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Before: SMT. P. MADHAVI DEVI
Date of hearing: 11/03/2020 Date of pronouncement: 30/04/2020 O R D E R
This is assessee’s appeal for the AY 2010-11 against the order of CIT(A) – 1, Hyderabad, dated 25/11/2016,
Brief facts of the case are that the assessee, an individual, filed his return of income for the AY 2010-11 on 04/08/2010 declaring total income of Rs. 2,17,660/-. The return of income was selected for scrutiny under CASS and during the assessment proceedings u/s.143(3) of the Act, the AO observed that the assessee had made cash deposits to the tune of Rs. 17,58,000/- into his ICICI Savings Bank Account and was asked to explain the source for these cash deposits.
The assessee explained that the entire sum of Rs.17,58,000/-, which was deposited into the bank account was the money received by him towards the sale of agricultural land and also lease amount from his tenants who were carrying on the agricultural operations for the last 4 years. He submitted that since the tenants only had purchased the land also, they had paid the entire dues along with sale consideration. The AO, however, did not accept this contention of the assessee and treated the entire sum of Rs. 17.58 lakhs as income from his unexplained sources and brought it to tax.
Aggrieved, the assessee preferred an appeal before the CIT(A), who confirmed the order of the AO and the assessee is in second appeal before the Tribunal by raising the following grounds of appeal:
1. The CIT(A) as well as the Assessing Officer erred in law and facts of the case in bringing to tax agricultural income and sale of agricultural lands.
2. The CIT (A) as well as the Assessing Officer ought to have appreciated the fact that the agricultural lands are situated about 12kms from the nearest municipal limits of Gadag District of Kamataka, without proper application of mind or bringing on record that the land are situated within 8kms of the municipal limits, could not have taxed the same.
3. The CIT(A) ought to have appreciated the fact that the entire deposit of cash in bank is out of agricultural income and sale of agricultural lands which are exempt from tax.
4. Your CIT(A) as well as the Appellant submits that the Assessing Officer ought to have appreciated the evidence submitted and accepted the explanation that the entire deposit in ICICI bank amounting to Rs. 17,53,000/- is out of exempted income by way of agricultural income and sale of agricultural lands.
5. The CIT(A) as well as the Assessing Officer without bring on record any information that the sale of land is not agricultural lands, or the lands are situated with in 8kms of the nearest municipal limits, ought to have not taxed the same as income from unexplained sources.
6. Alternatively, your Appellant submits that the CIT(A) as well as the Assessing Officer having not disputed the fact that your appellant is holding agricultural lands, cannot bring the agricultural income, received during the year under consideration, to tax.”
The ld. counsel for the assessee submitted that there is no doubt that the assessee was holding agricultural land and that he had given it on lease to agriculturists and copies (invoices) of the agriculture produce were also produced before the AO and CIT(A). He submitted that even the sale consideration received for sale of land has been treated as income/unexplained sources. He further submitted that agriculturists had paid the lease amount, which was due to the assessee for the past 4 years and the same should also have been considered as explained.
On the other hand, the ld. DR supported the orders of the revenue authorities.
Having regard to the rival contentions and material on record, I find that there is no dispute that the assessee has sold the agricultural land and has received the consideration of Rs. 9.8 lakhs which is also part of Rs.17.58 lakhs deposited into the bank. I therefore agree with the contention of the assessee that the said amount should have been accepted by the AO and the CIT(A) as explained source. With regard to the balance amount being the lease amount due for the past four years, the assessee has to explain with necessary evidence. The ld. counsel for the assessee submitted that he has all the necessary details to explain these deposits as well.
In view of the same, I direct the AO to accept the sale of consideration of Rs. 9.8 lakhs received for sale of agricultural land as explained source and for the balance amount, the issue is remitted to file of the AO for de-novo consideration in accordance with law after giving assessee a fair opportunity of hearing. The assessee is directed to cooperate with the AO for speedy disposal of the appeal.
6.1 As regards the contention of the assessee that the agricultural lands are situated beyond 12 kms from the municipal limits and not exigible to tax also has to be verified by the AO.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
Pronounced in the open court on 30-04-2020.