2015 (2) TMI 3 - AT - Income Tax

Treating 50% of the agricultural income as income from other sources - Held that - From the receipts of agricultural income, we find that the assessee is having sufficient agricultural income and has stated the same in the return. On this issue, we may clarify that the assessee at the request of the Bench pointed out that the receipts are only up to March 2004 and in the subsequent assessment year i.e., A.Y. 2005-06 receipts are from April to 30.3.2005. Hence the receipts for both the A.Ys. 2004-05 and 2005-06 have to be taken together and the total income declared by the assessee in the returns for A.Ys. 2004-05 and 2005-06 amounting to ₹ 10,57,768 and ₹ 7,41,439 have been produced. Therefore, we are of the opinion that the assessee has satisfactorily discharged his onus of (1) holding of agricultural land which has been gifted from his mother Dr. Adi Lakshmi, (2) income from the said land from grape and mango orchards and coconut trees which has accrued from the A.Y. 2001-02 and even from an earlier period in hands of his mother and (3) the net agricultural income has been arrived at supported by agricultural receipts which have been enlisted at pages 3 and 6 of the Paper Book for A.Ys. 2004-05 and 2005-06, respectively. The overall receipts for the two years put together add up to the income returned by the assessee. In these circumstances, disallowance of 50% of the claim, holding the same to be income from other sources by the CIT(A), is not justified. - Decided in favour of assessee.

Summary

Issues:
- Assessment of agricultural income for A.Ys. 2004-05 and 2005-06
- Disallowance of 50% of claimed agricultural income as income from other sources

Analysis:
1. The appellant, an individual and a partner in a hospital, did not file regular income tax returns for A.Ys. 2004-05 and 2005-06. Following a search operation under section 132, notices were issued under section 153C. The appellant declared nil taxable income and claimed agricultural income, which was partially rejected by the Assessing Officer due to lack of complete documentation on expenses.

2. The appellant contested the Assessing Officer's decision before the CIT(A), arguing that 50% of the agricultural income should not be treated as income from other sources. The appellant submitted receipts from the Agricultural Market Committee to support the claim of agricultural income from grape, mango, and coconut produce.

3. The CIT(A) upheld the Assessing Officer's decision, noting the absence of complete expenditure details and regular income tax returns. The CIT(A) concluded that the appellant failed to provide sufficient evidence to support the full claim of agricultural income, leading to the disallowance of 50% of the claimed amount for both assessment years.

4. The appellant appealed the CIT(A)'s order, providing additional evidence of agricultural receipts and arguing that the agricultural income was genuine, supported by the history of agricultural operations and receipts. The appellant's counsel highlighted the substantial net agricultural income over the years and the details of income and expenses.

5. After considering the arguments and evidence presented, the Tribunal found that the appellant had adequately demonstrated the ownership of agricultural land, income from agricultural activities, and provided receipts to support the declared income. The Tribunal disagreed with the CIT(A)'s decision to disallow 50% of the claimed agricultural income, stating that the appellant had fulfilled the burden of proof regarding agricultural income for both years.

6. Consequently, the Tribunal allowed the appeals, overturning the CIT(A)'s decision and ruling in favor of the appellant. The Tribunal emphasized the sufficiency of evidence provided by the appellant to support the declared agricultural income, leading to the rejection of the disallowance of 50% of the claimed amount as income from other sources.

7. The Tribunal's decision was pronounced on 24th December 2014, allowing the appeals of the appellant in relation to the assessment of agricultural income for A.Ys. 2004-05 and 2005-06, and the disallowance of 50% of the claimed agricultural income as income from other sources.