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Facts
The assessee, an individual, filed her return claiming agricultural income of Rs. 28,50,000 (gross Rs. 44,10,000, expenses Rs. 15,60,000). The AO disallowed this claim, treating the gross receipts as income from undisclosed sources, and the CIT(A) confirmed this order. The assessee appealed, arguing she owns agricultural land and has consistently earned accepted agricultural income.
Held
The Tribunal found that the lower authorities had not appreciated the facts of the case properly. Despite the assessee providing evidence of land ownership and agricultural activities, including certificates from revenue authorities and previous acceptance of such income, the AO and CIT(A) had confirmed the addition based on bank information about land use conversion and lack of specific bills for produce sale and expenses.
Key Issues
Whether the income claimed as agricultural income is indeed agricultural income, or income from undisclosed sources, given the land use conversion and lack of specific evidence presented by the assessee.
Sections Cited
10(1), 143(3), 143(2), 142(1), 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH, ‘F’: NEW DELHI
Before: MS. MADHUMITA ROY
ORDER PER AMITABH SHUKLA, AM,
The captioned appeal has been preferred by the assessee against order dated 24.09.2019 of Commissioner of Income Tax (Appeals)-34, New Delhi, [hereinafter referred to as ‘ld. CIT(A)] arising out of assessment order dated 22.03.2016 passed u/s 143(3) of the Income Tax Act, 1961 pertaining to Assessment Year 203-14. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
Assailing the order of the ld. CIT(A), the appellant has raised following grounds of appeal:-
1.1. That CIT(A) has erred in not accepting agricultural income amounting Rs.28,50,000 as income earned from agricultural activity and treating it income from undisclosed sources whereas the appellant is not engaged in any other business activities apart from agricultural activities 1.2. That CIT(A) has erred in sustaining disallowance of the entire expenses incurred for generating agricultural income amounting Rs.15,60,000 without understanding the facts of the case. 1.3. The CIT(A) has erred in accepting the fact put forth by Id AO that agricultural activity cannot be carried out on land the usage of which was changed to other purposes knowing statement was made without further investigating into the fact of the case, whereas the character of one of the land out of many lands was changed 1.4. The CIT(A) has erred in not appreciating the evidences shown to prove the nature of activities carried out by the appellant. 1.5. The learned CIT[A] ought to have appreciated that the appellant has been able to establish the ownership of large extent of agricultural lands, which are under cultivation and that the appellant has derived agricultural income for in past years. 1.6. The learned CIT[A] ought to have appreciated that the appellant has been able to establish that agricultural activities has taken place as apparent from assessment order page no 20 of ownership of large extent of agricultural lands, which are under cultivation and that the appellant has derived agricultural income for in past years 1.7. The CIT(A) has erred in accepting the wrong method adopted by Id AO to calculate the agricultural income which is merely based on presumption and surmises whereas the facts are not seen in totality.
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That CIT(A) has failed to appreciate that fact that ld. AO has not given enough opportunity of being heard in the course of assessment proceedings for the sake of natural justice.
That the Ld. CIT (A) has erred in ignoring the fact that even in immediate previous year i.e. (in Ass. Year 2012-13) appellant earned an agricultural income of Rs.27,00,000/-duly accepted by the department.
That the order passed by the CIT (Appeals)-XXXIV, Delhi is against the spirit of law & Facts of the case. 3. A perusal of the above grounds of appeal indicates that the principal dispute is regarding non-acceptance of agricultural income disclosed by the assessee and corresponding addition of Rs.44,10,000/- as income from undisclosed sources. Brief facts of the case are that the assessee is an individual and, for the year under consideration, had filed her return of income on 04.03.2014. The assessee claimed that she has been earning agricultural income for the past several years and has been consistently claiming exemption under section 10(1) of the Act. During the assessment year under consideration, the assessee earned net agricultural income of ₹28,50,000/- (i.e., gross agricultural receipts of ₹44,10,000/- less agricultural expenses of ₹15,60,000/-), which was duly disclosed in the return of income. The case of the assessee for AY 2013-14 was selected for scrutiny and notices under sections 143(2) and 142(1) of the Act were issued by the AO, which were duly complied with by the assessee from time to time. During the course of assessment proceedings, the assessee was called upon to furnish evidences in support of her claim of agricultural income. After considering the evidences filed, the ld. AO concluded that the Page 3 of 7 assessee was not the owner of the land from which agricultural income allegedly earned and proceeded to make impugned additions. The ld. CIT(A) confirmed the fundings of the AO. The assessee is in appeal before us contesting the impugned addition.
The ld. Counsel for the assessee, Shri Ved Jain, vehemently argued against the order of the lower authorities submitting that the entire addition is based upon misreading of the facts of the case. The ld. Counsel has filed a voluminous paper book in support of its contentions. It was submitted that all the documents filed before us were available before the lower authorities and no new evidences has been filed. The ld. Counsel argued that the assessee is only engaged an agricultural activity and which remains her solitary source of income. The ld. Counsel took us through the voluminous paper book so as to indicate the infirmity of conclusions drawn by the lower authorities on the issue that the assessee was not owning the agricultural land. By making vivid references to the evidences placed in a paper book as at pages nos.96, 135, 68 to 77, 78 to 94, 135 172, etc., it was alluded that the agriculture land was the ownership of the assessee and the conclusions drawn are therefore not correct. The ld counsel further submitted that in earlier years and following years also assessee has been offering agriculture income which stands accepted by the Department. No change of facts was reported. The ld. Counsel placed heavy reliance upon the certificate issued by Land Revenue Authorities to dispel any Page 4 of 7 doubts about land ownership in assessee’s hand and/or agricultural produce received therefrom.
Per Contra, the ld. DR placed heavy reliance upon the order lower authorities.
We have heard the rival submissions in the light of material placed on record. From the perusal of paper book and the reference made by the ld. Counsel, we are of the considered view that the inference drawn by lower authorities are not based upon correct appreciation of the facts of the case. We have noted that the ld. CIT(A) has given relief to the assessee observing as under on page-5 of her order
“5.3 I have considered the facts of the case, finding of the AO and submissions of the appellant. The appellant filed her return for the year declaring income of Rs.7,70,640/- on 04.03.2014 including an income of Rs. 28,50,000/- representing profit earned from agricultural activity. The appellant submitted that she owns and in possession of various pieces of agricultural land in Dasna, Ghaziabad and Saharanpur. In respect of her contention appellant has filed details of ownership of land, Girdawari report and details of agricultural produce sold during the year. The appellant has admitted that part of the land owned by the appellant was converted into non agricultural land by way of CLU but land in question is always under agriculture, even till date. But there is no merit in the contention of the appellant. In the case of the appellant, AO has called for the information u/s 133(6) from Andhra Bank, Green Park, New Delhi in respect of land in possession of Zeba Urfi and papers filed by her with bank regarding change in land use. The bank has informed to the AO vide letter dated 04.03.2016 that the agricultural land has been converted to non agricultural land. The bank has enclosed the copy of CLUs of all the properties. It is observed after going
Page 5 of 7 through the copies of the CLUs issued by Assistant Collector (First Class, Ghaziabad) that land was declared non agricultural land and was not being used for agricultural purposes. In spite of opportunities provided by the AO, the appellant has not brought any evidence on record to prove that there was no change of the land use and it is being used for agricultural purposes. During the appellate proceedings, appellant emphasized time and again that she is the owner of the land and even after the change of land use the land is being utilized for agricultural purposes. The appellant has not brought any evidence on record of sale of agricultural produce, bills for purchase of seeds, fertilizer etc. Govt, authorities dealing with the change of land use has provided the information that there is change in land use of the appellant for industrial purposes and land is declared non agricultural land and is not being utilized for agricultural purposes. Considering the above facts, claim made by the appellant for agricultural income at Rs. 28,50,000/- treating it as exempt is not acceptable and AO is justified in treating the gross receipts of Rs.44,10,000/- as income from undisclosed sources and addition made by the AO is hereby confirmed. 5.4. This ground of the appeal of the appellant’s dismissed…..”
We have noted that the ld. CIT(A) has not given any reasoning as to why it is confirming the AO’s order. It has been argued that the assessee has not produced any evidence on record in support of her contentions. The voluminous paper book filed by the assessee running into some 175 pages filed before us and which were filed before the lower authorities shows that sufficient details were produced in support of stand taken by the assessee. We are therefore of the considered view that the lower authorities have not appreciated the facts of the case properly. We therefore set-aside the order of the ld.
Page 6 of 7 CIT(A) and direct the ld. AO to delete the impugned addition made in the hands of the assessee. All the grounds of the appeal raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 16th January, 2026 Sd/- Sd/- [MADHUMITA ROY] [AMITABH SHUKLA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 16.01.2026 Shekhar Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi,
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