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Income Tax Appellate Tribunal, BANGALORE BENCHES “B”, BANGALORE
Before: Shri George George K, JM & Shri B.R.Baskaran, AM
O R D E R
Per George George K, JM :
This appeal at the instance of the assessee is directed against CIT(A)’s order dated 05.12.2018. The relevant assessment year is 2015-2016.
The solitary issue raised is whether the CIT(A) has erred in confirming the order of Assessing Officer that a sum of Rs.18,63,086 is not agricultural income and added the same as total income.
The brief facts of the case are as follow: The assessee is an individual. He is essentially an agriculturist. For the assessment year 2015-2016, the return of income was filed on 07.03.2017 declaring total income of Rs.`NIL’ and agricultural income of Rs.23,50,000. The assessment was taken up for scrutiny by issuance of notice u/s 143(2) of the I.T.Act. The assessment u/s 143(3) of the I.T.Act was completed vide order dated 28.12.2017 by disbelieving a sum of Rs.18,63,086 as agricultural income and adding the same to the total assessable income of the assessee. The relevant finding of the A.O. in making the above addition reads as follow:-
“4. On verification of the details furnished by the assessee, it is noticed that, the assessee has made deposit of Rs.18,84,000/- during the year in Vijaya Bank, Nallur and stated that the cash deposits are from out of the agricultural income. On verification of the RTC it is noticed that the land holdings are jointly held with others, and accordingly a proposition letter was sent to the assessee dated 19/12/2017, proposing to complete the assessment by bringing to tax the following discrepancies noticed with respect to the land holdings:
Sr. Survey Extent Nature Quantity Date Total Expenses Net Disallowable No. of of Grown of amount Amount income is Land crops (Quintal) sale received proposed to be Grown brought to tax 1 12 3.00 Area 36 2014- 12,96,000 3,88,800 9,07,200 The land 15 holding is in joint name and only 50% of the same can be allowed in your hands, accordingly, a sum of Rs.4,53,600 is proposed to be brought to tax as non agricultural income. 2. 53 2.00 Area 24 2014- 8,64,000 2,59,200 6,04,800 The land has 15 been purchased on 1.9.2016 and accordingly a sum of Rs.6,04,800 is proposed to be brought to tax as non agricultural income 3. 53 7.36 Maze 350 2014- 4,20,000 1,86,800 2,33,200 The land 15 holding is held by 7 persons and accordingly
Sri.Munawar Baig. 1/7th part of the amount aggregating to Rs.33,314 can be allowed and the balance of Rs.1,99,886 is proposed to be brought to tax as non agricultural income 4. 64 3.28 Area 25 2014- 9,00,000 2,95,200 6,04,800 Since the and 15 holding is not held by you, the sum of Rs.6,04,800 is proposed to be brought to tax as non agricultural income. Total 16.24 435 34,80,000 11,30,000 23,50,000 Total Quintals disallowance out of Agricultural Income Rs.18,63,086.
In response to the above proposition the submitted vide his submission dated 29.12.2017, he had stated that the sources for the said cash deposit are out of agricultural income, out of land belongs to my family and my relatives, which is not acceptable since the RTC clearly mentions land holdings and the assessee is one of the joint member in the said lands and accordingly the proposition was made to the assessee with respect to the proposed disallowance of Rs.18,63,086/- from the agricultural income returned aggregating to Rs.23,50,000/-. Further, in the submission discussed above the assessee has furnished the details of other agricultural lands which were not shown in the earlier submissions, but failed to produce further necessary evidences with respect to the agricultural activities carried on.
In the absence of the evidences with respect to the sale of agricultural produce and due to the nature of land holdings as discussed above a sum of Rs.18,63,086/- is brought to tax as undisclosed income from other sources and camouflaged as agricultural income and the claim of agricultural income of Rs.23,50,000/- is restricted to Rs.4,86,914/-.
Accordingly, the assessment in this case is concluded by adding to the returned income a sum of Rs.18,64,086/- and the claim of agricultural income of Rs.23,50,000/- is restricted to Rs.4,86,914/-.”
Sri.Munawar Baig. 4. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal to the first appellate authority. The CIT(A) confirmed the view taken by the Assessing Officer. The relevant finding of the CIT(A) reads as follow:-
5. During the appellate proceedings, the AR has furnished copies of RTCs which were produced before the A.O. during assessment proceedings and which are already examined by the AO. I have also perused the copies of RTCs and find that the land holdings are joint held by the appellant with others. But for the copies of RTCs no other details are produced to explain sources for cash deposit of Rs.18,63,086/- in to the Bank. The AO has in detail verified the submissions made and finally in the absence of proper evidences with respect of sale of agricultural produce and on the basis of land holdings, has considered Rs.18,63,086/- as undisclosed income which was camouflaged as agricultural income. In view of the above facts and circumstances, I hold that the order of the AO needs no interference and thus, the grounds fail.
5. Aggrieved by the order of the CIT(A), the assessee has preferred this appeal to the Tribunal. The assessee has filed additional evidence in the form of affidavit from persons from whom the assessee had taken land on lease for agricultural operation. The assessee has also filed a petition for admission of additional evidence. The paper book has been filed on behalf of the assessee running into 40 pages inter alia enclosing the statement of total income for assessment year 2015-2016, the notices received from the Assessing Officer, the reply filed by the assessee, English translation of RTC, the lease agreement entered into between the assessee and the land owners. It was submitted that the lease agreement and RTC were produced before the Assessing Officer and the CIT(A). It was submitted that only the additional evidence filed before the Tribunal is Sri.Munawar Baig. with regard to the affidavit of the land owners, which is clearly stated that the assessee had taken their land on lease and has undertaken agricultural operations and paid to the land owners a fixed rental amount. The learned AR submitted that the additional evidence goes to the root of the issue and the same may be taken on record and the appeal may be adjudicated based on the additional evidence now produced.
6. The learned Departmental Representative, on the other hand, strongly supported the orders of the Assessing Officer and the CIT(A).
We have heard the rival submissions and perused the material on record. The assessee is essentially an agriculturist. In respect of certain agricultural land, the assessee is a co- owner. In respect of some other agricultural lands, it is claimed that the assessee had taken the same on lease and carried on agricultural operations on the same. The land taken on lease from others are belonging to close relatives of the assessee like mother, grandfather, brothers, cousins etc. The details of the land and the assessee’s share therein are given below:-
Survey No. Acre Assessee’s share 12 3 50% 53 2 Belongs to another person. The assessee had taken the land on lease and carried out the actual agricultural operations. Assessee is 1/7th owner 54 7 acres 36 guntas 64 3 acres 28 guntas Belongs to another person. The assessee had taken the land on lease and carried out the actual agricultural operations. Total 16 acres 24 guntas
Sri.Munawar Baig. 7.1 The Assessing Officer held in respect of Survey Nos.12 and 54, that he would allow only agricultural income proportionate to the assessee’s share. In respect of Survey Nos.53 and 64, he held that no portion of the land declaring as agricultural income would be allowed as the assessee was not the owner of the said land. Therefore, he made the additions as under:-
Survey No. Amount added as non- agricultural income (Rs.) 12 4,53,600 53 6,04,800 54 1,99,886 64 6,04,800 7.2 The CIT(A) had confirmed the addition made by the Assessing Officer.
7.3 The assessee has now produced additional evidence in the form of affidavit from the persons (who are close relatives of the assessee), which clearly states that the assessee had taken their property on lease, carried on agricultural operations and has paid them lease rentals. The assessee had produced the RTC, and lease agreements etc. before the Assessing Officer and the CIT(A). The additional evidence now produced goes to further support the assessee’s plea that the lands belonging to others (close relatives of assessee) were taken on lease and they were paid lease rentals. The above affidavit now filed before the Tribunal as additional evidence goes to the root of the issue and in the interest of justice, equity and substantial cause we admit the same on record. Since the additional evidence is Sri.Munawar Baig. taken on record, the matter needs to be examined de novo by the Assessing Officer. Accordingly, this appeal is restored to the file of the A.O. The A.O. shall examine the additional evidence now taken on record. The assessee shall prove before the A.O. that he had taken land on lease from his relatives and had carried on agricultural operations on it. The assessee shall prove that he had earned net income out of the above said agricultural operation, a sum of Rs.23,50,000. The assessee shall cooperate with the Department and shall produce the necessary documents / evidence called for. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purposes.