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Facts
The assessee, Shri Mohammed Azhar, filed his return of income for AY 2018-19 declaring nil total income and agricultural income of Rs.33,30,102/-. The Assessing Officer (AO) treated the gross agricultural receipts of Rs.83,25,256/- as unexplained income under Section 68 of the Income Tax Act due to non-compliance and lack of supporting details, assessing the total income at Rs.83,25,256/-.
Held
The Tribunal noted that while the assessee did not comply with lower authorities, they have now provided documents evidencing ownership of agricultural land. Considering the nature of the issue and principles of natural justice, the Tribunal decided to grant one final opportunity to the assessee to substantiate their claim of agricultural income.
Key Issues
Whether the gross agricultural receipts can be treated as unexplained income under Section 68 without proper verification, and if principles of natural justice were violated due to non-compliance with notices and lack of opportunity.
Sections Cited
68, 143(2), 143(3), 143(3A), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by Shri Mohammed Azhar (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 21.02.2025 for the A.Y. 2018-19.
The assessee has raised the following grounds of appeal :
“ 1. The order of the learned Commissioner of Income Tax (Appeals) is against the law, weight of evidence and probabilities of case.
2. The learned Commissioner erred in confirming the order of the Assessing Officer wherein, gross receipts from agricultural operations at Rs.83,25,256/- are treated as total income u/s 68 of the IT Act.
The learned Commissioner ought to have appreciated that the Assessing Officer has not accorded further time as sought by the assessee, thereby violated the Principles of natural justice and therefore, the order has to be set aside, for not doing so the learned Commissioner erred in confirming the addition u/s 68 of the IT Act amounting to Rs.83,25,256/-.
The learned Commissioner ought to have appreciated that notice u/s 143(2) was not issued by the AO Nizamabad, therefore, the notice issue u/s 143(2) by an Officer without jurisdiction is an invalid notice, therefore, the CIT erred in confirming the order u/s 143(3) r.w.s 143(3A), which is based on an invalid notice, therefore further erred in confirming the section 68 of the IT Act amounting to Rs.83,25,256/-.
The appellant craves leave to add to, amend or modify the above grounds of appeal
either before or at the time of hearing of the appeal, if it is considered necessary.”
3. The brief facts of the case are that, the assessee is an individual, filed his return of income for Assessment Year 2018– 19 on 07.02.2019, declaring total income of Rs.Nil and agricultural income of Rs.33,30,102/-. The case of the assessee was selected for limited scrutiny for the reason of large agricultural income in comparison to the returned total income. Accordingly, notice under section 143(2) of the Income Tax Act, 1961 (“the Act”) was issued by the Learned Assessing Officer (“Ld. AO”) on 28.09.2019. During the assessment proceedings, the assessee did not comply with the notices issued by the Ld. AO. From the return of income, the Ld. AO noted that the assessee had disclosed gross receipts of Rs.83,25,256/- from agricultural operations and after claiming expenses of Rs.49,95,154/-, reported net agricultural income of Rs.33,30,102/-. However, as no supporting details were furnished regarding ownership of land, conduct of agricultural operations, or evidences of expenditure, the Ld. AO treated the gross receipts of Rs.83,25,256/- as unexplained income under section 68 of the Act and completed the assessment under section 144 of the Act on 05.04.2021, determining total income of the assessee at Rs.83,25,256/-.
4. Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal ex-parte for non-prosecution, observing that the assessee did not avail of repeated opportunities.
5. Aggrieved with the order of Ld. CIT(A), the assessee is in further appeal before the Tribunal. The Learned Authorised Representative (“Ld. AR”) submitted that the assessee is a genuine agriculturist, who could not appear before the lower authorities due to unavoidable reasons. It was submitted that gross injustice has been caused by treating the entire gross receipts from agricultural operations as income under section 68 of the Act, without examining the fact that the assessee indeed owns agricultural land and carries out cultivation. The Ld. AR placed on record an affidavit of the assessee, stating that he owns 36 acres of agricultural land, along with documentary evidences of ownership. It was contended that in the interest of justice, one more opportunity may be provided to the assessee to substantiate his claim of agricultural income with supporting evidences.
6. Per contra, the Learned Departmental Representative (“Ld. DR”) opposed the plea of remand and submitted that adequate opportunities were already provided by both the Ld. AO and the Ld. CIT(A). However, the assessee failed to respond to statutory notices or produce evidence in support of his claim. Therefore, the Ld. DR supported the orders of the lower authorities.
7. We have considered the rival submissions and perused the material available on record. It is an admitted fact that the assessee did not comply before the Ld. AO as well as the Ld. CIT(A). At the same time, the assessee has now placed on record documents evidencing ownership of 36 acres of agricultural land. On perusal of these documents, it appears that the assessee indeed owns agricultural land, and therefore, the claim of agricultural income cannot be outrightly rejected without proper verification. We are conscious of the fact that the assessee did not avail opportunities earlier. However, given the nature of the issue and to uphold the principles of natural justice, we are of the view that one final opportunity should be granted to the assessee to substantiate his claim. Accordingly, we deem it fit to set aside the impugned order and remit the matter back to the file of the Ld. AO for fresh adjudication. The Ld. AO shall provide adequate opportunity of being heard to the assessee and also permit the assessee to file necessary explanations and supporting documentary evidences in respect of ownership of land, conduct of agricultural operations, and expenses incurred. The assessee is also directed to cooperate with the proceedings and file evidences promptly.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 26th Aug., 2025.