2016 (5) TMI 853 - AT - Income Tax

Addition on account of agriculture income as income from other sources - Held that - It is undisputed fact that ownership as well as agricultural activities done on own land and on leased land are not in dispute. Only the mater remained to be adjudicated that the agricultural income earned by the assessee. The ld CIT(A) has considered all the submissions made by the assessee, therefore, we confirm the part addition out of addition confirmed by the ld CIT(A) at ₹ 10 lacs in pace of ₹ 13,41,674/-. - Decided in favour of assessee partly Addition U/s 68 - Held that - The assessee filed requisite evidences/affidavits before the ld Assessing Officer at the time of assessment proceedings. Additional evidences were also filed before the ld CIT(A), on which he has taken remand report from the Assessing Officer. The assessee has proved identity of the depositor, genuineness of the transactions and creditworthiness of the creditor. All the credits in the bank account were out of deposits made with these parties. There are copies of the registered deeds, which cannot be doubted and payments were received by the assessee through banking channel. When the assessee transferring the immovable property through these agreements, there is no reason to doubt on the amount received by the assessee. Therefore, we reverse the order of the ld CIT(A). - Decided in favour of assessee.

Issues Involved:
1. Validity of the assessment order under section 143(3) of the Income Tax Act.
2. Treatment of agricultural income as income from other sources.
3. Addition of unexplained credits in the bank account.
4. Set-off of agricultural income against unexplained credits.
5. Charging of interest under sections 234A and 234B of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order:
The first ground of appeal regarding the validity of the assessment order under section 143(3) was not pressed by the assessee's representative and was therefore dismissed.

2. Treatment of Agricultural Income:
The assessee declared agricultural income of ?38,75,000 in the return. The Assessing Officer (AO) observed discrepancies in the supporting documents and estimated the agricultural income at ?5,00,000, treating the remaining ?33,75,000 as income from undisclosed sources. The CIT(A) partly allowed the appeal, estimating the agricultural income at ?20,33,326 after considering the remand report and additional evidences, and treating the rest as income from other sources. The Tribunal confirmed part of the addition, reducing the amount to ?10,00,000 instead of ?13,41,674.

3. Addition of Unexplained Credits:
The AO made an addition of ?51,25,000 as unexplained credits in the assessee's bank account. The CIT(A) confirmed the addition of ?46,60,000 after examining the affidavits and statements of some creditors but disallowed ?4,65,000. The Tribunal reversed the CIT(A)'s order, accepting the explanations provided by the assessee regarding the credits, supported by affidavits, banking transactions, and registered deeds, thus deleting the addition.

4. Set-off of Agricultural Income:
Since the Tribunal deleted the addition related to unexplained credits, the issue of set-off of agricultural income against these credits became redundant and was not adjudicated.

5. Charging of Interest:
The issue of charging interest under sections 234A and 234B was directed to be recalculated by the AO as per law, following the Tribunal's findings on other grounds.

Conclusion:
The Tribunal's judgment partly allowed the appeal, confirming a reduced addition of ?10,00,000 for agricultural income and deleting the entire addition of ?46,60,000 for unexplained credits. The AO was directed to recalculate interest as per the law. The appeal was partly allowed, providing significant relief to the assessee.

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