PRAKASH CHAND,SHIMLA vs. INCOME TAX OFFICER, SHIMLA

Aforesaid appeal by assessee for Assessment Year (AY) 2018- 19 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 14-08-2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) r.w.s. 144B of the Act on 26-04-2021. The sole grievance of the assessee is confirmation of addition of agricultural expenditure u/s 69C for Rs.38.70 Lacs. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.

The assessee earns agricultural income from apple orchards. It claims that approx. 40% to 45% of sales from agricultural produce is expended towards this activity. However, the assessee could not furnish requisite documents and relevant bills to substantiate the same. Accordingly, the agricultural expenditure of Rs.38.70 Lacs as claimed by the assessee was held to be non-genuine and the same was added as unexplained expenditure u/s 69C. The assessee filed first appeal wherein the addition was confirmed against which the assessee is in further appeal before us.

The Ld. AR has placed on record computation of agricultural income. It could be seen that the assessee has earned gross agricultural income of Rs.86.01 Lacs and incurred various expenditure on account of labor charges, salary, packing charges, fertilizers & chemicals and finally, computed agricultural income of Rs.47.30 Lacs. The transaction-wise detail along with source of payment has also been furnished. In its reply to Ld. CIT(A) on 04-09-2024, the assessee had furnished details of agricultural expenditure along with Bank statements through which such expenditure was incurred. It was demonstrated that entire expenditure was routed through bank account of the assessee. It was further pointed out that the case of the assessee for AY 2020-21 was scrutinized on identical facts and the returned income was accepted by Ld. AO. However, these details have not, at all, been considered by Ld. CIT(A). Nevertheless, when all the expenditure has been routed through known sources of income, the same could not be held to be unexplained expenditure. The provisions of Sec.69C have no applicability to the facts of the present case since the only allegation of Ld. AO was that the expenditure was not genuine. The source of expenditure was never doubted. On these facts, the impugned addition could not be sustained on facts and hence, deleted. The Ld. AO is directed to re-compute the income of the assessee.