2016 (12) TMI 947 - AT - Income Tax

Assessment u/s 153A - Undisclosed investment made in acquisition of immovable property - Held that - This is a fact Shri Naresh Kumar Choudhary is a son of the assessee had filed the return of income and in his premises search operation was carried out. In response to notice issued u/s 153A of the Act, the amount invested in agricultural land in the name of the assessee has been offered for taxation. This is evident from the cash flow statement placed at page 4 of the paper book. In case the addition is sustained in the case of the assessee then it will amount to double taxation on the same amount. The return of income of Shri Naresh Kumar Choudhary for the assessment year 2008-09 has been scrutinized and then the same had been accepted which includes the investment in the agricultural land in the name of the assessee. Agricultural income - Held that - It is noted from the records that the assessee had purchased the agricultural land on 14-05-2007 at Sri Ganganagar which indicates that the assessee was having agricultural income from Rabi and Kharif crops. The assessee had shown the agricultural income of ₹ 1.06 lacs and the same had also been shown in the return of income. The AO did not accept this amount of ₹ 1.06 lacs as agricultural income of the assessee as the assessee had not produced the bills and vouchers for sale of crops and the same had also been confirmed by the ld. CIT(A). It is also noted from the records that the assessee had submitted the copies of girdawari records establishing the growing of crops from the lands owned by the assessee. It is noted that the assessee had good piece of land i.e. 23 bigha and 3 biswas on which crops are grown by the assessee. It may be taken into consideration that the agricultural income is exempt from tax and there is no need to maintain books of account or bills/ vouchers. Looking to the facts and circumstances of the case, direct to delete the addition of ₹ 1.06 lacs made by the AO.

Summary

Issues involved:
1. Addition of undisclosed investment in immovable property
2. Treatment of agricultural income as income from undisclosed sources
3. Double addition of investment in the hands of the assessee

Analysis:

Issue 1: Addition of undisclosed investment in immovable property
The assessee appealed against the addition of ?20,83,500 made by the Assessing Officer (AO) on account of undisclosed investment in acquiring immovable property. The Appellate Tribunal noted that during a search operation, documents related to a sale agreement for land were found in the son's premises. The son had filed a return of income offering ?41,97,039 for taxation under Section 132(4) of the Act, including the amount spent on purchasing the land. The Tribunal observed that if the addition was sustained in the assessee's case, it would lead to double taxation. Considering this, the Tribunal directed to delete the addition, as the son's income tax return had been accepted, which included the investment in the agricultural land.

Issue 2: Treatment of agricultural income as income from undisclosed sources
The AO disallowed the agricultural income of ?1,06,000 declared by the appellant, stating that no bills or vouchers for crop sales were produced. The CIT(A) upheld this decision. However, the Tribunal found that the appellant had purchased agricultural land in 2007, indicating agricultural activities. The appellant had submitted girdawari records showing crop cultivation on owned land. The Tribunal noted that agricultural income is exempt from tax and does not require detailed documentation. Considering these facts, the Tribunal directed to delete the addition of ?1,06,000 made by the AO, as the appellant had sufficient evidence of agricultural activities.

Issue 3: Double addition of investment in the hands of the assessee
The Tribunal addressed the concern of double addition of the investment in the hands of the assessee, as the son had already offered the amount for taxation. By accepting the son's return of income, which included the investment in question, the Tribunal concluded that sustaining the addition in the assessee's case would lead to double taxation. Therefore, the Tribunal directed to delete the addition made by the AO, avoiding double taxation on the same amount.

In conclusion, the Tribunal allowed the appeal of the assessee based on the detailed analysis of the issues raised, ensuring that the additions made by the AO were deleted to prevent double taxation and considering the exempt nature of agricultural income.