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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN & SHRI INTURI RAMA RAO
आदेश / O R D E R
PER SHRI GEORGE MATHAN, JUDICIAL MEMBER :
This is an appeal filed by the assessee directed against the order of the learned Commissioner of Income Tax (Appeals)-2, Chennai (hereinafter called as ‘CIT(A)’) in dated 28.06.2019 for the assessment year 2016-17.
Mr. Banusekar, Chartered Accountant represented on behalf of the Assessee and Ms. R. Anitha, JCIT represented on behalf of the Revenue.
2 -: 3. It was submitted by the learned Authorized Representative that the assessee owned agricultural land. The assessee was also in the business of trading in shares and the assessee had declared a loss of Rs.1,93,48,753/-. The assessee had also disclosed an agricultural income to an extent of Rs.31,87,508/- as gross receipts.
The assessee had shown receipts from the sale of mango at Rs.18,38,200/- and from the sale of vegetables at Rs.13,49,308/- and had claimed a total expenditure of Rs.7,52,768/-.
The Assessing Officer on completion of the assessment had disallowed the assessee’s claim on agricultural income from the sale of vegetables to the extent of Rs.13,49,308/- . The Assessing Officer had also disallowed Rs.3,43,245/- out of the expenditure claimed in respect of the agricultural operations.
It was a submission that on appeal the learned CIT(A) had dismissed the assessee’s appeal on the ground that there was no evidence produced in respect of the sale of the agricultural produce representing to the sale of vegetables and in respect of the expenditure disallowed, the same was confirmed because the assessee had not produced any receipts or vouchers that authenticated the details of the persons who had received the consideration representing the expenditure. It was a submission that the assessee owned nearly 11.5 acres of agricultural land. 6.5 acres was mango cultivation and in the balance was groundnut, sugarcane and intercrop vegetables were also planted. It was a submission that the income of the assessee being agricultural income, the sale of the agricultural produce was done on site and no specific receipts or vouchers were available. It was a further a submission that it was not possible to obtain vouchers or receipts from the local labourers who were employed for the cultivation of the land. It was a submission that 3 -: the addition made by the Assessing Officer by disallowing the claim of agricultural income in respect of the sale of vegetables and the addition representing the disallowance of the expenditure in connection with the agricultural operation was liable to be deleted.
In reply, the learned Departmental Representative submitted that no evidence has been produced before the Assessing Officer or the learned CIT(A). It was a submission that no agricultural operation have been done on the said lands in respect of the vegetables. It was a submission that the additions were liable to be confirmed.
We have considered the rival submission and perused the materials available on record.
Here a little facts needs to be said. The appeal was first posted for hearing before this Bench on 19.11.2019 on which date the learned Departmental Representative was directed to request the Assessing Officer to have the site inspected immediately to verify if the agricultural operations were being carried out.
He was also directed to obtain photographs of the site as to whether the agricultural operation as claimed to be done. Certain photographs were produced on 20.11.2019 which showed certain areas with wild growth. It was submitted by the learned Authorized Representative that the Officer had directed his inspector to verify the property and the owner of the property being the karta of the assessee was also available at the property but no one has come. The learned Departmental Representative was then requested to ask the Officer to inspect the property along with the assessee and obtain photographs. The appeal was posted to today, being 26.11.2019.
The learned Departmental Representative has produced photographs of the said property, wherein the inspector of the office, the karta of the HUF and certain workers are also available. The photographs show mango plantation. The photographs show substantial portion of the property to be ploughed and ready for agricultural operation. Tractors and trailers are also found in the photographs.
Certain portion of the photographs also shows groundnut plants intercropping with the mango trees.
The learned Departmental Representative has also placed before us the copy of the Village Revenue Officer Certificate dated 23.11.2019, wherein he has certified that the sugarcane crop was grown in the vacant land and vegetables were also grown between the mango trees and the soil is fertile and abundant water is available and the gap between the mango trees is wide enough to have intercrops. Another certificate is also produced which shows that the said Village Revenue Officer certifies that he has shown the land to the Income Tax Inspector. The land consists of 11.34 acres. The land is agriculturally suitable having 1200 mango trees, two bore- wells and a well. The mango trees are connected with the drip irrigation. At present, the land is being filled with soil of the lake where it is called soil change to increase the fertility for cultivation of crops and vegetables such as Brinjals, Bitter gourd, mirchis, tomatoes, etc., where the land is without mango trees and in between the mango trees where the gap is wide. These are certificates issued by the Village Revenue Officer. Admittedly, this was a surprise inspection directed by the Tribunal.
The surprise inspection has revealed that the agricultural operation is continuing on the said land. The Village Revenue Officer certificate also confirms the fact of agricultural operation.
This being so, the addition representing the disallowance of the income earned from the vegetable crops and the disallowance out of the agricultural operation expenditure is unsustainable and is liable to be deleted and we do so. However, as the assessee has not maintained any evidence to substantiate and prove the quantum of agricultural income and the expenditure in respect of the agricultural operations, the disallowance stands restricted to 10% of the income generated from the sale of vegetable products and 10% out of the total expenditure in respect of the agricultural operations.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open Court on 26th November, 2019 in Chennai.