BELATHUR SRINIVASAIYENGAR RANGAIYENGAR ,MYSORE vs. INCOME TAX OFFICER, WARD-1(1), MYSORE

The assessee has raised the following grounds of appeal: Belathur Srinivasaiyengar Rangaiyengar, Mysore Page 2 of 11

At the outset, there is a delay of 323 days in filing the appeal before this Tribunal. Before us, the ld. A.R. of the assessee drew our attention to an Affidavit in original dated 18.3.2025 filed by the Belathur Srinivasaiyengar Rangaiyengar, Mysore Page 3 of 11 assessee stating therein the reasons for the delay, which are reproduced below for ease of reference and convenience: Belathur Srinivasaiyengar Rangaiyengar, Mysore Page 4 of 11 Belathur Srinivasaiyengar Rangaiyengar, Mysore Page 5 of 11

1 Having heard the ld. Counsel for the assessee and ld. D.R., it is perceived that the explanation in the condonation application supported by the affidavit is plausible and sufficient cause being shown by the assessee which prevented him from filing the appeal within the specified period and accordingly, we are inclined to condone the delay and admit the appeal for adjudication on merit. Belathur Srinivasaiyengar Rangaiyengar, Mysore Page 6 of 11

Now the brief facts of the case are that the assessee filed his return of income for the assessment year 2017-18 on 3.8.2017. Thereafter, the case was selected for complete scrutiny under CASS and accordingly notices u/s 143(2) as well as 142(1) of the Act were issued calling for the various documents/record in support of the claims made by the assessee in the return of income. On verification of the details furnished during the course of assessment proceedings, it was noticed by the AO that the assessee had claimed agricultural income to the tune of Rs.46,57,720/-. Further, the AO observed that under column 4 of schedule-“EI”, the assessee had shown both the gross receipts and the net agricultural income for the year at Rs.46,57,720/- only. No expenditure had been shown towards the accrual of agricultural income. The AO was of the opinion that it is very difficult to conduct agricultural activity without any expenditure as the agricultural activities are very labor-intensive right from ploughing the land, planting of seeds, nourishing with manure/pesticides periodically and also harvesting/storage of agricultural produce. Further, the expenses towards procuring water and electricity is also required. Under these circumstances, it is impossible to accept the contention of the assessee that gross agricultural receipt itself is his net agricultural income. Hence, the expenditure towards conducting agricultural activity is reasonably estimated to be @ 30% of gross agricultural receipt amounting to Rs.13,97,316/-. As the assessee has not shown any agricultural expenses, the amount of Rs.13,97,316/- is reasonably estimated to be the agricultural expenditure incurred by the assessee in earning the gross agricultural receipts of Rs.46,57,720/-. The AO was of the opinion that by showing the gross agricultural receipts as the net agricultural income, the assessee is trying to cover up the expenditure incurred on agricultural activities and thus the expenditure incurred on agricultural activities amounting to Belathur Srinivasaiyengar Rangaiyengar, Mysore Page 7 of 11 Rs.13,97,316/- is brought to tax as income from other sources and the agricultural income is restricted to Rs.32,60,404/-.

1 The AO further noticed that the assessee has offered income from sale of sites as per the provisions contained in section 44AD of the Act. The assessee is also in the field of real estate business i.e. purchase of land, converting it into nonagricultural land & thereafter obtaining permission from the authorities to develop the converted land into a layout and sale of sites of different dimensions to public since financial year 2014-15. As per the section 269SS of the Act as amended from 1.6.2015, the assessee was not supposed to receive cash as sale consideration in property transaction. In view of this, action relating to contravention of section 269SS of the Act was initiated accordingly.

Aggrieved by the order of AO passed u/s 143(3) of the Act dated 31.12.2019, the assessee preferred an appeal before the ld. CIT(A)/NFAC.

The ld. CIT(A)/NFAC dismissed the appeal of the assessee as the assessee did not effectively pursue the appeal despite being given several opportunities. The ld. CIT(A)/NFAC held that as no details, documents or submissions have been provided during the appellate proceedings and accordingly, the ld. CIT(A)/NFAC left with no option but to decide the case on the basis of material on record. In the absence of materials/submissions/details, the ld. CIT(A)/NFAC constrained to agree with the approach adopted by the AO in making the addition. The ld. CIT(A)/NFAC also held that the AO has passed a reasoned and speaking order considering all the facts and circumstances of the case and no interference with the order of the AO is called for. Belathur Srinivasaiyengar Rangaiyengar, Mysore Page 8 of 11

Again, aggrieved by the order of ld. CIT(A)/NFAC the assessee has filed the present appeal before this Tribunal.

Before us, ld. A.R. of the assessee vehemently submitted that the assessee had shown the net agricultural income amounting to Rs.46,57,720/- in the Schedule-EI but inadvertently mentioned the same to be gross agricultural income as well as under Net agricultural income and vehemently submitted that the action of the AO in estimating the expenses & treated the same as income from other sources is not justified. Further, reducing the agricultural income is also not justified as the assessee had shown net agriculture income only.

Ld. D.R. on the other hand supported the orders of the authorities below.

We have heard the rival submissions and perused the materials available on record. The assessee is aged 86 years senior citizen agriculturist and the crops he grows is mangoes, coconuts & ginger. The foremost source of his income is from agricultural activity. In the present case, the assessee had inadvertently declared gross agricultural income of Rs.46,57,720/- and also declared net agricultural income of Rs.46,57,720/-. The AO vide assessment order dated 05/02/2024 had adopted Rs.13,97,316/- i.e. 30% of the gross agriculture Receipts amounting to Rs.46,57,720/- as ‘Income from Other Sources’ being agriculture expenditure incurred by the assessee in earning gross agricultural receipts and accordingly, computed the balance as agricultural income amounting to Rs.32,60,404/- only instead of net agriculture Income of Rs. 46,57,720/- as declared by the assessee in his return of income. We take note of the fact that both the authorities below have accepted Belathur Srinivasaiyengar Rangaiyengar, Mysore Page 9 of 11 the claim of sources of agricultural income. We could not understand that how by arbitrarily treating 30% of Gross receipts as agriculture expenses will culminate into income from other sources. Therefore, we are of the view that although the authorities below have accepted the source of Income from the agriculture activities but reduced the net agriculture income to 30% without any basis that too on the estimation & presumption”.

1 Before us, the ld.AR submitted that in fact the assessee being a senior citizen had inadvertently declared both the gross receipts and the net agriculture income amounting to Rs. 46,57,720/- only however the actual net agriculture of Rs. 46,57,720/- was claimed to be exempt u/s 10(1) of the Act & reported in schedule EI of the Return.

2 Further the Chapter-II of the Income Tax Act, 1961 contend with “basis of charge”.

3 In our considered view, merely on the basis of some estimation & assumption of the ld. AO, reducing the agricultural income will not automatically commute into any income under head “income from other sources” without any specific material being brought on record to show that agricultural Income were inflated in order to escape the assessment under head “Income from Other sources”. In our opinion, the AO has merely acted on the basis of surmises and conjectures in adopting the estimation of 30% of alleged gross agricultural income as “income from other sources” without any basis & without carrying out any further verification. The suspicion however strong cannot take the place of proof. In this case, none of the authorities below have brought any substantial material on record to demonstrate that assessee has not earned Income through agricultural sources but from “income from other sources”. Therefore, we set aside the order of the ld. CIT(A)/NFAC by Belathur Srinivasaiyengar Rangaiyengar, Mysore Page 11 of 11 allowing the appeal of the assessee and direct the AO to delete addition.

In the result, appeal of the assessee is allowed.

The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file