SHANTHA NAGARAJU,BANGALORE vs. ITO, WARD-6(2)(1), BANGALORE

This appeal filed by Shantha Nagaraju [the Assessee/Appellant] is directed against the order dated 03-Jun-2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [the ld. CIT(A)] for Assessment Year 2018-19, dismissing the appeal against the assessment order dated 31-Mar-2021 passed under section 143(3) of the Income Tax Act.

At the outset, it is noticed that there is a delay of 177 days in filing the appeal before the Tribunal. The Assessee has filed a petition seeking condonation of delay, stating that she became aware of the order of the ld. CIT(A) dated 03- Jun-2025 only later, and thereafter filed the appeal on 24-Feb-2026. It is submitted that the Assessee is a lady agriculturist and was not conversant with the technicalities of the tax portal or electronic communication. She was also unaware of the order, as it was served through the email address of her authorised representative, which prevented her from monitoring the legal compliances. It was further concluded that, based on her return and statement of facts, she was unfamiliar with income-tax procedures. She came to know of the appellate order only when a demand was raised, and immediately thereafter contacted her Chartered Accountant. Ultimately, with the assistance of her daughter, who is stated to be a lawyer, the appeal was filed. It is further stated that the delay was neither intentional nor due to negligence.

The Assessee was represented by herself, her husband and her daughter Ms. Bhamini Advocate who reiterated the submissions made in the petition and requested condonation of the delay.

The Departmental Representative submitted that the 177-day delay in filing the appeal was not supported by sufficient cause and, therefore, should not be condoned.

We have considered the rival submissions and examined the petition for condonation of delay. It is undisputed that the Assessee received the appellate order on 03-Jun-2025 and filed the present appeal on 24-Feb-2026, resulting in a delay of 177 days. The Assessee has explained that she is an agriculturist, filed her return of income only for the relevant assessment year, and was not properly advised about the appellate proceedings. In these circumstances, we are satisfied that the delay was not deliberate or mala fide and deserves to be condoned. Accordingly, the delay is condoned, and the appeal is admitted for adjudication.

The Assessee stated that she earned gross agricultural receipts of ₹73,20,000, incurred agricultural expenditure of ₹34,22,300, and disclosed net agricultural income of ₹38,97,700. The learned Assessing Officer, however, treated the agricultural income as unsubstantiated and added ₹73,20,000 to the Assessee’s income.

Briefly, the Assessee, an individual, filed her return of income on 26-Aug-2018 declaring total income of ₹1,27,690. The return was selected for limited scrutiny to verify the agricultural income. Notice under section 143(2) of the Income Tax Act was issued to the Assessee on 28-Sep-2019. The learned Assessing Officer noted that, for Financial Year 2017-18, the profit and loss account reflected agricultural income of ₹38,97,700, which was substantial compared with the returned income. The Assessee had shown gross agricultural receipts of ₹73,20,000, agricultural expenditure of ₹34,22,300, and net agricultural income of ₹38,97,700. The Assessing Officer issued notices requiring the Assessee to upload supporting documents to substantiate the agricultural income earned during the year. As no reply was received, the Assessing Officer did not accept the genuineness of the agricultural activities and treated the gross agricultural receipts of ₹73,20,000 as the Assessee’s income. The Assessing Officer also held that the claimed agricultural expenditure of ₹34,22,300 was not established. Accordingly, an addition of ₹73,20,000 was made in the assessment order passed under section 143(3) of the Income Tax Act dated 31-Mar-2021.

Aggrieved by the assessment order, the Assessee preferred an appeal before the ld. CIT(A). In the statement of facts, she submitted that she owned 70 acres of agricultural land at different locations and cultivated crops such as pomegranate, mango, papaya, greens, and vegetables during Assessment Year 2018-19, declaring net agricultural income of ₹38,97,700. The ld. CIT(A) noted that notices had been served on the Assessee, but no response was filed. Accordingly, holding that the Assessee was not interested in prosecuting the appeal, the ld. CIT(A) confirmed the action of the learned Assessing Officer by appellate order dated 03-Jun-2025.

The Assessee explained that she owns about 70.35 acres of agricultural land, on which she carries out plantation and cultivation activities, including banana, mango, coconut, papaya, greens and vegetables. It was stated that banana is cultivated on a yearly basis and that the Assessee also grows mango, papaya, greens and vegetables through an integrated cropping system. The agricultural produce is sold periodically, mainly at the farm gate or through commission agents in the market, and the sale quantities are maintained. During the year, the Assessee stated that she received total agricultural receipts of ₹73,20,000 in cash, as fruits and vegetables are ordinarily sold for cash. Thus, according to the Assessee, the agricultural income stood duly explained. The Assessee further explained that she filed her return of income only because a small amount of bank interest income had accrued to her, and she also disclosed the agricultural income therein. Otherwise, according to her, there was no requirement for her to file a return of income. It was submitted that there was no allegation of cash deposits in her bank account, no allegation of purchase of any new property, and no other source of income apart from agriculture. Therefore, the declared agricultural income of ₹38,97,700 from approximately 70 acres of agricultural land was not unreasonable. The Assessee also placed before us several photographs of the agricultural produce during hearing. These photographs showed that she was cultivating organic mangoes, organic vegetables, greens, jackfruit, coffee and other produce. The Assessee also furnished photographs showing the number of trees standing on the agricultural land. Finally, the Assessee submitted that the agricultural land comprised 19,250 banana plants, 10,000 coconut trees, 1,000 mango trees, 5,000 papaya trees and approximately 3,000 tomato plants. She supported these submissions with photographs of the agricultural produce, plants and trees on the land. The Assessee also submitted that she had obtained a horticulture term loan of ₹60,00,000 from Corporation Bank and had been granted subsidy assistance from the National Horticulture Board, Gurugram. She stated that the loan was sanctioned for agricultural and horticultural activities, including plantation and cultivation, and that substantial interest repayment obligations were incurred in connection with the said loan. She further submitted that the UTI Bank Yelahanka branch had also sanctioned another agricultural term loan of ₹60,00,000 on 02-Aug- 2006 for the cultivation of coloured capsicum. The Assessee submitted that sufficient land 77.5 acres in her name and further 25.04 acres in the name of her husband was available for cultivation and that the relevant portions of the agricultural land were used for growing the stated crops.

Assessee also explained that there are 19,250 banana plantation, 10,000 coconut trees, 1000 mango trees, 5000 papaya plants and 3000 pomegranate plantations. She also produced the photographs of her plants in the farm as well as several photographs of the produce. She also submitted that even the agricultural University at Bangalore has also conducted a tour along with the Vice Chancellor of that university at the farmhouse of the assessee. Such photographs were also shown to us.

Regarding agricultural expenditure, the Assessee submitted that on an average 15 labourers were engaged regularly for cultivation by paying Rs 350/- per day to labours and further maintenance work and were paid daily wages. She also stated that expenditure was incurred on manure, diesel, maintenance and other farming requirements, tractors etc thereby explaining the agricultural expenses claimed. For electricity, assessee has 10 borewells which are running on electricity and further using most modern drip irrigation system.

Assessee also referred to some literature showing that Karnataka's climate and soil support several high value crops based on data from NABARD stating that Arecanut: Net profit of Rs 1.5–2.5 lakh per acre annually. Market price for processed arecanut ranges from Rs 300–400 per kg. A well- maintained acre yields 1,000–1,500 kg per year. For Coconut: Net profit of Rs 80,000–1.2 lakh per acre. A mature palm produces 80–100 nuts annually. With copra and oil demand rising, prices are stable. For Coffee (Arabica & Robusta): Net profit of Rs 1–2 lakh per acre. Coffee requires shade and intercropping with pepper or fruit trees.

The learned departmental representative submitted that the details furnished by the assessee here clearly shows that she is in agriculturist and the manner in which the explanation is given by the assessee along with her husband about the activity agricultural activities carried out by the assessee were never produced before the learned lower authorities.

We have carefully considered the rival contention and perused the orders of the learned lower authorities. In fact, the assessee has filed return of income declaring total income of ₹ 127,690. In the return of income, the assessee has stated that she has earned gross agricultural income of ₹ 7,320,000 and incurred an expenditure of ₹ 3,422,300. Thus, the net agricultural income offered by the assessee was ₹ 3,897,700. The assessee is having the agricultural land of 70.5 acres in her own name and 24.05 acres in the name of her husband which are used for the agricultural activities. The assessee has submitted the details of the agricultural produce, the square feet area in which the various agricultural produces were grown. The claim of the assessee that she has 19,250 banana plants, 10,000 coconut tree plants, 1000 mango tree, 5000 papaya tree and 3000 pomegranate plantations. It was also the fact shown to us that assessee has 10 Borewells and is using the labour for cultivation. The facts and the documents produced before us also shows that assessee has been granted horticultural term loan of ₹ 60 lakhs by the Corporation Bank, the subsidy is also granted by the National horticultural board and a further term loan of ₹ 60 lakhs is sanctioned by UTI Bank Yelahanka branch, Bangalore as per letter produced before us. The assessee has also shown us the bank statements wherefrom the interest is paid on such borrowings. It is not the case of the learned assessing officer that assessee has deposited cash in the bank account of the assessee or has made an investment for which the sources are not explained. It is also a fact that the income of the assessee chargeable to tax is merely ₹ 127,000. The return of income was filed by the assessee under the mistaken belief. Otherwise, the whole of the income is exempt as agricultural income. The photograph shown before the Bench clearly shows that that assessee has huge agricultural activities. The assessee has grown banana, mango, papaya, arecanut, pomegranate, the coloured capsicum, green vegetables and several other fruits and vegetables. The claim of the assessee is that assessee is not using pesticide manual but using organic binder of cow dung, if on the Conservative basis we find that the income shown by the assessee net of expenditure is only ₹ 39 lakhs agricultural on cultivation of 70 acres of land than the average income of the assessee can be considered at ₹ 55715 per acre. We do not find that such income is unreasonable in view of the substantial activities of borrowing, cultivation, existence of plant et cetera shown by the assessee before us.

It is also not correct that the lower authorities have made an addition of the whole of the agricultural gross income without granting any deduction. The assessee is asking for deduction of the expenditure from the gross agricultural income. The amount of expenditure is ₹ 34 lakhs out of the agricultural income of ₹ 73 lakhs which is almost 50% of the gross income. The total net agricultural income is thus shown by the assessee of only ₹ 3,897,700. Looking at the nature of the activities, area of the land available with the assessee, the crops grown by the assessee as well as the nature of facilities for agricultural activities maintained by the assessee, we do not find any unreasonableness. We do not find that any useful purpose will serve after the evidence produced before us of restoring the issue back to the file of the learned assessing officer.

Accordingly, we reverse the orders of the lower authorities, allow the Assessee’s appeal, and direct the learned Assessing Officer to delete the addition of ₹73,20,000 made in the hands of the Assessee. 17. In the result appeal filed by the assessee is allowed. Order pronounced in the open court on 29th July 2026.