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Facts
The assessee declared agricultural income of Rs. 21,33,000/- as exempt under Section 10(1) of the Act. The Assessing Officer disallowed Rs. 5,30,252/-, treating it as unexplained cash credit under Section 68, based on an investigation and average orange production data from agricultural authorities. The Ld. Commissioner (CIT(A)) upheld the AO's addition.
Held
The Tribunal found that the AO's addition was based on assumptions and presumptions, ignoring the extensive evidence submitted by the assessee, including details of agricultural income/expenditure, land records, sale receipts, and reports from the Taluka Agriculture Officer. The Tribunal emphasized that agricultural produce quantity is dependent on various factors and cannot be determined by a 'straight jacket formula', thus deleting the addition.
Key Issues
Whether the disallowance of a portion of agricultural income claimed as exempt under Section 10(1) and its addition as unexplained cash credit under Section 68, based on average production data and without proper consideration of the assessee's specific evidence, was justified.
Sections Cited
10(1), 68, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, NAGPUR BENCH “SMC”, NAGPUR
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 25.02.2025, impugned herein, passed by the ADDL/JCIT (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2014-15.
In this case, the Assessee by filing his return of income disclosed agricultural income of Rs.21,33,000/- and claimed the same as exempt u/s 10(1) of the Act. However, the Assessing Officer (AO) disallowed the amount of Rs.5,30,252/- and added the same as unexplained cash credit u/s 68 of the Act in the income of the Assessee mainly by holding that exempt income claimed by the Assessee was in excess of actual income earned by him. The AO came to such finding on conducting the investigation and by calling for report from the Authorities of Agricultural Department of Government of Maharashtra, on the spot and local enquiry by inspector attached to his office and examining the final documents and details related to farming of the specific produces.
The Assessee, being aggrieved, challenged the said addition before the Ld. Commissioner, however, could not get any relief, as the Ld. Commissioner by dismissing the appeal of the Assessee affirmed the addition made by the AO. Thus, the Assessee being aggrieved has preferred instant appeal.
Heard the parties and perused the material available on record. It appears from the assessment order that the AO before coming to the conclusion and/or making the addition of Rs.5,30,252/- mainly relied on average production for F.Y. 2013-14 for orange as provided by Taluka Krishi Adhikari, Chandur Bazar to the tune of 9 to 14 metric tonnes per hectare in the Taluka, where agriculture land is situated. Further, the AO also relied on the report of the Taluka Agriculture Officer, Warud, which is adjoining talukas and very famous for cultivation of orange and construed that selling price of orange from Warud Taluk is more than the other area, in case of Assessee’s highest selling price of orange is taken as sale consideration.
This Court has given thoughtful considerations to the peculiar facts and circumstances of the case. Admittedly, the Assessee before the authorities below has submitted the details of the agricultural income and expenditure, copy of agricultural land holding and receipt of land revenue, copies of extract of 7/12, copy of receipts of sale of grains, copy of sale of orange fruits and receipt and the letter of Taluka Agriculture Officer, Chandur Bazar, wherein such officer has specified the agricultural produce of orange from 10 to 17 metric tonne per hectare. Further, the Assessee also submitted the report of Taluka Agriculture Officer dated 03.06.2016 in order to substantiate his claim. Further, the Assessee also produced the statements of Jayesh Sheshraoji Akotkar and Nilesh Vitthalrao Pardhi (agriculturists) in order to substantiate his claim. However, the AO by sidelining the said documents and statements, construed contrary just simply on the assumption and presumption. Admittedly, there cannot be any straight jacket formula for production of particular quantity of agricultural produce in a particular time, as the same depends on the seed quality, soil quality, weather condition, pesticides, water, care etc. and therefore on the aforesaid factors, the addition made and sustained, is liable to be deleted, thus the same is deleted.
In the result, the Assessee’s appeal is allowed.
Order is pronounced 24.09.2025 as per rule 34(5) of the Income Tax {Appellate Tribunal} Rule 1963.