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Facts
The assessee, an individual, declared agricultural income from the sale of trees. The AO added the sale proceeds as income under Section 56 of the Act due to lack of evidence. The CIT(A)/NFAC dismissed the appeal ex-parte for non-compliance.
Held
The Tribunal held that the entire issue requires fresh examination by the AO as there was a lack of clarity regarding the AY and the transaction details. The Tribunal allowed the assessee another opportunity to present evidence.
Key Issues
Whether the sale of grown trees from agricultural land constitutes agricultural income exempt from tax, and if the assessee was denied a reasonable opportunity of being heard.
Sections Cited
250, 143(2), 142(1), 144B, 56, 10(1)
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Income Tax Appellate Tribunal, “SMC’’BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal, at the instance of the assessee, is directed against the order of the learned CIT(A)/NFAC dated 15.01.2025 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1072179961(1) passed under section 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2020-21.
The assessee has raised the following grounds of appeal:
1. The appellant denies himself liable to be taxed on disallowance of Rs.5,19,510/- as assessed by the NFAC as against the income of Rs. 35,19,510/- under the facts and circumstances of the case of the appellant.
2. The order passed by the CIT(A) is bad in law in so far as it violates the principles of natural justice. In other words the order is an ex-parte order which needs to be cancelled at the hands of this Hon'ble Tribunal under the facts and circumstances of the case.
3. The Authorities below have failed to appreciate that the agricultural income is earned from sale of trees in the agricultural land under the facts and circumstances of the case of the Appellant.
4. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
5. In view of the above and the other grounds that may be urged at the time of hearing of the appeal, your Appellant prays that the appeal may be allowed in the interest of equity and justice.”
Condonation of delay: “1. An Order of National Faceless Appeal Centre in NFAC/S/250/2024- 25/1072179961(1)for the Assessment Year 2020-21 was passed on 15.01.2025. The same was uploaded in Income Tax Portal on 15.01.2025.
2. The Appellant ought to have filed the appeal before this Hon'ble Tribunal within 60 days from the date of uploading of the NAC Order i.e. on or before 16.03.2025.
3. The appellant is a senior citizen and was unwell for 2 weeks. Because of illness the Appellant could not come and sign the appeal papers on time. By the time appellant sign the appeal papers, arose 6 (SIX) days delay to file the Appeal before this Hon'ble Bench.
It is our humble request that this Hon'ble Tribunal takes a lenient and compassionate view and condone the delay of 6 (SIX)days in filing the Appeal before Hon'ble Tribunal and hear the same on merits for the advancement of substantial cause of justice.
It is submitted that if this application for condonation of delay in filing the Appeal is not allowed, the Appellant would be put to great hardship and irreparable loss and on the other hand no hardship or injury would be caused to the Revenue if this application of Condonation of delay is allowed. Reliance is placed on the decision of the Hon'ble Apex Court in the case of Collector, Land Acquisition Vs. MST. Katiji and Others (1987) 167 ITR 471 and also in the case of Concord of India Insurance Co. Ltd., Vs Smt. Nirmala Devi and Others 118 ITR 507 and also on the decision of the Hon'ble Apex Court in the case of Radha Krishna Rai vs. Allahabad Bank and others (2000) 9, SCC 733.
Brief facts of the case are that the assessee, being an individual and having income from house property, income from other sources, and agricultural income, filed his return of income for the AY 2020-21 on 07.01.2021 by declaring a total income of Rs. 5,19,510/-. Subsequently, the case of the assessee was selected for limited scrutiny under CASS for the reason of “Agricultural Income” and accordingly notices u/s. 143(2) and 142(1) of the Act were Page 3 of 6 issued to the assessee, calling for details. In response to notices u/s. 143(2) and 142(1) issued, the assessee submitted an e- response on 13.07.2021 by stating that from the AY 2002-2003 to till AY 2011-12, the assessee had declared the agriculture income ranging from Rs.1,50,000/- to 4,50,000/- on which ground nuts and dals, etc., were cultivated. Since 2012-13, trees such as mango (25), teak wood (58), and neem (52) were planted; consequently, there was no income. Further, the assessee submitted that during AY 2020-21, since these trees were fully grown, they were sold for a consideration of Rs.30,00,000/- and the same was declared in the AY 2020-21. Further, the purchaser had transferred the amount by RTGS on 30.01.2021. However, the assessee could not produce any documentary evidence in spite of the final show cause notice dated 17.08.2022 served on the assessee. The AO completed the assessment u/s. 143(3) of the r.w.s. 144B of the Act by adding Rs.30,00,000/- as income u/s. 56 of the Act.
4. Aggrieved by the order of the ld.AO, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
5. The ld.CIT(A)/NFAC dismissed the appeal of the assessee, as despite giving 03 notices along with the show cause notices, the assessee did not file any response. The ld.CIT(A)/NFAC held that the assessee is no longer interested in pursuing his appeal and accordingly dismissed the appeal of the assessee. Further, with regard to the merit of the case, the ld.CIT(A)/NFAC held that the assessee failed to establish the agricultural activities carried out by him, which are primary conditions for having agricultural income. Without furnishing the vital evidence in support of the agriculture income, it will not be sufficient to prove the genuineness of the Page 4 of 6 agriculture income, and accordingly dismissed the appeal on merits also.
Aggrieved by the order of ld.CIT(A)/NFAC dated 15.01.2025, the assessee has filed the present appeal before this Tribunal.
Before us, the ld. A.R. of the assessee vehemently submitted that the assessee had sold well grown 25- mango trees, 58- teak wood trees and 52-neem trees for Rs.30,00,000/- to Shri. G.V. Nadagouda on 20.11.2020 by way of an unregistered sale deed. The sale of these grown trees is agricultural income and is exempt from income tax levy. Further, ld. A.R. submitted that orders of authorities below are without providing a reasonable opportunity of hearing to the assessee, which is a gross violation of the principle of natural justice, and accordingly prayed that one more opportunity may be granted before the AO to substantiate his claim.
The ld. D.R., on the other hand, supported the orders of the authorities below.
We heard the rival submissions and perused the material available on record. It is an undisputed fact that the case of the assessee was selected for limited scrutiny under CASS for the reason of “Agriculture Income”. During the course of assessment proceedings, the assessee submitted that well-grown 25- mango trees, 58- teak wood trees, 52- neem trees for a consideration of Rs.30,00,000/- were sold to Shri. G.V. Nadagouda on 20.11.2020 by way of an unregistered sale deed. It is also submitted that sale of these grown trees in the agriculture land amounts to agriculture income and is thus exempted from income tax levy. The present appeal relates to previous year 2019-20, relevant to AY 2020-21.
Page 5 of 6 We could not understand when the sale of these trees was made by way of an unregistered sale deed dated 20.11.2020 and the purchaser transferred the amount by way of RTGS on 30.01.2021, then how these are related to AY 2020-21. Further, we take note of the fact that in response to the show cause notice dated 17.08.2022 the assessee could not also furnish these details as submitted by the AR of the assessee. We are of the considered opinion that all these details require fresh examination by the AO in the light of the above observation, and therefore, we are inclined to remit the entire issue in dispute to the file of the AO for fresh consideration in accordance with the law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to produce the documentary evidence showing the sale of these trees along with the receipts of Rs.30,00,000/- during the FY 2019-20 relevant to AY 2020-21 to substantiate his claim. We make it clear that if the assessee establishes that the agriculture income declared was from the sales of those trees, then the AO will treat the same as agriculture income, which is exempted u/s 10(1) of the Act. It is ordered accordingly.
In the result, the appeal of the assessee is partly allowed for statistical purposes.