2015 (9) TMI 1350 - AT - Income Tax

Treating the agricultural income as income from other sources - Held that - Exact quantum of agricultural income which could reasonably be earned from the agricultural land holding is a matter of debate or further enquiry, but, the fact that assessee is having agricultural income cannot be disputed or doubted considering the evidences brought on record by assessee. However, considering the fact that the entire receipts from agricultural operations is in cash and the expenditure incurred is also in cash and as alleged by the department they are not supported by proper vouchers, we are of the view that the matter requires examination by AO as far as quantum of agricultural income earned by assessee. Moreover, certificate dated 29/08/2011 obtained from Tahsildar, Kadiam only indicates the produce grown by assessee without mentioning the yield per acre or income which one can reasonably expected to earn annually from such land holding and sell of agricultural produce. If assessee is able to substantiate the net agricultural income shown by him with supporting evidence, the same has to be accepted, other wise, AO can estimate the agricultural income on a reasonable basis after giving an opportunity to assessee to establish his claim. With the aforesaid observations, we set aside the impugned order of ld. CIT(A) and remit the matter back to the file of AO for considering afresh after due opportunity of being heard to assessee. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Treatment of agricultural income as 'income from other sources.'

Analysis:
The appeal was against the decision to treat agricultural income as 'income from other sources.' The assessee declared a total income of Rs. 1,74,570 for the relevant assessment year, with a significant portion coming from agricultural activities. The Assessing Officer (AO) raised concerns about the cash nature of the transactions, lack of evidence for receipts, and the discrepancy in lease rent payments. The AO rejected the claim of agricultural income, attributing it to explaining investments in other companies.

During the appeal, the assessee provided documentary evidence supporting the agricultural income claim. The Commissioner of Income Tax (Appeals) acknowledged the agricultural operations but questioned the lack of concrete evidence for the income amount. The Commissioner found discrepancies in lease rent payments and doubted the authenticity of the claimed sales to a company. Ultimately, the Commissioner upheld the decision to treat the income as 'income from other sources.'

The assessee argued that the substantial agricultural landholding and documentary evidence supported the claim. The Departmental Representative contended that the evidence provided was insufficient to establish the agricultural income. The Tribunal noted the evidence presented by the assessee, including landholding details and a certificate from the local authority confirming agricultural activities. While acknowledging doubts raised by the authorities, the Tribunal emphasized the need for a more thorough examination by the AO to determine the actual agricultural income earned by the assessee.

The Tribunal set aside the decision of the Commissioner and remitted the matter back to the AO for a fresh assessment, allowing the assessee an opportunity to substantiate the declared agricultural income with proper evidence. The Tribunal highlighted the importance of a detailed examination to establish the actual quantum of agricultural income earned by the assessee. The decision was made on 31st August 2015, allowing the appeal for statistical purposes.