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Facts
The appellant, an individual, disclosed agricultural income of Rs. 26,07,285/- and other income for AY 2017-18. The Assessing Officer, under Section 143(3), added 50% of the agricultural income, disbelieving it, which was subsequently confirmed by the CIT(A).
Held
The Tribunal observed that the AO made the addition without rejecting the assessee's books of account and without clarifying if the agricultural income was shown as application of income. The ITAT ruled that the AO was not justified in making the addition in these circumstances and set aside the matter to the CIT(A) for de novo consideration after providing the assessee a reasonable opportunity of hearing.
Key Issues
Whether the Assessing Officer can make an addition to agricultural income without rejecting the assessee's books of account and without proper clarification in the assessment order.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC, Delhi for Assessment Year (AY) 2017-18.
Brief facts of the case are that the appellant is an individual deriving income from agriculture and income from ‘other sources’. The return of income for AY 2017-18 was filed disclosing income of Rs. 4,10,070/- and agricultural income of Rs. 26,07,285/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-1(3), Thiruvananthapuram vide order dated 30.12.2019 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act). While doing so
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before us in the present appeal.
When the appeal was called nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, I proceeded to dispose of the appeal after hearing the learned Sr. DR.
In the grounds of appeal the assessee submitted that the AO ought not have made addition of 50% of agricultural income, inasmuch as, the agricultural income is supported by the books of account and certificate from Revenue authorities of the village. Without rejecting the books of account AO ought not have made the addition. Assessee also placed reliance on the decision of the ITAT, Vishakhapatanam Bench in the case of Chandrasekhar Yerena v. ITO [2024] 166 taxmann.com 619 wherein the agricultural income offered by the assessee was accepted based on the certificate issued by the Village Revenue Officer. Thus, he submitted that the AO was not justified in making the addition.
On the other hand, the learned Sr. DR opposed the submissions of the assessee.
I heard the learned Sr. DR and perused the material on record. The AO made addition of 50% of the agricultural income shown by the assessee. From the perusal of assessment order it is not clear whether the Jyothikumar Bhaskaran Sarojiniamma Nair agricultural income was shown as application of income. In the absence of application of income the question of addition does not arise. Undisputedly, the assessee maintained books of accounts. Without rejecting the books of account the AO was not justified in making addition disbelieving agricultural income. Therefore, the matter is set aside to the file of the CIT(A) to decide the appeal in accordance with law after affording reasonable opportunity of hearing to the appellant reasonable opportunity of hearing to the assessee.
In the result, the appeal filed by the assessee stands partly allowed.
Order pronounced in the open court on 10th February, 2025. 10.