SAMBHAJI LAXMAN PATIL L/R UJWALA SAMBHAJI PATIL,BELAGAVI vs. JOINT COMMISSIONER OF INCOME TAX, RANGE - 1, BELGAUM

The sole grievance of the assessee is that ld.CIT(A) erred in confirming 50% of the addition made by the Assessing Officer disallowing claim of Agricultural income of Rs.12,35,800/-.

Brief facts of the case are that the assessee is an individual and mainly engaged in carrying out Agricultural activities. Income of Rs.1,57,720/- declared in the return for A.Y. 2011-12 filed on 28.02.2012 along with showing net Agricultural income at Rs.24,71,600/-. Case selected for scrutiny through CASS followed by validly serving statutory notices u/s.143(2) and 142(1) of the Act. Ld. Assessing Officer called for the details of Agricultural income shown by the assessee. Assessee provided the details of Crops/Fruits sold during the year along with the quantity, No. of Trees, Yield per tree and the gross receipts shown at Rs.41,19,300/- and incidental expenses claimed @40% at Rs.16,47,720/- leaving behind net agricultural income of Rs.24,71,600/-. Assessee also furnished the photographs of the trees and crops. certificates issued by Belgaum District Horticulture Department and the land ownership documents. However, ld. Assessing Officer was not satisfied with these details and asked the assessee to furnish monthly Cash Flow statement for the purchase/inputs towards Agricultural activities and sale of crops and also the proof of sale of Agricultural produce. In absence of these details, ld. Assessing Officer concluded the proceedings observing that assessee is maintaining bank accounts with eight banks and the assessee is only claiming Agricultural income on notional basis and not on actual purchase and receipt and claim of Agricultural income at Rs.24,71,600/- disallowed and taxed under the head ‘Income from other sources’. Income assessed at Rs.26,29,320/-.

Aggrieved assessee preferred appeal before ld.CIT(A) and filed the physical appeal with Form No.35 on 16.04.2014 and online appeal on 21.01.2019. Ld.CIT(A) vide order dated 20.12.2024 dismissed the assessee’s appeal in limine being barred by limitation considering the e-filing date 21.01.2019. Thereafter order u/s.154 r.w.s.250 of the Act was passed on 06.02.2025 stating that there is mistake apparent from record and the appeal of the assessee is not barred by limitation as the physical appeal was filed on 16.04.2014. Thereafter, ld.CIT(A) has also examined the merits of the case and held that the assessee holds substantial land holding and carries out Agricultural produce but in absence of complete details, gave part relief and deleted 50% of the addition made by ld. Assessing Officer.

Aggrieved assessee is now in appeal before this Tribunal.

Ld. Counsel for the assessee submitted that the assessee is engaged in Agricultural activities for past many years and owns 52 Acres of well irrigated agricultural land. Referring to the paper book running into 156 pages it is claimed that assessee has maintained the details of agricultural sales and expenses, agricultural income has been consistently shown for past many years and in support income tax returns for A.Y. 2008-09 to A.Y. 2014-15 has been filed. It is also stated that the Assessing Officer in the previous assessment years 2005- 06 to 2008-09 has carried out the scrutiny proceedings u/s.143(3) of the Act and has majorly accepted the assessee’s claim of Agricultural income. He therefore submitted that impugned addition deserves to be deleted.

On the other hand, ld.DR supported the order of ld.CIT(A) as well as the Assessing Officer and stated that assessee has not maintained proper details for the Agricultural income earned during the year.

We have heard the rival contentions and perused the record placed before us. The only grievance of the assessee is that ld.CIT(A) has erred in sustaining the addition of Rs.12,35,800/- being addition made by the Assessing Officer disallowing the claim of Agricultural income. We note that this fact is not in dispute that assessee owns 52 Acres of Agricultural land as has been accepted by both the Assessing Officer as well as ld.CIT(A). It is also noticed that the assessee expired on 17.05.2019 and the present appeal has been filed by the legal heir of the assessee, i.e. his wife Ujwala Sambhaji Patil. She also filed an Affidavit stating that her husband gifted her 22 Acres of Agricultural land at Village Benhanhalli, Taluka and District Belagavi. During the course of the proceedings before the lower authorities, details of item wise, quantity wise sales of the Fruits and Crops sold during the year have been provided. Further, details of sales and expenses are placed in paper book from pages 21 to 44 for the expenses incurred for carrying out Agricultural activities as well as the receipts of sale of Agricultural produce which is mainly been made to Sitaram Ravaji Kadukar, Belgaum. We also note that the assessee has been showing the Agricultural income consistently for past many years. Details of Agricultural income shown in the income tax returns for A.Y. 2008-09, A.Y.2009-10 and A.Y.2010-11 is at Rs.21,25,000/- and Rs.24,09,400/- and Rs.25,21,800/- respectively. Copies of assessment orders passed u/s.143(3) of the Act for A.Y. 2005-06 and A.Y. 2008-09 has been placed in paper book from pages 149 to 156. During A.Y. 2005-06, agricultural income shown at Rs.17,65,000/- out of which ld. Assessing Officer disallowed Rs.2.00 lakh. For A.Y. 2006-07, against the agricultural income stated by the assessee to be Rs.19.00 lakh, ld. Assessing Officer made disallowance of Rs.1.50 lakh. For A.Y. 2007-08 against the agricultural income of Rs.19,25,000/- disallowance of Rs.1.00 lakh has been made and for A.Y. 2008-09 against the agricultural income of Rs.21,25,000/- ld. Assessing Officer has disallowed Rs.1.25 lakh mainly for not maintaining complete details.

We also take note of the fact that the details called for by the Assessing Officer about the records to be maintained for the Agricultural sale and purchase seems to be the one which are required to be maintained by the other business concerns which are engaged in the trading and manufacturing activity. Ld. Assessing Officer should have taken note that because the assessee is having some income other than the agricultural income had to furnish the return. In case of those assesses who have no other income other than the agricultural income there is hardly any requirement of maintaining the meticulous details about each and every transaction of sale of agricultural goods and expenses incurred for carrying out the agricultural activity. However, in the given case, assessee has been claiming the agricultural income for past many years, quantitative and item-wise details have been provided with the number of trees, photographs, sale bills and expenses.

Under these given facts and circumstances and also considering the assessment orders of the previous years, we deem it appropriate to confirm disallowance of Rs.1.00 lakh as against Rs.12,35,800/- sustained by ld.CIT(A) and accordingly against the agricultural income of Rs.24,71,600/- only sum of Rs.1.00 lakh is disallowed and to be taxed under the head ‘Income from Other sources”. Grounds of appeal raised by the assessee are partly allowed.

In the result, the appeal of the assessee is partly allowed.