2016 (3) TMI 1090 - AT - Income Tax

Agricultural income - Held that - The evidence and material on record clearly proved that assessee is owner of 142 acres of land which have been cultivated as per girdavri record produced. The claim of the assessee was not rebutted by the AO in his comments to earn agriculture income. The assessee in the Paper Book have also filed certificate from the buyer showing agriculture produced purchased by them and paying the amount through banking channels which is supported by the bank certificate. Therefore, Ld. CIT(A) was justified in holding that assessee earned agriculture income. It was also found from the record produced that the land held by the assessee was capable of giving only one crop depends upon the seasonal rain. The assessee however cold not produce any evidence that the land was being cultivated through Hissedari therefore, Ld. CIT(A) was justified in holding that entire claim of agriculture income cannot be accepted. However, the materials on record and the huge land holding held by the assessee, cultivated by the assessee and that sale proceeds of agriculture produce received through banking channels clearly supports the claim of the assessee of earning of the substantial agriculture income therefore, Ld. CIT(A) was not justify in holding that claim of having earned agriculture income cannot be accepted beyond sum of ₹ 10,000/- per acres. Thus we accept the claim of assessee of earning agriculture income @ ₹ 15,000/- per acres as against ₹ 10,000/- confirmed by the Ld. CIT(A). We therefore accept the agriculture income earned by the assessee is a sum of ₹ 21,30,000/- as against the total claim made by the assessee of ₹ 28,28,260/-. We therefore restrict the addition to ₹ 6,97,260/-. Thus the orders of authorities below are set aside and modified to the extent that AO shall accept the agriculture income is a sum of ₹ 21,30,000/- and restrict the addition on account of income from other source is a sum of ₹ 6,97,260/-. - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Challenge against addition of agricultural income by the AO.
2. Discrepancy in the assessment of agricultural income by the Ld. CIT(A).
3. Cross Objections filed against different orders of Ld. CIT(A) for two assessment years.

Issue 1: Challenge against addition of agricultural income by the AO

The assessee challenged the addition of Rs. 14,08,200 on account of agricultural income, which was treated as unaccounted income by the AO due to lack of substantiating evidence. The assessee claimed to have earned agricultural income from 142 acres of land, supported by audited accounts and banking transactions. The Ld. CIT(A) found that the evidence filed during appellate proceedings confirmed the ownership and cultivation of land by the assessee. However, the claim of entire agricultural income was deemed exaggerated, leading to an adjustment of the accepted income to Rs. 14,20,000, with the remaining amount confirmed as income from other sources.

Issue 2: Discrepancy in the assessment of agricultural income by the Ld. CIT(A)

Upon further review, the Tribunal found that the addition made by the Ld. CIT(A) was excessive. The evidence on record established the ownership and cultivation of 142 acres of land by the assessee, supported by buyer certificates and banking transactions. While the claim of earning agriculture income was accepted, the Tribunal disagreed with the Ld. CIT(A)'s limitation of income to Rs. 10,000 per acre. Considering the evidence and findings, the Tribunal accepted the claim of earning agriculture income at Rs. 15,000 per acre, resulting in a total income of Rs. 21,30,000, and restricting the addition to Rs. 6,97,260. The orders of the authorities below were set aside and modified accordingly.

Issue 3: Cross Objections filed against different orders of Ld. CIT(A) for two assessment years

The Cross Objections filed by the assessee pertained to different orders of Ld. CIT(A) for the assessment years 2009-10 and 2010-11. The Tribunal, after considering the challenges against the addition of agricultural income and discrepancies in assessment, partly allowed the Cross Objections for both years. The Tribunal directed the AO to accept agricultural income at Rs. 21,30,000 and restrict the addition of income from other sources to Rs. 6,97,260 for the relevant assessment year, thereby partly allowing the Cross Objections.

In conclusion, the Tribunal's detailed analysis and modifications in the assessment of agricultural income highlight the importance of substantiating claims with proper evidence and documentation to avoid discrepancies and ensure accurate tax assessments.