MANEKCHAND MUNDHRA HUF,MUMBAI vs. INCOME TAX OFFICER WARD 17(2)(3), MUMBAI

The grievance of the assessee in the present appeal is with regard to the decision of the Departmental Authorities in treating the agricultural income as income from other sources.

Brief facts are, the assessee is a Hindu Undivided Family (HUF). In the return of income filed for the impugned assessment year, the assessee offered gross agricultural income of ` 22,80,470, and after claiming expenditure of ` 2,72,667, declared net agricultural income of ` 20,07,803. In the course of assessment proceedings, the Assessing Officer called upon the assessee to furnish various information to justify its claim of agricultural income. In response to the query raised by the Assessing Officer, the assessee filed its reply and submitted that one Shri Bhairavsingh Bhanwarsingh, carries on agricultural activity on behalf of it and hands over the agricultural produce which is sold through Agricultural Produce Marketing Committee. The assessee further explained its inability to furnish the details of area–wise crop since the activity was carried out by another person. However, the assessee furnished the details of produce sold along with the original receipts. Assessing Officer was not convinced with the explanation of the assessee. On verification of bank account, he observed that during the year, the assessee had made cash deposits of ` 13 lakh. In response to the query raised by the Assessing Officer with regard to the cash deposit, it was stated by the assessee that family members had brought cash to Mumbai and no record relating to such cash brought to Mumbai is available. Thus, ultimately, the Assessing Officer concluded that assessee was unable to demonstrate that it was 3 Manekchand Mundhra (HUF) carrying on any agricultural activity from which it had earned the agricultural income. Further, he observed, the agricultural income shown by the assessee is nothing but unexplained cash credit under section 68 of the Act. Accordingly, he added back the amount to the income of the assessee under the head income from other sources. The assessee challenged the aforesaid decision before the first appellate authority.

After considering the submissions of the assessee, learned Commissioner (Appeals), however, did not find them acceptable. She observed, the assessee could not corroborate the fact that the income of ` 20,07,803, was earned from agricultural activity. Thus, ultimately, learned Commissioner (Appeals) treated the cash deposit of ` 13 lakh in the bank as unexplained cash credit under section 68 of the Act and confirmed the addition made by the Assessing Officer. As regards the balance amount of ` 7,07,803, learned Commissioner (Appeals) directed the Assessing Officer to treat it as income from other sources.

The learned Authorised Representative submitted, assessee owns substantial agricultural land admeasuring 7.60 acres in the District of Bikaner, Rajasthan. She submitted, cultivation activity in the said agricultural land is carried out through Bhairavsingh Bhanwarsingh by virtue of agreement dated 2nd June 2011. She submitted, various crops are cultivated in the agricultural land and agricultural produce

The learned Departmental Representative submitted, in view of the fresh evidences filed by the assessee, the issue may be restored back to the Assessing Officer for de novo adjudication.

We have considered rival submissions and perused the material on record. As could be seen from the facts on record, assessee’s claim of agricultural income was primarily rejected by the Departmental Authorities on the ground of lack of evidence to demonstrate that agricultural activities were actually carried on by the assessee. However, it is seen from the record that before the Assessing Officer the assessee had furnished receipts evidencing sale of agricultural produce. Before us also, the assessee has furnished Affidavits by 5 Manekchand Mundhra (HUF) cultivator and the Karta of the assessee along with the certificate of Gram Panchayat by way of additional evidences to demonstrate that agricultural activities, in fact, were carried on by the assessee. Since these evidences will have a crucial bearing in deciding the nature of income shown by the assessee, we are inclined to admit them. However, considering the fact that these evidences were not filed before the Departmental Authorities, in all fairness, they have to be examined by the Assessing Officer to verify the authenticity of assessee’s claim. That being the case, we are inclined to restore the issue to the Assessing Officer for de novo adjudication of assessee’s claim of agricultural income keeping in view the evidences filed by the assessee. It is open for the assessee to bring further evidences to demonstrate that it had actually derived income from agricultural activities. Needless to mention, the Assessing Officer must decide the issue after providing adequate opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.

In the result, appeal is allowed for statistical purposes. Order pronounced in the open Court on 29.05.2019