2016 (5) TMI 1299 - AT - Income Tax

Treating the agricultural income as income from other sources - Held that - The land is irrigated with the irrigation facilities and is situated in Raikot, Ludhiana. The land was being irrigated by the assessee through local labour employed. The crop is being recorded by the Local Patwari which the AO could have verified by issuing summons. No doubt the assessee were not having any direct evidence of the sale of the agricultural produce but the extent of land itself suggest that the assessee earned agricultural income from the said land, doing so, when the evidence of the ownership of the land was accepted there cannot be any dispute or doubt about the agricultural income from the said land. There is three corps in the entire one year period and accordingly, income has to be estimated. The assessee claimed that one crop gives income of roughly at ₹ 5 lac and for three crop it becomes ₹ 15 lac. The assessee claimed that it has rightly declared agricultural income at ₹ 15,40,370/-. We are of the view that this is excessive agriculture income declared by the assessee. But, the agriculture income cannot be taken at nil. In view of the fact that the assessee is holding agriculture land of five acres in Punjab, the income of the entire year can be estimated at ₹ 10 lac. The balance will be treated as income from other sources. We order accordingly. - Decided partly in favour of assessee.

Summary

Issues:
1. Condonation of delay in filing appeal.
2. Treatment of agricultural income as income from other sources.

Analysis:
1. Condonation of Delay: The appeal was filed 217 days late, citing the assessee's critical illness and medical treatments as reasons for the delay. The medical documents provided were deemed sufficient by the Senior DR for condonation. The Tribunal accepted the reasons and condoned the delay, allowing the appeal to be admitted.

2. Treatment of Agricultural Income: The main issue revolved around the AO treating the agricultural income of the assessee as income from other sources due to doubts regarding the legitimacy of the income declared. The assessee claimed ownership of 5 acres of agricultural land in Punjab and provided details of the land to the AO. The AO questioned the possibility of such high agricultural income on a small landholding. The CIT(A) upheld the addition, stating the lack of evidence regarding the crops grown on the land. However, the Tribunal noted the fertile nature of the land in Punjab, the irrigation facilities, and the crops grown by the assessee. The Tribunal acknowledged the lack of direct evidence of sale but accepted the ownership of the land. Estimating the income at ?10 lakh for the year, the Tribunal partially allowed the appeal, treating the balance as income from other sources.

In conclusion, the Tribunal partially allowed the appeal, emphasizing the credibility of agricultural income based on land ownership and agricultural practices in Punjab while estimating the income at a reasonable amount.