PATEL KALIDAS MEGHJIBHAI (HUF),SURAT vs. DCIT CIRCLE-3(2), SURAT

AO noticed that the assessee claimed ownership and lease of agricultural land and provided details of the crops grown, including cotton and cumin, however, supporting documents for land lease agreement and other evidence furnished by him were not found to be satisfactory by the AO. The assessee did not provide clear details of land leasing arrangements, expenditure on cultivation or sufficient documents like bills, vouchers or proof of sale transactions before the AO. The AO relied on the available data and comparison with average yield figures for the region and observed that the claimed cotton yield of 13,400 kg/hectare was significantly higher than the expected yields. Therefore, the agriculture income was assessed to a lower amount and the difference was added as income from other sources. After evaluating the available evidence and considering the discrepancies in the information provided, the agriculture income was assessed at Rs.8,37,436/-. The difference of Rs.11,82,890/- was added as income from undisclosed sources. Accordingly, order u/s.143(3) of the Act was

Aggrieved by the addition made in assessment order, assessee preferred appeal before the CIT(A). During appellate proceedings, the CIT(A) observed that the addition of Rs.11,82,890/- made by the AO appeared justified in the absence of corroborative evidence from the assessee to support the reported agricultural income. The CIT(A) also observed that the lack of clarity in the land lease arrangements, cultivation expenses and proof of sale transactions raised further concerns regarding the veracity of the reported agricultural income. In view of the same, the CIT(A) upheld the addition of Rs.11,82,890/- made by the AO and dismissed the appeal of the assessee.

Aggrieved by the order of CIT(A), assessee has filed present appeal before the Tribunal. The Ld. AR of the assessee furnished a paper book containing chart of agriculture land owned by the appellant and corresponding gross agriculture income earned for AY 2015-16, ROI and computation of income for the AY 2013- 14 to 2015-16, copy of assessment orders for AY 2013-14 and 2014-15 and certificate from the Talati of Patan Village dated 15.11.2017 and gist of case laws relied upon. The Ld. AR submitted that the appellant has been an agriculturist for several years and had reported substantial agricultural income consistently. The Ld. AR further stated that the total land owned by the appellant is 13.10 hectares, 4 15-16 Patel Kalidas Meghjibhai (HUF) with 6.07 hectares in Pata and 7.06 hectares in Ankleshwar. The gross agricultural income for the year was Rs.33,67,210/-, including income from cotton and cumin cultivation. After deducting expenses, the net agricultural income reported was Rs.20,20,326/-. The net agricultural income for the preceding two years was Rs.29,78,007/- for AY 2013-14 and Rs.47,95,158/- for AY 2014-15. The Ld. AR contended that the consistent reporting of agricultural income establishes the credibility of the income reported in AY 2015-16. It is further contended that during the assessment proceedings, the AO estimated the cotton yield to be higher than expected on the basis of a report from the department of agriculture and hence, treated Rs.11,82,890/- of agricultural income as income from other sources. The Ld. AR contended that in Gujarat, variety of cotton is cultivated with varying yields depending on land fertility and cotton variety and he clarified that the reported yield of 833 kg. per hectare is an average yield for the cotton varieties grown. It is also submitted that the cotton yield is influenced by factors such as land quality and cultivation techniques and that the appellant employed advanced irrigation and cultivation techniques to enhance the yield. The Ld. AR stated that the appellant has furnished a certificate from the Talati of Patan confirming the reported yield of 130 man per vingha for the crops cultivated. Besides, additional supporting documents, such as Form 7/12, land lease 6.1 The Ld. AR also submitted that the addition made by the AO is based solely on an estimation without any supporting evidence and that the AO relied on the report from the Department of Agriculture to estimate the yield, but did not consider the detailed documentation provided by the appellant during the assessment proceedings. In addition to this, the Ld. AR also submitted that the assessment in case of assessee for AYs 2013-14 and 2014-15 were concluded without any addition to the agricultural income reported. In both these years, higher agricultural income was accepted by the AO. The Ld. AR relied on the decision of jurisdictional High Court in the case of DCIT vs. Gujarat Narmada Valley Fertilizers Co. Ltd.(2013) 33 taxmann.com 265 (Guj), which upheld the principle of consistency in tax matters. Reliance was also placed on the decision of the Hon’ble Allahabad High Court in the case of CIT vs. Landmark Innovation (P.) Ltd.[2013] 38 taxmann.com 217 (Allahabad), which supported the view that agricultural income from the same land, accepted in previous year, cannot be disputed in subsequent years without new evidence. In view of the above, the Ld. AR requested to delete the addition of Rs.11,82,890/- made by the AO as income from other sources.

We have heard both the parties and perused the materials available on record. We have also deliberated on the decisions relied upon by the Ld. AR. The CIT(A) has sustained addition of Rs.11,82,890/- by treating a part of the agricultural income as income from other sources on the ground that the assessee failed to substantiate the agricultural yield with supporting evidence. It is an undisputed fact that the assessee has been declaring agricultural income for several years and such income has been consistently accepted by the Department. The agricultural income of Rs.29,78,007/- and Rs.47,95,158/- declared in the immediately preceding years, i.e., AYs 2013-14 and 2014-15 were substantially higher than the agricultural income declared in the present AY. These two AYs were subjected to scrutiny assessment and in the assessment orders passed u/s 143(3) dated 27.01.2016 and 05.12.2016, the agricultural incomes shown by the appellant have been accepted without any adverse inference. Copies of the assessment orders are placed at pages 9 to 13 of the paper book. It is, therefore, clear that the assessee is not a first time agriculturist nor someone who has suddenly declared an inflated agricultural income in an isolated year. The principle of consistency, as recognized by several judicial fora 7 15-16 Patel Kalidas Meghjibhai (HUF) including the Hon’ble jurisdictional High Court, requires that once the department accepts a factual position in earlier years, the same should not be disturbed in subsequent year in the absence of material change in facts or emergence of contrary evidence. In the present case, there is no change in the cultivation pattern, land holdings, agricultural practices or crop type that would justify a deviation from past accepted assessments. In the absence of such change, the departure from the accepted factual status by the AO and the CIT(A) from past result is not proper. The assessee has placed on record Form 7/12 extracts, details of land held in Ankleshwar and Patan aggregating to 13.10 hectares, land agreements, crop details, revenue records, sale bills and even a certificate from the Talati regarding the yield. These documents substantiate both ownership and cultivation. The AO has neither disproved nor doubted the genuineness of the land holdings or the agricultural activity undertaken. It is also not the case of the AO that the assessee had other non-agricultural sources of income which could justify the addition. The department has also not brought any material or evidence on record that the assessee had any undisclosed non- agricultural income which could justify the addition under the head “income from other sources.” Considering the totality of facts, the consistent past history of acceptance of agricultural income, documentary evidence furnished by the assessee, absence of any contrary material by the department, we are of the 15-16 Patel Kalidas Meghjibhai (HUF) considered opinion that the addition of Rs.11,82,890/- sustained by the CIT(A) cannot be upheld. Accordingly, ground raised by the appellant is allowed

In the result, the appeal is allowed. Order pronounced in accordance with Rule 34 of ITAT Rules, 1963 on 03/12/2025 in the open court.