2017 (8) TMI 28 - AT - Income Tax

Unexplained cash credit u/s 68 - chargeability of agricultural income - Held that - When the genuineness of the transaction with respect to agricultural income is raised and further they are newspaper reports as well as subsequent assessment orders where the agricultural income of the assessee has been established and accepted emphatically by revenue these orders do have relevance on the issue. In view of this as assessee is prevented by sufficient cause to produce these evidence before the lower authorities we accordingly admit them and accordingly remit the issue back to the file ld Assessing Officer to decide in accordance with the law along with the additional ground. In view of our decision on admission of additional evidences and additional ground raised by the appellant and further as all the grounds of appeal of the assessee are related to chargeability of agricultural income, we deem it fit and proper and in the interest of justice to set aside the all the grounds of appeal including additional ground to the file of the ld AO with a direction to reexamine the whole issues in view of additional evidence and after granting proper opportunity of hearing to the assessee. Appeal of the assessee is allowed for statistical purposes.

Issues:
1. Disallowance of agricultural income as unexplained cash credit under section 68 of the Act.
2. Exemption eligibility of agricultural income under section 10(1) of the Act.
3. Arbitrary estimation of agricultural income.
4. Rejection of affidavits without examining landowners.
5. Computation of peak credit without considering total expenditure.
6. Admission of additional evidence.
7. Validity of re-assessment order.
8. Direction to re-compute interest under sections 234B and 234C.
9. Initiation of penalty proceedings under section 271(l)(c) of the Act.

Analysis:
1. The appeal pertains to Assessment Year 2001-02 where the assessee challenged the disallowance of agricultural income as unexplained cash credit under section 68 of the Act. The Assessing Officer disbelieved the claim of agricultural income amounting to a significant sum and taxed a portion of it. The CIT(A) confirmed the addition but granted partial relief. The Tribunal found the CIT(A)'s order to be perverse as it ignored crucial evidence, such as land revenue records and farm expenses, leading to arbitrary conclusions. The Tribunal admitted an additional ground raised by the assessee related to the computation of peak credit, emphasizing the technical nature of the issue.

2. The Tribunal also allowed the admission of additional evidence that emerged post the CIT(A)'s order, emphasizing its relevance in deciding the genuineness of transactions and agricultural income. The Tribunal remitted the issue back to the Assessing Officer for reconsideration along with the additional ground. The Tribunal set aside all grounds of appeal to reexamine the issues in light of the additional evidence, ensuring proper opportunity for the assessee. The appeal was allowed for statistical purposes, highlighting the need for a comprehensive review of the agricultural income computation.

3. The appeal for the subsequent year, Assessment Year 2002-03, mirrored the issues raised in the previous year's appeal. The Tribunal observed identical facts and arguments presented by both parties, leading to a similar direction for reexamination by the Assessing Officer. The Tribunal allowed the appeal for statistical purposes for both years, emphasizing the consistency in addressing the agricultural income issues across the appeals.

In conclusion, the Tribunal's detailed analysis focused on the disallowance and exemption of agricultural income, emphasizing the importance of considering all evidence and computation aspects in such cases. The admission of additional evidence post the CIT(A)'s order underscored the need for a comprehensive review to ensure a just and accurate determination of agricultural income and related tax implications.

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