GOPALBHAI UMARBHAI BHARVAD,AHMEDABAD vs. THE ITO, WARD-3(1)(1) PREVIOUSLY WARD-3(2)(2), AHMEDABAD

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ITA 2128/AHD/2025Status: DisposedITAT Ahmedabad28 October 2026AY 2017-185 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the nature and extent of agricultural activities, ownership of land, agricultural produce, sale proceeds, and expenses incurred require proper verification with documentary evidence. It noted that the assessee furnished additional details during appellate proceedings, but the claim for agricultural expenses was disallowed by the CIT(A) partly because they were not separately reflected in Schedule EI of the ITR. The Tribunal found that the claim for agricultural expenses cannot be decided solely on the disclosure method in the return without examining supporting evidence and its nexus with agricultural activities. It also stated that the applicability of Section 68 and the sustainability of the addition thereunder must be examined in light of the facts and statutory provisions. In the interest of justice, the Tribunal decided to restore the matter to the file of the AO for fresh examination and adjudication. The AO is directed to examine the agricultural income, supporting evidence, sale proceeds, agricultural expenses, and the applicability of Section 68, considering the enhancement made by the CIT(A). The impugned order of the CIT(A) is set aside. The assessee is directed to submit all relevant documents and explanations to the AO.

What were the facts?

The assessee, Gopalbhai Umarbhai, filed an appeal against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, for Assessment Year 2018-2019. The assessee had declared total income of ₹1,47,000/- and agricultural income of ₹25,50,500/-. The Assessing Officer (AO) made an addition of ₹24,00,000/- under Section 68 of the Income Tax Act, 1961, treating declared agricultural income as unexplained. The CIT(A) observed that the assessee furnished a sale bill for ₹1,99,033/-. The AO had estimated net agricultural income at ₹1,50,500/-, treating the balance as unexplained. During appellate proceedings, the assessee provided further details of agricultural income and claimed expenses of ₹78,990/-. The CIT(A) disallowed these expenses and enhanced the addition by ₹78,990/-, dismissing the appeal.

What were the issues?

1. Whether the entire assessment and appellate process was conducted in violation of the principles of natural justice, with key documentary evidence being ignored by the AO and CIT(A)? (Mixed law and fact, concerning principles of natural justice and evidence appreciation). 2. Whether the addition of ₹24,00,000/- under Section 68 was erroneous, as it treated declared agricultural income as unaccounted income despite relevant details being provided? (Mixed law and fact, concerning Section 68 and the nature of agricultural income). 3. Whether the CIT(A) erred in disallowing agricultural expenses of ₹78,990/- solely because they were not separately shown in Schedule EI of the ITR 2A? (Mixed law and fact, concerning the allowability of expenses and disclosure requirements). Assessee's contentions: The assessee argued that the assessment and appellate processes violated natural justice by ignoring crucial documentary evidence. They contended that the addition under Section 68 was incorrect as the declared agricultural income was supported by details, and that agricultural expenses should have been allowed, not disallowed merely due to their disclosure method in the ITR. The assessee relied on the principles of natural justice and the need for proper consideration of evidence. Revenue's contentions: The judgment does not record specific contentions made by the Revenue.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(2),Section 142(1),Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

For Appellant: Ms Divya Rathod, AR
For Respondent: Shri Kalpesh Rupavatia, Sr. DR
Hearing: 21.10.2026Pronounced: 28.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT ITA No. 2128/AHD/2025 (Assessment Year: 2017-18)

Gopalbhai Umarbhai Vs. The Income Tax Officer, Bharvad, Ward-3(1)(1), 145, Bharvad Vas, Ahmedabad. Odki, Viramgam-382130. [PAN : BICPB8440 C] (Appellant) .. (Respondent) Appellant represented by : Ms Divya Rathod, AR Respondent represented by: Shri Kalpesh Rupavatia, Sr. DR Date of Hearing 21.10.2026 Date of Pronouncement 28.10.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- Delay Condoned This appeal has been filed by the Assessee against the order dated 02.04.2025 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2018- 2019.

ITA No.2128/AHD/2026, AY-2017-18 Gopalbhai U Bharvad - 2–

2.

The Assessee has raised the following grounds of Appeal:-

1.

The order passed by the Ld. CIT (A) is against law. equity & justice.

2.

The entire assessment and appellate process has been conducted in violation of the principles of natural justice, as the Ld. A.O. and CIT(A) have ignored key documentary evidence that supports the appellant's claim. 3. The Ld. AO made and The CIT(A) confirmed the addition under Section 68, by treating agricultural income as unaccounted income, though the relevant details regarding agricultural income were duly recorded, but were not properly considered. The above mentioned addition is void, illegal, and against the principles of natural justice. 4. The Ld. CIT(A) has erred in law and fact by disallowing agricultural expenses incurred during the year. The sole reason for such disallowance was that the expenses were not shown separately in the Schedule El - of ITR 2A. 5. The appellant Craves liberty to add, amend, alter or NA modify all or any grounds of appeal before final appeal. 3. The assessee filed his return of income declaring total income of ₹1,47,000/- and agricultural income of ₹25,50,500/- for rate purposes. The case was selected for limited scrutiny on the issue of agricultural income, and notices under sections 143(2) and 142(1) of the Act were issued. After considering the submissions and material available on record, the Assessing Officer (AO) passed an assessment order under section 143(3) of the Act dated 15.11.2019, making an addition of ₹24,00,000/- under section 68 of the Act by treating the agricultural income declared by the assessee as unexplained income.

4.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) observed that the assessee had furnished an agricultural produce sale bill amounting to ₹1,99,033/. Based on the material available during the assessment proceedings, the

ITA No.2128/AHD/2026, AY-2017-18 Gopalbhai U Bharvad - 3– AO had estimated the net agricultural income at ₹1,50,500/- and treated the balance amount of ₹24,00,000/- as unexplained income.

5.

During the appellate proceedings, the assessee furnished further details of agricultural income and claimed agricultural expenses of ₹78,990/-. The Ld. CIT(A) did not accept the claim of agricultural expenses and enhanced the addition by ₹78,990/-, thereby determining the total assessed income at ₹26,25,990/-. Accordingly, the appeal was dismissed.

6.

We have considered the grounds of appeal, the orders of the lower authorities and the material available on record. The dispute primarily concerns the genuineness and quantum of agricultural income declared by the assessee, the addition of ₹24,00,000/- made under section 68 of the Act, and the disallowance of agricultural expenses amounting to ₹78,990/-.

6.1 It is evident from the order of the Ld. CIT(A) that the assessee furnished additional details of agricultural income during the appellate proceedings. However, the claim of agricultural expenses was not accepted, inter alia, on the ground that the expenses were not separately reflected in Schedule EI of the return of income. The agricultural income was substantially restricted on the basis of the limited documentary evidence considered by the AO.

6.2 In our considered view, the nature and extent of agricultural activities, ownership or cultivation of agricultural land, agricultural produce, sale proceeds, and expenses incurred in earning such income require proper verification with reference to the relevant documentary

ITA No.2128/AHD/2026, AY-2017-18 Gopalbhai U Bharvad - 4– evidence. The additional details furnished during the appellate proceedings also require examination to determine the actual agricultural income, if any, earned by the assessee during the year under consideration.

6.3 Further, the claim of agricultural expenses cannot be decided solely on the basis of the manner in which the expenses were disclosed in the return of income, without examining the supporting evidence and their nexus with the agricultural activities. At the same time, the assessee must substantiate the claim with appropriate documentary evidence. The applicability of section 68 and the sustainability of the addition made thereunder must also be examined in the light of the facts of the case and the relevant statutory provisions.

6.4 In view of the above facts and in the interest of justice, we consider it appropriate to restore the matter to the file of the AO for fresh examination and adjudication. The AO shall examine the agricultural income declared by the assessee, the supporting evidence regarding agricultural activities and sale proceeds, the claim of agricultural expenses, and the applicability of section 68 of the Act. The AO shall also consider the enhancement of ₹78,990/- made by the Ld. CIT(A), in accordance with law, after examining the relevant material. Accordingly, the impugned order of the Ld. CIT(A) is set aside, and the matter is restored to the file of the AO for fresh adjudication in accordance with law. The assessee is directed to submit all relevant bank statements, documents and explanations before the Assessing Officer and to strictly comply with the notices issued by the revenue authorities without seeking any unnecessary adjournments.

ITA No.2128/AHD/2026, AY-2017-18 Gopalbhai U Bharvad - 5–

7.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

The order pronounced in the open Court on 28.10.2026. Sd/- Sd/- Sd/- Sd/- (RAHUL CHAUDHARY) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Digitally signed by JEETENDRA Ahmedabad; Dated 28.10.2026 DEVENDRABHAI UPADHYAY MV DN: c=IN, o=PERSONAL, JEETENDRA title=6087, 2.5.4.20=7e5568a89b633f174b 28a80f5e63c638da40b7313fb4 DEVENDRA 7ebaefda841cf59d1703, postalCode=380059, आदेश की �ितिलिप अ�ेिषत / Copy of the Order forwarded to : BHAI st=Gujarat, serialNumber=816dc56e89621 1. अपीलाथ�/ The Appellant 1a1a21ccc4abc94ddc94458f4a UPADHYAY 2. ��थ�/ The Respondent. 1b37be8e1854e9399295106d4 , cn=JEETENDRA 3. संबंिधतआयकरआयु�/ Concerned CIT DEVENDRABHAI UPADHYAY 4. आयकरआयु�(अपील) /The CIT(A)- Date: 2026.10.30 16:14:58 +05'30' 5. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड�फाईल /Guard file. आदेशानुसार/ BY ORDER,

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