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Facts
The assessee declared agricultural income of Rs. 6,06,643/- for A.Y. 2012-13. A search under Section 132 of the Income Tax Act, 1961, was conducted, and the Assessing Officer (AO) disallowed the claimed agricultural income, considering it as income from other sources. The AO noted a lack of details regarding crop cultivation, purchasers of produce, and suspicious cash transactions.
Held
The Tribunal held that the assessee failed to prove the genuineness of its agricultural income claim for both A.Y. 2011-12 and A.Y. 2012-13. The previous year's addition remained unchallenged, and the current year showed a significant jump in income without supporting evidence. The Tribunal found the claim to be a ploy to launder unaccounted money.
Key Issues
Whether the claimed agricultural income is genuine and supported by evidence, and if the addition made by the AO and confirmed by the CIT(A) is justified.
Sections Cited
132, 2(1A)
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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO, HON’BLE & SHRI K.M. ROY, HON’BLE ACCOUNTANT, MEMBER
PER K.M. ROY, ACCOUNTANT MEMBER Assessee has filed the appeal challenging impugned order passed by the learned Commissioner of Income Tax (Appeals) – 3, Nagpur [hereinafter in short “Ld.CIT(A)”] vide Order No. CIT(A)-3/02/2015-16 dated 18.12.2017 for the 2012-13.
Assessee has raised following grounds in its appeal: - 2.
“1. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in maintaining addition of Rs. 6,06,643/- made by the AO on account of agricultural income.
Any other ground of appeal that may be raised at the time of hearing of the appeal.”
M/s. Mansa Agro Food Processing Pvt. Ltd.
Brief facts of the case are, search under section 132 of the Income Tax Act, 3. 1961 (in short “Act”) was carried out at the office premises of the company as well as the residential premises of the Directors and Family Members in the Group cases of M/s. Shree Agrawal Coal Pvt., Limited on 16.03.2011. Pursuant to search and seizure action under section 132 of the Act, the assessment was completed on 27.02.2015. Assessee declared agricultural income of Rs.6,06,643/-. Assessee owned 36.55 Acres of agricultural land and for the same 7/12 extract was submitted along with other evidences. No details in the form of crop cultivated, details of purchaser of agricultural produce were submitted, hence agricultural income claimed exempt was considered as income from other sources by the Assessing Officer.
Assessee carried the matter before Ld.CIT(A). Ld.CIT(A) confirmed the 4. assessment order on the ground that even for the A.Y. 2011-12 the addition on the same issue for an amount of Rs. 2,21,886/- was perpetuated on the ground of consistency. He sustained the addition by holding as follows: -
“4.1. The appellant during the course of appellate proceedings has submitted that in the earlier years similar issue in the case of the appellant for A.Y.2011-12 has been decided by CIT(A)-3, Nagpur vide order No.CIT(A) - 3/516/2012-13. The CIT(A) during the course of appellate proceedings for A.Y. 11-12 has dealt with this issue in the following manner: “…… 15. I have considered the assessment order, submission of assessee, remand report, assessee's response to the same. The assessee has shown total gross agricultural income of Rs.4,33,818/- and agricultural expenses of Rs.2,11,932/- The net agricultural income shown is Rs.2,21,886/- The assessee has submitted, in submission dated 26.11.2013 copies of the 7/12 extract of the agricultural land and the details of the agricultural income including the ledger account. It is M/s. Mansa Agro Food Processing Pvt. Ltd. seen from the ledger account submitted by the assessee that all the receipts are stated in cash as under: Date Mode Amount 28.10.2010 By Cash 1,97,218/- 05.02.2011 By Cash 1,65,450/- 31.03.2011 By Cash 1,75,000/- The issue was examined by the AO in the remand report submitted by the AO on 05.02.2014. The AO has stated that the assessee has not shown any expenses for seeds fertilizer, water, electricity, diesel, transportation etc. The AO has further reported that in some of the sale vouchers, phone numbers of the buyers are mentioned and almost all the phones are not in existence and some persons out of these have denied is stated that they have not purchased any agricultural produce from the assessee. The assessee has shown sale of 9.67 quintals of soyabean @ Rs. 2,450/- per quintal to Shri Rajesh Rambhau Podchelwar, commission agent by self made bill dated 05.02.2011. The AO recorded the statement of Shri Rajesh Rambhau Podchelwar during the remand proceedings u/s.
In statement that 26.12.2013, Shri Podchelwar has stated that he heard name of Shri Dharampal Agrawal but he did not know Shri Dharampal Agrawal and M/s Mansa Agro Food Processing Put. Ltd. In reply to Question No. 5 of the statement when the copy of above mentioned Bill No. Nil dated 05.02.2011 was shown by the AO to Shri Rajesh Rambhau Podchelwar, he has stated that after verifying to above sale bill dated 05.02.2011 I would like to say that nothing is truth in the above sale voucher. As I already told that I had never done work of sale and purchase of agriculture produce & soyabean. I do not know that from where my mobile No. is mentioned in above bill and this is not my signature?' The assessee's reply to the remand report is also considered in which the assessee has stated that the agricultural income cannot be held as fictitious only because of the statement of one party. The assessee has also stated that he sold the agricultural produce to small brokers or traders who had approached him. After considering the facts and circumstances, it is seen that the claim of agricultural income which is exempt from income tax does not appear to be genuine. All the sales are in cash and on self made vouchers/ bills and wherever phone numbers have been mentioned, they are not in existence. The party which attended before the AO during the remand proceedings has denied having purchased the agricultural produce from the assessee. The assessee has not been able to submit bills of expenses claimed to have been incurred in the agricultural operations. In the facts and circumstances stated above, the claim of agricultural income of Rs. 2,21,886/- made by the assessee is held as a ploy to launder his unaccounted money into the books as agricultural income which happens to be exempt from Income Tax. The addition of M/s. Mansa Agro Food Processing Pvt. Ltd.
Rs.2,21,886/- made by the AO is upheld and confirmed. The AO is accordingly directed" 4.2 I have gone through the assessment order, the grounds of appeal, written submission made by the appellant and the order of CIT(A) for A.Y.2011-12. Considering the AO's order, evidence on record and the view taken by my predecessor on the issue while deciding the issue of agricultural income for A.Y. 2011-12, I am of the considered view that the addition made by the AO deserves to be sustained. The CIT(A) while examining the issue for A.Y. 2011-12 has held that the claim of agricultural income of the appellant was not a genuine claim and has accordingly sustained the addition made by the AO for A.Y. 2011-12. I also find that there is a substantial jump in the agricultural income from Rs. 2,21,886/-in A.Y. 2011-12 to Rs. 6,06,643/- in A.Y. 2012-13. When the appellant could not justify his claim of agricultural income of Rs. 2,21,886/- then there is no ground for allowing claim of Rs.6,06,643/- in A.Y. 2012-13. Facts of the case remaining similar, I am inclined to agree with my predecessor. Accordingly, addition made by the AO amounting to Rs. 6,06,643/- is confirmed an upheld. This ground of appeal is accordingly dismissed.”
5. Before us, Ld. Authorized Representative (in short “Ld.AR”) vehemently submitted that the agricultural income is subject to variation due to Monsoon, climatic conditions and other factors. The ownership of the land is never disputed. Just because there is quantum rise in the agricultural income the same cannot be doubted. He accordingly, prayed that the addition be deleted.
6. Per contra, Ld. CIT(DR) (in short “Ld.DR”) strongly pressed that in the absence of corroborative evidence regarding the performance of the agricultural activity the addition has been rightly made and no interference is called in the factual finding of two concurrent authorities.
We have heard both the sides. The crucial point i.e. emanating here is that the appellant has miserably failed to prove its claim of agricultural income not only this year but also for A.Y. 2011-12. Finding in the earlier year i.e., A.Y. 2011-12 was M/s. Mansa Agro Food Processing Pvt. Ltd. remained unchallenged as the Assessee has not carried the matter before the Tribunal, for reasons best known to them. When the issue has already reached finality or quietus for earlier year i.e. A.Y. 2011-12 and in the absence of any strong circumstances compelling us to take a different view, there is no reason to depart from the same subsequently. Ld.AR could hardly point out any iota or shred of evidence that the agricultural activity was carried out which could be demonstrated from authentic corroborative materials. Mere land holding does not guarantee generation of agricultural income unless the activities carried out in accordance with section 2(1A) of Income Tax Act, 1961. We are fully aware of the fact that each assessment year is separate but in view of the same facts permeating through two different assessment years, the assessee is estopped to challenge the addition in subsequent proceedings once he has extended his acquiescence to the fate of proceedings in earlier year. Accordingly, Grounds raised by the assessee are dismissed.
In the result, appeal of the Assessee is dismissed. 8.
Order pronounced in the open Court on 3rd March, 2025