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TMI Blog2022 (2) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... income by relying on some NHB reports, without giving an opportunity to the appellant to put his say on the matter, similarly as has been done by Ld. AO. c. Not considering the fact that cost of banana cultivation for A Y 2011-12 is 57.22% and AY 2012-13 is 38.79% averaging to 42.46% as against the alleged average ratio of 47.20% considered by CIT(A). 2) The Hon. CIT(A) erred in disallowing expenses of Rs. 94,500/- under Sec. 14A r.w. Rule 8D of Income Tax Rules, 1962. 3) The Hon. CIT(A) erred in disallowing the depreciation of Rs. 2,76,166/- on ad hoc basis for the reason that no business is carried out during the 4) The Hon. CIT(A) erred in a. disallowing legal and professional expenses of Rs. 15,08,770/- in spite of the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground of appeal, it is with regard to the disallowance of excess claim of agricultural income and at para 4.2 to 4.5 the A.O has given his reasons and more specifically he has relied on a data published by National Horticultural Board (NHB). As per the data provided by NHB the expenses incurred for crop of banana in the year 2nd and 3rd after plantation should be approximately 47.2% of gross receipts. However, the assessee has shown the expenses at 27.2% of gross receipts only. From the above it is clear that the assessee has suppressed the expenses to inflate the exempt agricultural income. Therefore, the suppressed expenses to the tune of 20% of gross receipts which comes to Rs. 3,01,781/- was disallowed and added to the total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible to general public including the assessee and there has been no violation of natural justice. Hon'ble Orissa High Court held that the assessee was entitled to prior notice of any report or material which the A.O intended to rely upon and by merely claiming that the said reports were available on internet cannot satisfy the mandate of rules of natural justice. Therefore, in the instant case, natural justice has been clearly violated and the A.O's order was clearly indicative of possible bias and therefore, the impugned order passed by the A.O was set aside and the Revenue was directed to serve copies of reports which were sought to be relied upon by the A.O against the assessee to the assessee. This issue was decided in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upport his case on this issue. We are therefore, of the considered view and after going through the entire details that no business activity was carried out by the assessee and when he could not establish the business connection for the use of the luxury vehicles in relation to his business in such a scenario the stand of the revenue is correct. This ground is therefore, dismissed. 5. In ground No. 4, the assessee has challenged the disallowance of legal expenses of Rs. 15,08,770/-. The A.O has discussed the same in the assessment order as under: "Perusal of profit and loss account, it was observed that assessee has claimed legal expenses to the tune of Rs. 15,08,770/- and claimed it as expenditure. On verification of details it was foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no business operations were carried on by the assessee during the year as no business income has been shown, therefore, the learned CIT(A) upheld the disallowance of legal expenses as made by the A.O. The fact remains undisputed before us that the assessee has not done any business activities during the year and that there is no business income shown also by the assessee. Therefore, the legal expenses claimed cannot be wholly and exclusively for the purposes of business of the assessee. In such a scenario, the decision of the subordinate authorities is held to be correct. Ground No. 4, therefore, dismissed. 8. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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