KALLURI RAMAKRISHNA PARAMAHAMSA,BANGALORE vs. THE INCOME TAX OFFICER , CIRCLE 7(1)(1), BANGALORE, BANGALORE

In this appeal, the assessee has raised the following grounds: -

The brief facts of the case are that the assessee is an individual and for the year under consideration filed its return of income on 15.02.2021, declaring a total income of Rs. 5,16,48,211/-. The return filed by the assessee was selected for scrutiny under CASS, inter alia, on account of the large agricultural income per acre shown by the assessee in comparison to the average agricultural income for the territory. Accordingly, the assessee was asked to furnish documentary details for the sale of crops, details of the APMC Mandi, documentary evidence with regard to the mode of sale of agricultural proceeds, and documentary evidence with regard to expenses such as seeds, fertilisers, pesticides, etc. In response, the assessee submitted that he has been earning agricultural income since 2001, and the same has been considered while computing the total income and tax payable thereon. It was further submitted that the agricultural crops sold during the year were maize, paddy and seeds, etc., which are grown in the agricultural land situated in the East Godavari River Belt of Andhra Pradesh and the Kalluri Plant Nursery at the East Godavari River Belt, Andhra Pradesh. Further, the assessee submitted that agricultural income was also earned from a Nursery in Bangalore. The assessee submitted that all the sales were cash sales and sold to different persons from nearby villages, and therefore, no sale receipts are available for the sales made.

The Assessing Officer (“AO”), vide order dated 26.09.2022 passed under section 143 r.w.s. 144B of the Act, disagreed with the submissions of the assessee and held that the assessee has not submitted any documentary evidence, like sale bills, sale receipts of APMC Mandi, etc., to substantiate the sale of agricultural proceeds of Rs. 55,07,450/- from the agricultural farms and nursery in East Godavari River Belt of Andhra Pradesh. The AO further held that the assessee failed to establish the genuineness of the agricultural operations by not submitting any documentary evidence to support the claim of expenses of Rs. 5,87,037/-, such as water bills, electricity bills, labour charges, seed and fertiliser expenses, etc. Thus, the AO held that the assessee has failed to discharge the onus of proving the exemption claimed on account of agricultural income. Accordingly, the exemption claimed on account of agricultural income at Rs. 55,07,450/- was disallowed and added to the total income of the assessee. Further, the expenses amounting to Rs. 5,87,037/- on account of agricultural expenses were also disallowed and added to the total income of the assessee.

The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee and held that absence of documentary evidence to prove the sale of agricultural produces creates serious doubt about the genuineness of the claim, as the assessee has not even furnished details of persons to whom agricultural produce was allegedly sold, such as their names, address, quantity sold, price realised, etc. Further, as regards the agricultural expenses amounting to Rs. 5,87,037/-, the learned CIT(A) held that the assessee has not produced a single bill, receipt, voucher or any other documentary evidence to prove the actual incurring of such expenses. The learned CIT(A) held that without these evidences the claim of the expenses remained unsubstantiated and cannot be accepted. Accordingly, the learned CIT(A) upheld the addition of Rs. 55,07,450/- made by the AO on account of agricultural income in respect of agricultural farms and nursery situated in the East Godavari River Belt of Andhra Pradesh. Further, disallowance of agricultural expenses amounting to Rs. 5,87,037/- was also upheld in the absence of any documentary evidence. Being aggrieved, the assessee is in appeal before us.

During the hearing, the learned Authorised Representative (“learned AR”) submitted that the assessee has been earning agricultural income since 2001 and in respect of agricultural income earned from agricultural farms and nurseries in the East Godavari River Belt of Andhra Pradesh, a disallowance @20% was made on gross agricultural income in the assessment year 2018-19. The learned AR submitted that in the appellate proceedings, the learned CIT(A), inter alia, restored this issue to the file of the AO for fresh adjudication as the assessment order was passed under section 144 of the Act. The learned AR further submitted that while giving effect to the directions issued by the learned CIT(A) in the assessment year 2018-19, the AO deleted the disallowance on account of agricultural income after considering the documentary evidence filed by the assessee relating to agricultural sale receipts and agricultural expenditure. Accordingly, the learned AR submitted that, given an opportunity, the assessee shall furnish all the details in support of its claim for agricultural income earned from the agricultural farms and nursery in the East Godavari River Belt of Andhra Pradesh, and the agricultural expenditure incurred during the year.

On the other hand, the learned Departmental Representative, by vehemently relying upon the order passed by the lower authorities, submitted that despite the grant of ample opportunity, the assessee failed to submit any of the details to substantiate its claim before the lower authorities.

We have considered the submissions of both sides and perused the material available on record. As per the assessee, it has agricultural lands and a nursery in the East Godavari River Belt of Andhra Pradesh, admeasuring 28.82 acres and a nursery in Anekal Taluk, Bengaluru, admeasuring 2.10 acres. In the year under consideration, the assessee came to have earned a total agricultural income of Rs. 1,15,07,650/- and incurred agricultural expenses of Rs. 5,87,037/-. As the assessee failed to furnish the documentary evidences regarding sale bills, sale receipts of APMC Mandi etc. to substantiate the sale of agricultural produce from agricultural farms and nursery in East Godavari Belt of Andhra Pradesh, the lower authorities disagreed with the claim of the assessee that the amount of Rs. 55,07,415/- deposited by the assessee in his bank account were from the sale of agricultural produce from the aforesaid land parcel. Further, due to a lack of documentary evidence, the lower authorities also disagreed with the assessee's claim of agricultural expenses of Rs. 5,87,037/-. On the other hand, lower authorities did not make any addition in respect of the agricultural income of Rs. 60,00,200/- earned by the assessee from its nursery situated in Anekal Taluk, Bengaluru. Thus, in the present case, the dispute is confined only to the agricultural income earned by the assessee from agricultural farms and nursery situated in the East Godavari River Belt of Andhra Pradesh and the agricultural expenditure incurred by the assessee. Page 6 of 8

From the perusal of the documents passed on record, we find that in the assessment year 2018-19, the agricultural income claimed to have been earned by the assessee was disallowed @20% following the approach adopted in the preceding year. As the assessment order was passed under section 144 of the Act, the learned CIT(A), inter alia, restored the issue of disallowance of agricultural income earned by the assessee to the file of the AO for fresh adjudication. We find that vide order dated 13.05.2025 giving effect to the order passed by the learned CIT(A) for the assessment year 2018-19, the addition on account of disallowance of agricultural income was deleted by the AO after considering documentary evidence furnished by the assessee, such as pertaining to ownership, agricultural receipts and expenditure proofs substantiating agricultural operation. From the perusal of the said order, we find that the agricultural income was earned from the same parcel of land situated in the East Godavari River Belt of Andhra Pradesh.

During the hearing, the learned AR undertook that the assessee shall furnish all the documents in support of its claim of earning of agricultural income from agricultural land and nursery in East Godavari River Belt of Andhra Pradesh and evidence pertaining to agricultural expenditure incurred during the year under consideration before the AO for necessary examination, if an opportunity is granted in this regard. Therefore, in the interest of justice and fair play, we deem it appropriate to restore this issue to the file of the Jurisdictional AO for de novo adjudication with the direction to the assessee to furnish all the details/documents in support of its claim before the AO for necessary verification/examination. The assessee is further directed to fully cooperate in the assessment proceedings and furnish any other information/documents as may be sought by the AO for complete adjudication of this issue. Needless to mention, no order shall be passed without affording reasonable opportunity of hearing to the assessee. With the above directions, the impugned order on this issue is set aside, and the grounds raised by the assessee are allowed for statistical purposes.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 8th July, 2026