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Issues Involved:
1. Disallowance of agricultural income claimed by the assessee. 2. Addition u/s 68 for unexplained cash credits. 3. Verification of purchases and sales made by the assessee. 4. Acceptance of agricultural income in previous assessment years. Summary: Issue 1: Disallowance of Agricultural Income Claimed by the Assessee The A.O. disallowed the assessee's claim of agricultural income, stating that all expenses and sales were conducted in cash, and the books of accounts and vouchers were self-generated. The CIT(A) allowed the appeal, holding that the assessee was engaged in agricultural activities, supported by evidence such as khasra & khatoni, sale deeds, and photographs of crops. The CIT(A) referenced several Supreme Court decisions to define "agriculture" and concluded that the assessee's activities met this definition. The Tribunal upheld the CIT(A)'s findings, noting that the assessee had carried out basic and subsequent agricultural operations and had provided sufficient evidence to support its claim. Issue 2: Addition u/s 68 for Unexplained Cash Credits The A.O. added Rs. 41,11,287/- u/s 68, presuming that the sale proceeds of agricultural produce represented the assessee's income from undisclosed sources. The CIT(A) found that the assessee had provided substantial evidence to support its claim of agricultural income, and the A.O. had not brought any contrary evidence. The Tribunal agreed with the CIT(A), stating that the A.O. had failed to make a case for treating the sale proceeds as income from undisclosed sources and had not applied his mind while making the addition. Issue 3: Verification of Purchases and Sales Made by the Assessee The A.O. contended that the purchases and sales made by the assessee were not verifiable. The CIT(A) found that the assessee had provided bills, vouchers, and other relevant evidence to prove the authenticity of the purchases and sales. The Tribunal noted that the A.O. had accepted the agricultural income in previous assessment years and had not provided any evidence to dispute the assessee's claim for the current year. The Tribunal upheld the CIT(A)'s findings, stating that the assessee had maintained regular books of accounts and the entries were not proved to be bogus. Issue 4: Acceptance of Agricultural Income in Previous Assessment Years The Tribunal noted that the Department had accepted the agricultural income returned by the assessee during the A.Ys. 2003-04 and 2004-05 in assessments made u/s 143(3) read with section 147. The Tribunal found no merit in the Revenue's appeal, as the facts for the current year were similar to those in the previous years. The Tribunal upheld the CIT(A)'s order, confirming that the agricultural income shown by the assessee should be accepted. Conclusion: The Tribunal dismissed all the appeals filed by the Revenue, confirming the CIT(A)'s orders and directing the A.O. to accept the agricultural income shown by the assessee.
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