MANISH ISHWARBAHI PATEL,VADODARA vs. ITO, WARD 3(1)(4), VADODARA
Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHAAssessment Year: 2020-21
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER: This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi (in short “the CIT(A)”) dated 01.07.2025 for the Assessment Year (A.Y.) 2020-21 in the proceeding under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. The brief facts of the case are that the assessee had filed his return of income for the A.Y. 2020-21 on 09.11.2020 declaring Nil income. The case was selected for scrutiny under CASS. The Assessing Officer noticed that the assessee had disclosed agricultural income of Rs.51,43,825/-. In the course of assessment, the Assessing Officer had made enquiries in this regard but was not satisfied with the genuineness of the agricultural income as disclosed. Accordingly, the entire agricultural income of Rs.51,43,825/- was treated as unexplained and added to the income. The assessment was completed under Section 143(3) of the Act on 21.09.2022 at a total income of Rs.51,43,825/-. 3. Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the first appellate authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. 4. The assessee is now in second appeal before us. The following grounds have been taken in this appeal: “1. The learned CIT(Appeals) erred in law and on facts in confirming the rejection of claim of the Appellant for net agricultural income of Rs.51,43,825/- as decided by the learned Assessing Officer inspite of the fact that the Appellant had adduced all the evidences to justify the claim of exemption in respect of the said agricultural income. It is submitted that it be so held now and the exemption of agricultural income denied by the learned Assessing Officer and as confirmed by learned CIT(Appeals) be restored to the Appellant.
The learned CIT(Appeals) erred in confirming the rejection of claim of exemption in respect of net agricultural income of Rs.51,43,825/- inspite of the Appellant pointing out that in the past, the said agricultural income has been accepted by the Department, and hence, following the ratio of Hon'ble Supreme Court in the case of Radhasaomi Satsang vs. CIT 193 ITR 321, where the facts are identical, the said exemption has to be granted following the rule of consistency.
The learned Assessing Officer erred in converting exempt net agricultural income claimed by the Appellant of Rs.51,43,825/- as income from unexplained source u/s.68 and taxing the same u/s.115BBE of the Act. The learned CIT(Appeals) erred in confirming the same. It is submitted that in the facts and circumstances of the case and without prejudice to the main contention that such exemption of agricultural income cannot be denied to the Appellant, the learned CIT(Appeals) should not have upheld the stand of the learned Assessing Officer to consider the said income u/s.68 of the Act and taxing the same u/s.115BBE of the Act.
The appellant reserves the right to add, alter or amend any of the grounds of appeal.”
Shri Sanjay R. Shah, Ld. AR of the assessee, explained that the assessee is a farmer owning land admeasuring 58.48 acres in his village. He explained that the assessee has been disclosing agricultural income all along in his return which was accepted by the Department in the past. According to the Ld. AR, the assessee is involved in cultivation and selling of grass crop named “Sundhiyu” which is used by shepherds for feeding animals. He explained that Sundhiyu crop is a special kind of crop which re-grows after cutting and can be sold 5 to 7 times within a short span of 20 to 30 days. The assessee had sold the agricultural produce of Sundhiyu locally to the shepherds in cash and no transportation cost was incurred as the shepherds themselves had collected and transported the grass. The Ld. AR submitted that considering this fact, the Assessing evidence for sale of other agricultural products or incurring of any agricultural expense was brought on record by the assessee. He further submitted that the assessee was only a co-owner of the land and the entire agricultural income could not have been disclosed by the assessee all along. The Ld. Sr. DR has drawn our attention on various factors recorded by the Ld. CIT(A) in para 5.7 of the order for confirming the addition. He, therefore, supported the orders of the lower authorities. 7. We have considered the rival submissions. The contention of the assessee is that he was owner of the land admeasuring 58.48 acres located in his village. The details of agricultural land holding in Form No.7 and Form No.12 has been brought on record in the paper-book filed by the assessee. It is found therefrom that as the assessee was only co- owner of the land. The contention of the assessee is that the entire land holding was cultivated by the assessee only and accordingly he had disclosed the entire agricultural income in his hands. However, no evidence has been brought on record to establish that the other co-owners did not disclose any agricultural income. It is further found that apart from Sundhiyu, other crops such as “Sargawan”, “Cotton”, “Juwar”, “Paddy”, “Castor” etc. were also grown on the land. Even if contention of the assessee that Sundhiyu was purchased by the shepherds at the site is accepted, the assessee should have brought on record the evidence of sale of other crops viz. cotton, juwar, paddy, castor etc. Merely because the agricultural income disclosed by the assessee in the past was accepted by the Department that cannot be a reason to accept the agricultural income disclosed by the assessee in the current year as correct. The onus was on the assessee to establish that he had earned agricultural income of Rs.51,43,825/- during the year by bringing on Manish Ishwarbhai Patel vs ITO Page 5 of 6
record proper evidences in this regard. It is also found that most of the land was non-irrigated. Therefore, the correctness of the agricultural income disclosed by the assessee was required to be critically examined.
Further, no documentary evidence in respect of agricultural expense incurred by the assessee was brought on record. At the same time,
Assessing Officer was not correct in treating the entire agricultural income of Rs,51,43, 825/- as unexplained. Considering the fact that the assessee had disclosed agricultural income in past in his return and had brought on record the evidence for land holding of 58.48 acres (in joint ownership), the action of the Assessing Officer in disallowing the entire agricultural income as unexplained, also can’t be upheld.
8. In view of the above facts, we deem it proper to set aside the matter to the file of the Juri ictional Assessing Officer with a direction to allow another opportunity to the assessee to explain the agricultural income disclosed by the assessee. The Assessing Officer is also directed to examine the land holding owned by the assessee and examine the correctness of the agricultural income derived therefrom. It should also be enquired whether any agricultural income was disclosed by the other co-owners of land. The assessee is also directed to make compliance before the Assessing Officer in the course of set aside proceeding and produce the details and documents as required by the Juri ictional
Assessing Officer. In case the assessee doesn’t comply in the set aside proceeding the JAO will have liberty to complete the assessment on the basis of the materials as available on record.
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