority confirmed the above order.

Shri Kul Bharat, Judicial Member noted the fact that the statistical data may reflect the trend but cannot be a conclusive proof regarding crop yield.

Quashing the addition, the Tribunal observed, “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.”

Shri Om Parkash appeared for the Revenue.

To Read the full text of the Order CLICK HERE

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