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Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
Assessee by : Smt. Suman Lunkar, CA : Shri Shrinivasa Karthik Devara, Revenue by JCIT (DR) Date of Hearing : 03-08-2023 Date of Pronouncement : 29-08-2023 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee against order dated 15.11.2022 passed by the Ld.CIT(A)-11, Bangalore for A.Y. 2014- 15 on following grounds of appeal:
1. The learned Commissioner of Income-Tax (Appeals) has erred in passing the order in the manner as passed by him. The order as passed is bad in law and void ab initio and is against the principle of natural justice and is therefore required to be quashed.
2. In any case and without prejudice, the learned Commissioner of Income tax (Appeals) has erred in confirming the addition of Rs. 60,38,555/- made by the Assessing Officer by disputing the agricultural income to that extent and treating the same as income from Other Sources. The addition as made by Assessing Officer and as confirmed by Commissioner of Income tax (Appeals) is totally against the facts of the case and erroneous and the addition is required to be deleted.
3. In any case, the learned Commissioner of Income tax (Appeals) has erred in holding that:- a) The appellant has not proved the facts of giving agricultural land on lease. b) The appellant has not proved that agricultural land was used for agricultural purposes. c) That the agricultural income as it claimed by the appellant is not substantiative. The above conclusions drawn by the learned Commissioner of Income tax (Appeals) are not based on facts and evidences and only on surmises and therefore are to be disregarded especially when in the assessment order the learned Assessing Officer has himself partially accepted the claim of agricultural income. 4. In any case, the learned Commissioner of Income tax (Appeals) has erred in relying on the remand report issued by the learned Assessing Officer. Since this report itself was passed without hearing the appellant and without considering the facts of the case and evidence available. The substance of addition based on such remand report is bad in law and on facts is to be deleted. 5. On the facts and circumstances of the case and on the evidence available, the agricultural income of Rs. 78,79,150/- as returned by the appellant is totally substantiated and justified and the same is to be accepted and the addition as made by the learned Assessing Officer and confirmed by learned Commissioner of Income tax (Appeals) is to be deleted. 6. In any case and without prejudice, the income is erroneously assessed and the demand raised is excessive. 7. The learned Commissioner of Income tax (Appeals) has erred in levying interest u/s 234A and 234B of the Act. The action of the Commissioner of Income tax (Appeals) being erroneous both on facts and law is to be negated and the Interest levied be deleted. 8. In view of the above and other grounds to be adduced at the time of hearing, it is requested that the impugned order passed by the learned Commissioner of Income tax (Appeals) and learned Assessing Officer be quashed or Page 3 of atleast the addition to income out of agricultural income as made and sustained be deleted and interest levied be also deleted.”
Brief facts of the case are as under: 2.1 Assessee is an individual and earns income from agricultural sources. For the year under consideration, he filed his return of income on 11.01.2015 declaring Nil income. Subsequently, the return was revised on 31.03.2016 declaring total income of Rs.55,72,540/-. The case was selected for scrutiny under CASS and statutory notices were issued to the assessee, in response to which representative of assessee filed requisite details as called for. 2.2 The Ld.AO noted that the assessee had declared agricultural income of Rs.76,79,150/-. Assessee was asked to furnish supporting documents in respect of the agricultural income like crops cultivated during various seasons, details of agricultural land owned, gross income earned out of agricultural operations, expenditure incurred to earn such agricultural income etc. 2.3 Assessee vide letter dated 26.09.2016 submitted that he has in his possession 45.25 acres of agricultural land and that it had grown vegetables/crops. Assessee had filed the bills of the vegetables sold that amounted to Rs.16,40,595/-. Assessee also submitted a certificate issued by Tehsildhar, Kunigal Taluk stating that the agricultural income for the Financial Year relevant to the Assessment Year under consideration can be estimated at Rs.16.30 lakhs out of 8 acres 20.5 guntas of land. The assessee thus submitted that considering the certificate issued by the Tehsildhar and the total land owned by assessee, the net agricultural income of Rs.76,79,150/- is justified. The Page 4 of Ld.AO based on the above submissions of the assessee observed and held as under: “5. The assessee's submissions have been examined. The Tahsildar's Certificate is an estimate of the earning and not a certificate of the earning of the agricultural income of the assessee. The Tahsildar has not certified that the assessee has grown crops in its land and the yield from the crops cultivated is Rs. 1,90,000/- per acre. The certificate by the Tahsildar is indicative of the potential yield of agricultural income of land in the area. Further, it is a known fact that the yield on account of cultivation of crops is subject to various factors and not dependent only on the land. The yield of agricultural produce is dependent not just on the land, on which cultivation of crops are done but is subject to irrigation, maintenance and other variants. Therefore, the certificate of the Tahsildar cannot be used for determining the agricultural income of the assessee.
6. Further, apart from submitting details of land holdings and few bills of sale of agricultural produce, the assessee could not substantiate its total agricultural income of Rs. 76,79,150/-. The assessee submitted receipts, showing sale of agricultural produce to the extent, of Rs. 16,40,595/-. Therefore, the assessee could not substantiate its agricultural income of Rs. 60,38,555/- (Rs. 76,79,150/- minus Rs. 16,40,595/-) despite sufficient opportunities given to the assessee.” 2.4 Aggrieved by the order of the Ld.AO, assessee filed appeal before the Ld.CIT(A). Before the Ld.CIT(A), assessee filed similar arguments as made before the Ld.AO and the Ld.CIT(A). After considering the submissions observed and held as under: “4.6 The submissions of the appellant and report of the AO have duly been considered. As regards, income from lease rent, as detailed supra in the AO's report, the inquiries conducted by the AO on the basis of directions of this office show that the claim of the appellant is patently false. The AO sent summons to the lessees as claimed by the appellant, but the same were received back un-served with remarks 'insufficient address'/`address cannot be located'. The AO also issued summons to the appellant to furnish copies of the relevant lease deeds, copy of RTC for the agricultural land which were given on lease, copy of the bank account where the lease rent was credited if amount received through banking channel and to produce the Page 5 of lessees for examination. Although the summons were duly served upon the appellant, however neither the appellant furnished any details nor were the lessees produced. As discussed supra, copy of this report was also sent by this office to the appellant, however the appellant has not responded to the same. This clearly shows that the appellant does not have anything to say on this matter and he does not have anything to substantiate his claim of lease rentals having been received by him. So this argument of the appellant is rejected. 4.7 Further, even in a case when a land is given on lease to someone else, the onus still remains on the assessee claiming exempt income to show that agricultural activities were carried out on such land by the lessee. So merely giving agricultural land on lease and having received money for the same would not in itself lead to a conclusion of having earned exempt agricultural income as the requirement of the law is "land is used for agricultural purposes". Anyhow, in the case under consideration the factum of giving land on lease itself is not proved. 4.8 As regards the reliance of the appellant on the certificate of the Tehsildhar, the same is totally misplaced. The said certificate can at the most be considered as the capacity of the land to yield certain income. However, the same does not show that the appellant had actually carried out the agricultural activities and earned any agricultural income. As rightly pointed out by the AO the certificate can indicate potential of the land but actual yield and actual income is not established by the same. Copy of RTC has not been produced by the appellant. Details of sale of agricultural produce are also not brought on record. Since it is the appellant who has claimed exempt agricultural income, the onus was upon him to substantiate his claim. Owning an agricultural land in itself is not sufficient to show that agricultural income was received from such land. The land might not have been cultivated at all or the actual income from the agricultural activities during the year might be very low or the cultivator might have even suffered losses. 4.9 In the case under consideration the appellant has just submitted that he owns the land but there is nothing to support his claim of having carried out any agricultural activities himself or by any other person on his behalf. So there is nothing to show that the appellant had earned such huge agricultural income during the year under Page 6 of consideration. So the action of the AO in restricting the extent of the agricultural income to an amount, for which the appellant could submit some evidence, cannot be faulted with. 4.10 As regards claim of the appellant that its lease rentals as agricultural income had been accepted by the AO in AY 2015-16, the same is also devoid of any merit. A perusal of the assessment order for AY 2015-16 shows that the appellant had claimed agricultural income of Rs 74,47,774/- and of this his claim to the extent of Rs 9,20,000/- only was accepted by the AO. This amount of Rs 9,20,000/- related to lease rental as against Rs 39,50,000/- claimed in the year under consideration. This itself shows that the lease rent in AY 2015-16 does not have any co-relation with the claim of lease rent in the year under consideration. Anyhow, having lease rental in one year does not ipso facto lead to a conclusion that the same was received in all the other years also. Each assessment year is different and the onus was on the appellant to show that he had actually received such lease rental during the year under consideration and that the lessees had carried out agricultural activities on his land. However, as discussed supra, the appellant has failed to discharge this onus.” 2.5 Aggrieved by the order of the Ld.CIT(A), assessee is in appeal before this Tribunal.
The Ld.AR before this Tribunal submitted that apart from agricultural income as certified by the Tehsildhar is sale of agricultural produce being Rs.16,40,595/-, assessee had listed out agricultural land to the extent of 4 acres 2 guntas to one Mr. D.S. Shambhu vide agreement dated 10.08.2007. The Ld.AR has placed the leased agreement in vernacular language as well as the translated version in paper book at pages 53-61.
It is submitted by the Ld.AR that assessee had received Rs.15,50,000/- during the year as per the said lease agreement. The Ld.AR further submitted that assessee had also leased out agricultural land to the extent of 5 acres 13.08 guntas to one Mr. B.N. Venkataramaiah vide agreement dated 19.03.2008 from Page 7 of Rs. 24 Lakhs during the year. He submitted that the leased agreement has been placed at pages 62-69 of the paper book. It is submitted that the above leased agreements were filed before the Ld.CIT(A) which has not been considered by the officer.
The Ld.AR brought our notice to page 74, wherein the details of holding of the agricultural land by assessee has been listed along with the details of the crops. He has also filed the ledger account of net agricultural income at pages 72-73 and as per the said ledger account, assessee received in cash Rs.76,79,150/- towards the agricultural income.
The Ld.AR submitted that in the subsequent assessment year being 2015-16, the assessee declared agricultural income of Rs.74,47,774/-. The Ld.AO for A.Y. 2015-16 accepted the leased income of the agricultural land amounting to Rs.9,20,000/-. He thus prayed for the deletion of the addition made in the hands of the assessee.
On the contrary, the Ld.DR submitted that the certificate issued by the Tehsildhar is on an estimate yield and the certificate only specifies the facilities that are available on the agricultural land admeasuring 8 acres and 20 ½ guntas. Further he submitted that the said certificate is issued by the Tehsildhar on 20.09.2016, whereas the present assessment year under consideration is Assessment Year 2014-15. The Ld.DR vehemently submitted that it is not discernible regarding the period of agricultural activity from the said certificate as carried on by the assessee.
The Ld.DR in respect of the leased income generated from the agricultural land submitted that, for Assessment Year 2015-16, the assessee had declared a total leased rental of Rs. 39.50 Lakhs out of which the Ld.AO accepted Rs. 9.20 Lakhs. In the present facts of the case, the assessee is declaring total leased rental from both the lessees at Rs. 39.50 Lakhs which has been totally denied by the Ld.AO.
The Ld.DR further submitted that on remand of the evidences by the Ld.CIT(A) to the Ld.AO, the lessees as mentioned in the alleged lease agreement did not appear, and therefore the genuineness of the agreement is also doubted by the authorities. He thus supported the orders passed by the authorities below. We have perused the submissions advanced by both sides in the light of records placed before us. 10. From the details filed by the assessee before the Ld.CIT(A), following evidences in respect of the agricultural income are placed on record. Agricultural income Extent of land earned 4 acres, 2 guntas 15,50,000 5 acres, 13.08 guntas 24,00,000 8 acres, 20.5 guntas 16,30,000 Total 55,30,000 11. Thus to the extent of 17 acres 35.58 guntas of land, income of Rs. 55.30 Lakhs was submitted to be generated. Admittedly the total land holding by the assessee is 45.25 acres. The argument of the Ld.AR is that proportionately the agricultural Page 9 of Rs.76,79,150/- commensurate to the total land holding. This argument of the assessee has not been verified by the authorities and also not supported by evidence. The arguments of the Ld.DR also cannot be brushed aside regarding the certificate dated 20.09.2016 issued by the Tehsildhar to be relatable to the year under consideration. All these things deserves to be verified in detail by the Ld.AO. In the interest of justice, we remand this issue to the Ld.AO for denovo consideration. Assessee is directed to file RTC documents in respect of each land revealing the cultivation that was carried out during the year under consideration. Accordingly, the Ld.AO is directed to verify all the relevant details and to consider the claim of assessee in accordance with law. Accordingly, the grounds raised by assessee stands allowed for statistical purposes. In the result, the appeal filed by the assessee stands allowed for statistical purposes. Order pronounced in the open court on 29th August, 2023.