AGRAWAL AGRO FARM,SHANWARA vs. NFAC, AO, INDORE

ITA 767/IND/2024Status: DisposedITAT Indore22 October 2026AY 2018-1912 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 38,07,437/- under section 68 of the Income Tax Act, 1961, was not sustainable. The Tribunal observed that the assessee had furnished documentary evidence supporting agricultural activities, including land records, cultivation details, sale diaries, and transportation documents. While the AO doubted the genuineness of sales due to the absence of commission payments, the relationship with a commission agent, and the receipt of sale consideration in consolidated amounts, these circumstances alone were insufficient to establish that the sale proceeds were not genuine agricultural receipts. The Tribunal found that the AO had not brought on record any independent material to prove that the amounts received originated from undisclosed sources or that the agricultural sale transactions were fictitious. The CIT(A) had also not adequately addressed the cumulative evidentiary value of the documents. Therefore, suspicion arising from the timing of payments or relationships could not substitute for an examination of primary documentary evidence. The Tribunal directed the deletion of the addition.

What were the facts?

The assessee, Agrawal Agro Farm, a partnership firm engaged in agricultural activities, filed its return for Assessment Year 2018-19 declaring nil taxable income and agricultural income of Rs. 32,85,040/- from total agricultural sales of Rs. 61,31,414/-, including banana sales of Rs. 38,07,437/-. The Assessing Officer (AO) treated the banana sale proceeds of Rs. 38,07,437/- as unexplained cash credits under section 68 of the Income Tax Act, 1961, and made an addition. The Commissioner of Income-tax (Appeals) [CIT(A)] confirmed this addition. The assessee appealed to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the learned AO erred in making an addition of Rs. 38,07,437/- under section 68 of the Income Tax Act, 1961, based on misconceptions of facts and improper consideration of the Act's provisions, rendering the addition unsustainable and requiring deletion? 2. Whether the addition of Rs. 38,07,437/- under section 68 of the Income Tax Act, 1961, is unwarranted as it is purely based on surmises and conjecture, thus requiring deletion? 3. Whether the addition of Rs. 38,07,437/- under section 68 of the Income Tax Act, 1961, is illegal due to cogent evidence filed by the appellant, necessitating its deletion? 4. Whether the learned AO ought to have accepted the agricultural income of Rs. 38,07,437/-, which was duly supported by required evidence, making its rejection unjustified? 5. Whether the rejection of agricultural income of Rs. 38,07,437/- is illegal and bad in law, especially when the principles of consistency and Apex Court judgments were referred to, requiring acceptance of the agriculture income? 6. Whether the impugned order suffers from non-application of mind and non-assignment of reasons, vitiating the AO's action? Assessee's Contentions: The assessee argued that it maintained regular books of account and furnished documentary evidence, including land ownership records, cultivation details, commission agents' sale diaries, Mandi records, and transportation details. The assessee claimed to have consistently disclosed substantial agricultural income in earlier years, which the department accepted. The AO failed to dispute land ownership or agricultural activities and made the addition based on the manner and timing of payments without positive evidence of fictitious sales. The assessee relied on an Income-tax Inspector's report confirming agricultural activities. The assessee contended that the AO's doubts regarding commission payments and the relationship with commission agents were insufficient to deem sales non-genuine. Revenue's Contentions: The judgment does not record specific contentions from the revenue.

Which sections of the Income-tax Act were involved?

Section 68,Section 253,Section 250,Section 143(1),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI PARESH M. JOSHI & SHRI ARVIND SONI

Hearing: 01.09.2026Pronounced: 22.10.2026

Per Arvind Soni, AM:

1.

This is an Appeal filed by the Assessee under section 253 of the Income Tax Act 1961, [ herein after referred to as the Act for the sake of brevity] before this tribunal as & by way of a second Appeal. The Assessee is aggrieved by the order dated 28.09.2024 passed by the Ld. CIT(A) U/S 250 of the Act, which is herein after referred to as the “Impugned Order”.

2.

The assessee is a partnership firm engaged in agricultural activities, including cultivation and sale of banana, turmeric, ginger and other agricultural produce. For A.Y. 2018-19, the assessee filed its return of income on 21.07.2018 declaring nil taxable income and agricultural income of Rs 32,85,040/-

against total agricultural sales

The order continues below.

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