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Facts
Bhupinder Singh Sidhu HUF declared Rs. 37,00,000 as net agricultural income for A.Y. 2020-21 from 40 acres of land, with sales and expenses transacted through banking channels. The Assessing Officer rejected the declared income, estimated agricultural income at Rs. 10,00,000 (Rs. 25,000 per acre), and added the difference of Rs. 27,00,000 as unexplained income under Section 69A of the I.T. Act, 1961, which was confirmed by the CIT(A). The assessee consistently filed returns showing agricultural income and provided documentary evidence including land records, sale agreements, and bank statements.
Held
The Tribunal found no justification for the Assessing Officer's estimation of agricultural income. It noted that the assessee had provided copies of agreements for the sale of 'kinnow' fruits and bank statements demonstrating the receipt of sale proceeds through banking channels. Since the AO had not disputed the land ownership or previous assessments under Section 143(3), the additions made by the AO and confirmed by the CIT(A) were deemed unsustainable.
Key Issues
Whether the estimation of agricultural income by the Assessing Officer was justified despite documentary evidence of sales and expenses through banking channels, and whether the addition of the difference as unexplained income under Section 69A was sustainable.
Sections Cited
143(1), 143(2), 143(3), 69A, 115BBE
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Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH
Before: SHRI LALIET KUMAR & SHRI KRINWANT SAHAY
Order Per Krinwant Sahay, AM: Appeal in this case has been filed by the assessee against the order dated 4.7.2025 passed by the Ld. Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi for A.Y. 2020-21.
2. Grounds of appeal are as under:
1. 1. That the order of Assessing Officer as upheld by the CIT(A) is bad in law and is beyond all the cannons of law and justice.
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2. That the order of the Assessing Officer as upheld by the CIT(A) estimating the income from 40 acrs of agricultural land at Rs 1000000/- against the net returned agriculture income at Rs 3700000/- (Rs. 6000000/-, Rs. 2300000/- expenses) more so when the receipts and expenses are all through the banking channels is bad in law and needs to be set aside.
3. That the order of the Assessing Officer as upheld by the CIT(A) is against the accepted norms in the previous years as well as in the subsequent years is bad in law and needs to be set aside.
4. That the appellant craves leave to add or delete any of the grounds of appeals at any time before the appeal is finally heard and decided.
Brief facts of the case, as per the order of the Ld. CIT(A), are as under: - “3.1 In this case, the assessee has e-filed his return of income on 30.09.2020 declaring total income at Rs. NIL. The return of income was processed u/s.143 (1) of the Income Tax Act, 1961. Thereafter, the case was selected for scrutiny assessment under the category CASS. The case was selected for scrutiny assessment under the category CASS 1024/Chd/2025 Bhupinder Singh Sidhu (HUF), Mohali 3 "agriculture income". Accordingly, notice uls 143(2) of the Income-tax Act, 1961 dated 29.06.2021 was issued and duly served upon the assessee electronically. Vide above mentioned notices/ show cause notices the Assessee was asked to furnish details of agricultural income. The reply of assessee was examined carefully. As per the AO, the assessee has been given ample opportunities to come forward and submit the justification/submission with documentary evidences but the same has remained to be un-complied with, hence, the AO, had no alternate option but to decide the issues emerges from the record. 3.2 As per information available with the AO, the assessee had received "Agriculture Income" amounting to Rs.60,00,000/- and claimed expenditure thereupon of Rs.23,00,000/- during the F.Y. 2019-20 relevant to A.Y. 2020- 21. Assessee was asked to file vide notice from time-to-time documentary evidences with regard to the amount of agriculture income and expenses on such activities. On the basis of details / replies filed by the assessee it was seen that during the year under consideration, the assessee Hindu Undivided Family claimed to be the owner of agriculture lands measuring around 40 Acres, out of which 9 acres of land is in the name of Karta Shri Bhupinder Singh Sindhu and remaining 31 Acres are in the name of two sons namely Shri Gurrattan Singh and Shri Navrattan Singh. The assessee HUF claimed to have 1024/Chd/2025 Bhupinder Singh Sidhu (HUF), Mohali 4 entered into two lease arrangement with Krishan Lal Setia Slo Sh. Hansraj and Sh. Sunil Kumar S/o Sh. Kishor Kumar, and Shivam Setia S/o Sh. Lalit Setia. The assessee HUF has claimed to have received agriculture income by way sale of fruit crops to two lease agreement parties with whom they are having arrangement to sale such fruit crops to the tune of Rs.60,00,000. It was also, claimed that the share of the assessee HUF in such receipts is 2/3 of total receipts and 1/3 pertains to lease agreement holder parties: The assessee HUF has shown and claimed expenses to the tune of Rs 28,00,000 as against such agriculture receipts of Rs.60,00,000. It was also, claimed that the assessee HUF is having 2/3 share in total expenses incurred on agriculture activities and remaining 1/3 pertains to lease holder parties. Thus, net agriculture income agriculture income shown and claimed by the assessee HUF was Rs.37,00,000 (Rs.60,00,000 minus Rs.23,00,000). 3.3 On perusal of translated Jamabandi (Khasra) nakals by the AO, it was revealed that the lands are in the name of Shri Bhupinder Singh Sindhu and his father, his brothers, his sons and various other family members. Such copies also, reveals that the lands are old and same were in the name of father and grand- father of Shri Bhupinder Singh Sindhu. Copies of Jamabandi (Khasra) nakals does not contain any details with regard to type of crops taken on such lands and the assessee 1024/Chd/2025 Bhupinder Singh Sidhu (HUF), Mohali 5 HUF has not bothered to file any such details even after specific query in this regard from time-to-time. The lease agreements do not contain any address or PAN details of lease holder parties. Even after specific query in this regard, the assessee HUF has not provided such details and in absence of such details no inquiry with lease holder parties could be made by the AO. 3.4 As per the AO, assessee has shown total receipts of Rs.32,35,600/- whereas the assessee should have received Rs.35,75,000/- from Kishan lal & Sunil Kumar and Rs.26,75,000/- from Shivam Setia totaling to Rs. 62,50,000/-, as mentioned in the Lease agreement. Further on perusal of his ITR it was seen that the assessee has shown agricultural receipts of Rs.60,00,000/-. However, no satisfactory explanation along with supporting documents has been furnished by assessee to justify his claim. The assessee submitted vide reply dated 05/03/2022 that the expenses claimed at Rs.23,00,000/- has been paid through his bank account. But the assessee has not furnished any supporting evidence/documents mentioning the bank account, date of payment, name of party and details of items for which expenses on agriculture has been incurred at Rs.23,00,000/-. From the above stated facts it was evident that the assessee HUF has failed to justify that the lands are actually held in the capacity of assessee HUF itself 1024/Chd/2025 Bhupinder Singh Sidhu (HUF), Mohali 6 and income there from was shown only in the hands of assessee HUF and not in the hands of any other family members. Also, from the perusal of lease agreements, wherein there is no mention of sharing of any expenditure amongst the parties to the agreement and in the absence claim of expenses remains to be justified in the hands of the Assessee HUF. 3.5 In view of the above discussion by the AO, the whole of the agriculture income as shown and claimed by the Assessee HUF at Rs.60,00,000 could not be accepted and similarly, expenses so claimed at Rs.23,00,000 also, cannot be accepted fully as being incurred by the assessee HUF for earning agriculture income. Thus, to keep the principles of natural justice in consideration and material available on records only way was to estimate the income from agriculture activities. It was worth to mention there that there are various judicial pronouncement, which also allows the AO to estimate the income from agriculture activity at the rate of Rs.25,000/- per acre. As the assessee has been found to have 40 acre agriculture land (9 acre in his own name and 31 acre on his sons name), hence, income from agriculture activities were estimated at Rs.10,00,000 net of expenditure and remaining amount of net agriculture income shown and claimed by the assessee HUF at Rs.27,00,000/- (Rs.37,00,000 minus Rs. 10,00,000) was treated as income from some undisclosed sources and added back in the hands of the assessee HUF u/s 69A of the 1024/Chd/2025 Bhupinder Singh Sidhu (HUF), Mohali 7 1.T.Act, 1961 under head unexplained money/cash, which will governed through section 115BBE of the Act.”
The Ld. CIT(A) in his appellate order has confirmed the action of the Assessing Officer without considering the submissions filed by the Assessee.
Although the Assessee has filed appeal on four 5. grounds but the main ground is as under: - “3. That the order of the Assessing Officer as upheld by the CIT(A) is against the accepted norms in the previous years as well as in the subsequent years is bad in law and needs to be set aside.”
During proceedings before us, Ld. Counsel for the Assessee has filed brief written submissions which is reproduced as under:
That the appellant is a regular assessee and has filed its returns of income since the assessment year 1984-85. The perusal of the record would reveal that the only-source of income of the appellant is interest income from the bank deposits and agricultural 1024/Chd/2025 Bhupinder Singh Sidhu (HUF), Mohali 8 income. There is no other source of income. The returns filed by the appellant has been accepted both under section 143(1) and also under section 143(3) of the income tax Act. Copies of the returns filed for the assessment year 2015-2016 onwards has been placed in the paper book. A copy of the return filed for the year under consideration shows that the gross total income of the appellant was Rs. 6000000/-and after deducting expenses of RS23 00000/- net agricultural income has been declared at Rs. 3700000/-. During the course of assessment proceedings the appellant has filed copies of the jamabandi of the land owned by the HUF at 40 acrs out of which 9 acrs stands in the name of the karta and 31 acres stands in the name of 2 sons of the karta who are also coparcener of the HUF. The appellant during the assessment proceedings and appellate proceedings also filed copy of the khasra Girdawari of the land wherein the land has been shown a Garden for the reason that the land has treats of Kinnow fruits grown on the total land.
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That the appellant filed copies of the agreement for the sale of ‘kinnow’ entered into by the appellant with the byers who are having PAN and has transferred the amount of sale price of the fruits to the appellant through its bank accounts the details of which are contained in the bank statement and also in the order of assessment. Thus the sale proceeds of agricultural operations i.e sale of fruit has been held at Rs. 62.50 lacs against the returned income at Rs. 60.00. Although it is evident from the assessment records that the sale proceeds of the fruits has been received through banking channels which has been mentioned in the order of assessment. The AO has inspite of this fact has assessed the income from sale of fruits at Rs 25000/- per acres which is on estimated basis. AO has not disputed the land. AO has not disputed the assessment completed u/s 143(3) for the assessment year 2015-2016 and other assessment years. Thus, the estimation of the income in spite of the agreements, affidavit of the persons to whom the expenses has been paid that too through the banking channels is against the law and thus needs to set aside.
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3. That regarding the order of the CIT(A) it is submitted that the learned CIT(A) in para 5.3 has mentioned that in the Khasra Girdawari furnished by the appellant do not disclose the crop which in fact is incorrect because there is clear mention of the GARDEN in the respective column. Further, he has although examined the agreements for the sale of Kinnow and pointed out that the PAN of the purchasers have not been provided which fact is evident from the perusal of para 5.02. The PAN of the purchases has been mentioned in the submissions filed by the appellant which are reproduced in the order of the CIT(A) at page 9 of the order and copies also filed as is mentioned in the written submissions. The CIT(A) has also incorrectly brushed aside the submissions of the appellant regarding acceptance of the income in earlier years and subsequent years vide para 5.5. Thus the order of the CIT(A) upholding the order of the AO is bad in law and needs to be set-aside. He also argued the case at length on the basis of facts mentioned in the written submissions.
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Per Contra, the ld. DR relied on the orders of the authorities below.
We have considered the findings given by the Assessing Officer in the assessment order and the appellate order passed by the CIT(A). We find that it is basically a case based on facts. In fact, the Assessee has been filing its returns of income for the last many decades showing its source of income from interest on bank deposits and agricultural income. There is neither any increase or decrease of land holding which is clear from the Jamabandi Khasra and Girdawari filed by the Assessee before the lower authorities. There is also no change in the format or structure of the HUF, where the Assessee is a co-partner. The AO has doubted the expenditure incurred by the Assessee without bringing anything on record. Similarly, the estimation of income from sale of fruit i.e.’Kinnow’ has not been accepted although the Assessee has already entered into an agreement to sell Kinnow to a party and copies of agreement along with evidence of receipt of sale proceedings through the 1024/Chd/2025 Bhupinder Singh Sidhu (HUF), Mohali 12 banking channels were produced before the Assessing Officer as well as before the Ld. CIT(A). All such documents are available on record.
We do not find any reason for the Assessing Officer to make estimation of agricultural income of the HUF, as the copy of agreement to sale the agricultural produce has been filed. We have also gone through the land documents filed by the Assessee. We have also seen copy of agreement to sell ‘Kinnow” to its buyers and finally we have gone through the copies of the bank account filed by the Assessee showing receipt of income through banking channels.
9. After taking into consideration all the material available on record, we do not find any justification for making estimation of the agricultural income by the Assessing Officer and its confirmation by the Ld. CIT(A). Therefore, the additions made on this account and its confirmation by the Ld. CIT(A) are not sustainable. Accordingly, Assessee’s appeal on this issue is allowed.
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In the result, appeal of the Assessee is allowed.
Order pronounced on 29.10.2025.