RAKESH KUMAR GARG, J. - (1.) THE Revenue has filed the present appeal under s. 260A of the IT Act, 1961 (hereinafter referred to as the 'Act') against raise the following substantial question of law : "Whether in the facts and circumstances of the case and in law the order of the Tribunal is perverse, being based on conjectures and surmises and the findings of the AO as well as the CIT(A) have been ignored without any cogent material -
(2.) THE assessee declared agricultural income at Rs. 7,50,000 from cultivation of 36 acres of own agricultural land and 6 acres of leased agricultural land. In support of the said declaration, the assessee produced Revenue record, J Forms and claimed that the agricultural income was net of expenses @ 25 per cent. However, the submissions of the assessee were not accepted by the AO, who determined the agricultural income of the assessee at Rs. 5,52,561 holding that the yield declared was high. The remaining income of Rs. 1,97,439 was taxed as income from other sources vide order dt. 16th
(3.) BEING aggrieved, the assessee filed an appeal before the CIT(A) who confirmed the action of the AO and dismissed Not satisfied with the order of the CIT(A), an appeal before the Tribunal was filed by the assessee, which was allowed has produced evidence on record, in support of his claim and income declared by him on estimate basis is bona fide. The findings of the Tribunal in this regard are reproduced : "I have considered the rival submissions carefully. Firstly, it is abundantly clear from the record that the assessee has declared agricultural income in the past also. The factum of the assessee being engaged in the activity yielding agricultural income in the past as well as during the year under consideration is not in dispute. The dispute essentially revolves around the quantum of agricultural income declared for the reason that the assessee does not maintain any regular books of account in this regard. The assessee claimed to have estimated his agricultural income by reducing from the gross sale realization the expenses to the extent of 25 per cent. This manner of declaring agricultural income itself shows that it has been declared on estimate basis. Now the issue is as to whether the estimate made by the assessee can be construed as reasonable considering the claim of agricultural operations carried out, size of land holdings, past history, etc. In this context, we find that the assessee has attempted to explain that it had 36 acres of land under cultivation, partly owned by him and partly belonging to his brother in addition to 6 acres of land taken on lease. The AO did not accept the plea of the assessee with respect to the leased land for the reason that it was not substantiated. Insofar as the non -acceptance of the quantum of agricultural income is concerned, the AO referred to a journal of Haryana Agricultural University to deduce as to what should be per acre yield from the land owned by the assessee. On that basis, he held that the yield declared by the assessee was high. In my considered opinion the approach of the AO was manifested by the reason that in the absence of the books of account, the agricultural income was not verifiable. This aspect is justified. However, the approach adopted thereafter by the AO of not going by the material adduced by the assessee in support of the estimate is also wrong for the reason that there is no finding much less a whisper that the material sought to be relied upon by the assessee was lacking in credibility. In fact the certificate of average income per acre of land obtained from village 'Patwari' which indicates an income level of Rs. 36,000 per acre, cannot be brushed aside. Moreover, the assessee submitted the 'J Forms' evidencing sale of agricultural produce but subjecting the same to microscopic scrutiny to cull out the yield etc. is an unjustified exercise. What the AO was to essentially do was to only verify the estimates made by the assessee. No doubt, there is always an element of subjectivity in estimation. Unless it can be made out that the estimate is on a wild basis or is totally lacking in bona fides only then the AO would be justified in substituting his estimates in the place of estimation done by the assessee. There is no such exercise on the part of the AO emerging in the instant case. Having regard to the aforesaid discussion, in my view the AO was not justified in rejecting the claim of the assessee for having derived agricultural income of Rs. 7,50,000 for the year under consideration. Moreover, in the immediately preceding year, the assessee has declared agricultural income of Rs. 7,00,000. No doubt, the income for asst. yr. 2002 -03 has not been subjected to scrutiny assessment yet the trend of income declared cannot be lost sight of while considering the efficacy of income declared by the assessee. Moreover, there is no material on record to show any vested interest or motive with the assessee to declare agriculture income higher than the actual amount. This is for the reason that the copies of the bank account do not show any investment made by the assessee. In fact, the assessee has supported his plea by filing an affidavit to the effect that the income earned during assessment year under consideration was spent on agriculture inputs or household expenses. Thus, the estimate declared by the assessee can be construed as bona fide. Therefore, I am inclined to uphold the stand of the assessee.";