DCIT CORPORATE CIRCLE 4(2), CHENNAI vs. PULLARAPAKKAM NAMACHIVAYA THIRUNAVUKKARASU CHANDRU, CHENNAI

This appeal by the Revenue is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-8, Chennai dated 28.06.2017 in for the assessment year 2014-15 passed U/s.250(6) r.w.s. 143(3) of the Act. At the time of hearing the Ld.AR was not present before the Bench, however on perusing the file and hearing the submission of the Ld.DR the Bench decided to proceed with the appeal ex-parte.

The Revenue has raised several grounds in its appeal however the crux of the issue is that the Ld.CIT(A) has erred in deleting the addition made by the Ld.AO amounting to Rs.1,49,42,774/- towards income from unexplained sources by treating it as agricultural income.

The brief facts of the case are that the assessee is an individual earning income from business, filed his return of income for the assessment year 2014-15 on 10.12.2014 admitting loss of Rs.24,65,396/-. The case was selected for scrutiny under CASS and notice U/s.143(2) of the Act was issued on 18.09.2015. Thereafter assessment was completed U/s.143(3) of the Act on 29.12.2016 wherein the Ld.AO made addition of Rs.1,49,42,774/- as income from unexplained sources which was claimed by the assessee as agricultural income.

During the course of scrutiny assessment proceedings, it was observed by the Ld.AO that the assessee had claimed to have earned huge agricultural income. Therefore the Ld.AO directed the assessee to produce documentary evidence in support of his claim such as the type of irrigation, number of bore wells existing in his land, type of crops raised, crop seasons, yield per season, particulars of sales like to whom agricultural produce were sold, copy of sales bills, copy of purchase bills in respect of consumables for agricultural activities like fertilizers, pesticide purchased, details of tools used for producing agricultural products, details of tools used for harvesting agricultural products, details of vehicles used for supervising cardamom estates, vehicles used for transport, details of power consumption, details of tests conducted such as soil test, crop test etc. However in spite of several opportunities provided to the assessee, the assessee had not furnished any details except copies of sale deeds for purchase of agricultural land and the chitta issued by the Revenue Authorities mentioning the quantum of agricultural land held by the assessee and adangal wherein the VAO had certified that the agricultural income earned by the assessee was Rs.1,33,50,000/-. Since the assessee had not furnished the details has to how the assessee had earned the agricultural income, the Ld.AO treated the agricultural income declared by the assessee as ‘income earned from unexplained source’. However on appeal the Ld.CIT(A) by relying on the adanga, patta, chitta issued by the VAO and the certificate of the VAO stating that the assessee had earned agricultural income of Rs.1,33,50,000/- allowed the appeal of the assessee.

The Ld.DR vehemently argued before us stating that when the assessee had claimed to have earned such huge agricultural income, he ought to have produced the details of his agricultural activities with documentary evidence rather than only relying on the certificate issued by the VAO. He further submitted that such huge income is not probable in agricultural activities. He therefore pleaded that the order of the Ld.AO may be reinstated and that of the Ld.CIT(A) may be set aside.

We have heard the rival submission and carefully perused the materials available on record. We find merit in the arguments advanced by the Ld.DR. When the assessee has claimed such huge agricultural income, the onus is on him to establish the same before the Ld.Revenue Authorities with documentary evidence as far as possible. But in the case of the assessee, he has not produced any evidence before the Ld.Revenue Authorities other than the adangal / chitta certificate issued by the VAO. When the quantum of agricultural income declared by the assessee is very huge, it will not be proper for the Ld.Revenue Authorities to only rely on the adangal certificate issued by the VAO in order to vouch the claim of the assessee that he has earned such huge agricultural income. Therefore we do not find any merit in the order of the Ld.CIT(A) who has deleted the Ld.AO only by relying on the certificates issued by the VAO. However in the interest of justice, we hereby remit the matter back to the file of Ld.AO for de-nova consideration thereby granting one more opportunity to the assessee to produce evidence with respect to his claim of agricultural income. We also caution the assessee to promptly co-operate with the Ld.Revenue Authorities in their proceedings failing which the Ld.Revenue Authorities shall be at liberty to pass appropriate order in accordance with merit and law based on the materials before them.

In the result, the appeal of the Revenue is allowed for statistical purposes.