JIGAR PATEL,AHMEDABAD vs. THE ITO, WARD-5(3)(1), AHMEDABAD

The brief facts of the case are that assessee e-filed his return of income on 31.07.2018 for the AY 2018-19 declaring total income at Rs.5,48,790/- and agriculture income of Rs.75,54,376/-. The case was selected for scrutiny under CASS under selection criteria “Agricultural Income”. In response to several statutory notices issued to the assessee to furnish details about the agricultural activities, the assessee’s representative Shri Shailesh C Parikh & Co. CAs submitted reply. The AO on examination of the entire case, came to the conclusion that for the year under consideration which witnessed widespread calamity i.e. Gujarat 2017 floods, the agricultural income cannot be more and the reply given by the assessee was nothing but a concocted story. The AO completed the assessment u/s.143(3) r.w.s 143(3A) & 143(3B) of the Act dated 18.03.2021, considering Rs.25,99,275/- as the agriculture income was held as income from the unexplained sources shown as agricultural income and Rs.49,55,101/- (i.e. Rs.75,54,376 – Rs.25,99,275) was treated as unexplained cash credit u/s.68 of the Act.

“…Having considered the factual matrix of the case, I find that during the year under consideration, the assessee had shown net agricultural income of Rs.75,54,376/- which was a three fold jump from the previous year’s agricultural income. It has been observed by the AO that the assessee has got 91 Vighas of agricultural land. Gujarat Agricultural Land ceiling Act 1960 does not apply to him. But before the AO, the assessee did not give details of crops grown and sought adjournments. However, he filed a computerized ledger extracts of CASH Agricultural income which gave an impression that throughout the year, the assessee grew same types of produce – vegetables of bitter gourd, bottle gourd, brinjal, lemon, tomato chilly. The said ledger shows sale of agricultural produce almost on a daily basis and of almost same degree. The AO required the assessee to explain the reasons as to how the net agricultural income of the previous year 2017-18 has grown three times to Rs.75,54,376/- from the corresponding figure of the preceding fiscal of Rs.25,99,275/- and other details. The assessee submitted that the rise in agricultural income was due to reduction in agricultural expenses from 76.6% in the FY 2016-17 to 43.94% in the relevant previous year. He attributed this reduction to cutting down cost, experiences gathered etc. the submissions of the assessee did not find favour with the AO. The AO found that during the year under consideration, the state of Gujarat witnessed heavy floods causing damage to crops. I find great force in the argument of the AO that three times hike in net agricultural income in a year and that too, in the year of natural calamity was unbelievable and unsupported by documents. No proof in this regard was submitted by the assessee during the assessment or appellate proceedings. The photos of vegetables submitted during the assessment proceedings do not rebutted the findings of the AO and this ground of appeal remain unsubstantiated. In the circumstances, I do not have any reason but to sustain the well reasoned and speaking order of the AO estimating the agricultural income of the assessee at Rs.25,99,275/- and holding the balance income of Rs.49,55,101/- (Rs.75,54,376 – Rs.25,99,275) as income from the unexplained sources shown as agricultural income and added u/s.68 of the Act…”

5. On going through the record before us and after examining the matter on merits, we hold that the explanation of the assessee that there has been hike in agricultural income by three times in the current year and expenses have gone down from 76% to 43% cannot be held to be reasonable, logical and acceptable. We are in agreement with the Ld. CIT(A)’s observation in confirming the addition on merits of the case.