2010 (6) TMI 547 - HC - Income Tax

Survey - Agricultural income - Unexplained investment - The first appellate authority after appreciation of the oral and documentary evidence available on file, has recorded a finding of fact that, the additional evidence sought to be produced by the assessee was sent to the Assessing Officer for verification and report - t is significant to note that the assessee is holding 60 acres of agricultural land, out of which, 27 acres are wet land, 14 acres of dry land and 19 acres of mango plantation and he has submitted his crop-wise gross yield in rupees before the Assessing Officer as acknowledged by him in paragraph 10 of his assessment order - Decided in the favour of the assessee

Summary

Issues:
1. Whether the appellate authorities were correct in holding that the assessee accumulated cash from agriculture without evidence?
2. Whether the sum treated as non-agricultural income was correctly set aside?

Analysis:
1. The case involved an appeal by the Revenue against an order passed by the Income-tax Appellate Tribunal. The issue was whether the assessee, an undivided Hindu family and partner in a service station, had accumulated Rs. 30 lakhs in cash from agriculture, as detected during a survey. The Assessing Officer treated this sum as unexplained investment and brought it to tax. The first appellate authority, after considering evidence, deleted the addition of Rs. 30 lakhs. The Tribunal confirmed this decision. The High Court found no error of law in the orders passed by the lower authorities. The Assessing Officer doubted the opening capital shown by the assessee, but the first appellate authority rejected this based on evidence of agricultural income. The High Court upheld the concurrent finding against the Revenue, dismissing the appeal for lack of merit.

2. The second issue involved the treatment of Rs. 4,82,506 as non-agricultural income by the Assessing Officer, which was set aside by the appellate authorities. The High Court noted that the Assessing Officer's observations based on assumptions about the family's income were rejected after evaluating evidence. The first appellate authority and the Tribunal confirmed this decision, finding no error in the treatment of the sum as agricultural income. The High Court concluded that no substantial questions of law were raised by the Revenue, upholding the dismissal of the appeal and answering the raised questions against the Revenue.