SHARMA DHARMENDRA GORAKHNATH HUF,SHRIRAMPUR vs. ITO WD 2 AHMEDNAHAR, ITO AHMEDNAGAR

ITA 1156/PUN/2026Status: DisposedITAT Pune13 October 2026AY 2020-2111 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal, considering the totality of the facts and in the interest of justice, decided to restore the issue to the file of the Assessing Officer. The Tribunal directed the Assessing Officer to grant one final opportunity to the assessee to substantiate its case by filing the requisite details. The Assessing Officer was instructed to decide the issue as per facts and law after giving due opportunity of being heard to the assessee. The assessee was also directed to make submissions on the appointed date without seeking any adjournment, failing which the Assessing Officer was at liberty to pass an appropriate order as per law. The grounds raised by the assessee were accordingly allowed for statistical purposes. The Tribunal noted that the assessee had declared gross agricultural receipts and claimed net agricultural income as exempt under Section 10(1), but the AO rejected the claim due to lack of evidence and made an addition of the gross receipts. The CIT(A)/NFAC upheld the AO's action. The assessee's counsel submitted that details could not be filed before the AO due to portal closure and that the CIT(A) did not consider the details properly. The Tribunal acknowledged the assessee's submission that it could substantiate its case if given an opportunity.

What were the facts?

The assessee, Sharma Dharmendra Gorakhnath HUF, filed its return for AY 2020-21 declaring taxable income of Rs.9,470/- and net agricultural income of Rs.59,56,902/-. The case was selected for limited scrutiny due to large income declared and substantial increase in agricultural income compared to preceding years. The Assessing Officer (AO) completed assessment under section 143(3) r.w.s. 144B, adding the entire gross agricultural receipt of Rs.89,07,521/-. The AO held that the assessee failed to substantiate agricultural activities with documentary evidence. The CIT(A)/NFAC upheld the AO's action. The assessee appealed to the ITAT, challenging the addition and the procedural fairness of the assessment.

What were the issues?

1. Whether, on the facts and in law, the CIT(A)-NFAC erred in confirming the addition of Rs.89,07,521/- by treating bona fide agricultural receipts as taxable 'income from other sources', without properly considering the evidence and in violation of the settled legal position regarding agricultural income and burden of proof, as per Section 10(1)? 2. Whether the CIT(A) failed to appreciate that the assessee had furnished comprehensive evidence of agricultural operations, including lease agreements, 7/12 extracts, crop details, sale and expense bills, and bank statements, making the conclusion of unsubstantiated claim perverse? 3. Whether the order of the CIT(A)-NFAC is bad in law and void ab initio for violating principles of natural justice by treating the assessment as non-compliant despite the appellant's grievance and requests, and by dismissing the appeal without independent examination of evidence and effective opportunity of being heard, contrary to Section 250(6)? 4. Whether the authorities below erred in mechanically invoking Section 144 and converting a regular scrutiny under Section 143(3) into a best-judgment assessment without satisfying the requirements of Section 144? Assessee's Contentions: The assessee argued that it furnished comprehensive evidence, including lease agreements for 132.28 acres, 7/12 extracts, crop details, sale bills, expense bills, and bank statements. It contended that the CIT(A) did not properly consider these documents and upheld the AO's action without justification. The assessee claimed it could substantiate its case if given an opportunity. It also argued that the assessment was bad in law due to violations of natural justice and non-consideration of material on record. The assessee relied on judicial precedents recognizing income from leased agricultural land as exempt agricultural income under Section 10(1). Revenue's Contentions: The Revenue relied on the orders of the AO and CIT(A)/NFAC, submitting that despite ample opportunities, the assessee failed to submit details on time, leading the AO to reject the claim and add gross receipts. The Revenue argued that the CIT(A)'s order was exhaustive and detailed, and therefore, should be upheld.

Which sections of the Income-tax Act were involved?

Section 10(1),Section 143(3),Section 144,Section 144B,Section 250(6),Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI R. K. PANDA & Ms. ASTHA CHANDRA

For Appellant: CA Shri Aloke R. Singh and Shri Nikhil G. Gramle
For Respondent: Ms. Bhavya I.V., Jt. CIT-DR

PER R.K. PANDA, VP:

This appeal filed by the assessee is directed against the order dated 16.01.2026 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2020-21. 2. Facts of the case, in brief, are that the assessee-HUF filed its return of income on 26.12.2020 declaring taxable income of Rs.9,470/- with net agricultural income of Rs.59,56,902/- after claiming expenses of Rs.29,50,619/- from the gross agricultural receipt of Rs.89,07,521/-. The case was selected for limited scrutiny under CASS for the following reasons:

2 i) To verify the large income claimed by the assessee in ITR. ii) Substantial increase in agricultural income as compared to that shown i

The order continues below.

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