2017 (12) TMI 872 - AT - Income Tax

Agricultural income - estimation of income from Agricultural income from other crops - Held that - As perused the table extracted in para 5 of this order and find it contains the details of Agricultural income earned out of Sugarcane and other Cereals and Pulses. Before, CIT(A), the assessee furnished the evidences only to the extent of ₹ 2,33,571/- out of ₹ 24,38,284/-. Therefore, he partly allowed the claim of the assessee. In other words, it is the case of not evidencing the claim rather than not growing the crops at all and earning the Agricultural income at all out of the other crops. There can be many reasons for such failure of furnishing evidences. Therefore, we proceed to estimate the income from Agricultural income from other crops . In our view, restricting the claim to merely ₹ 2,37,571/- is not fair and reasonable. Therefore, we direct the AO to restrict the claim of Agricultural income out of other crops/cereals/pulses to ₹ 50% of ₹ 24,38,284/-. Thus, the assessee is entitled to relief of ₹ 12,19,142/- on this account. Accordingly, the relevant grounds raised by the assessee are partly allowed. direct the AO to restrict the claim to 50% of the ₹ 24,38,284/- which include the relief of ₹ 2,33,571/- given by the CIT(A). Unsecured loans received by the assessee from the loan creditors - Held that - We find merit in the request for remanding to the file of the AO. Thus, we find there is need for more facts necessary for adjudicating these grounds meaningfully. Hence, AO is directed to examine these credits afresh and decide the issue fresh in the light of the evidences to be furnished by the assessee during the remand proceedings. AO is free to repeat the addition in case of assessee s failure to discharge the onus to the satisfaction of the AO. AO is directed to grant reasonable opportunity of being heard to the assessee in accordance with the set principles of natural justice. Accordingly, relevant grounds raised by the assessee are allowed for statistical purposes.

Summary

Issues Involved:
1. Addition of ?1,44,78,665/- under Section 68 of the Income-tax Act, 1961.
2. Addition of ?24,38,284/- by taxing agricultural income under Section 68.
3. Non-adjudication of double taxation of agricultural income by the first appellate authority.
4. Non-adjudication of the source of loans received by the first appellate authority.
5. Delay in passing the order by the CIT(A).

Issue-wise Detailed Analysis:

1. Addition of ?1,44,78,665/- under Section 68 of the Income-tax Act, 1961:
The assessee challenged the addition of ?1,44,78,665/- made by the AO and sustained by the CIT(A) under Section 68. The additions pertain to loans received from various individuals and entities. The AO disbelieved the genuineness of these transactions due to inadequate documentation, such as missing bank statements or confirmation letters. The Tribunal found merit in the assessee’s request for another opportunity to provide the necessary documentation. Consequently, the Tribunal remanded the issue back to the AO for fresh examination, directing the AO to grant reasonable opportunity to the assessee to furnish additional evidence.

2. Addition of ?24,38,284/- by taxing agricultural income under Section 68:
The AO added ?24,38,284/- by taxing the agricultural income, citing reasons such as cash transactions, absence of credible sale bills, and unseasonal sales. The CIT(A) granted partial relief of ?2,33,571/-, leaving ?22,04,713/- for adjudication. The Tribunal noted that the assessee owns significant agricultural land and provided 7/12 extracts and sale bills, which were ignored by the AO. The Tribunal found the AO’s complete denial of agricultural income unreasonable and directed the AO to restrict the claim to 50% of ?24,38,284/-, providing relief of ?12,19,142/- to the assessee.

3. Non-adjudication of double taxation of agricultural income by the first appellate authority:
The assessee argued that the CIT(A) failed to adjudicate the issue of double taxation of agricultural income. The Tribunal did not separately address this issue, implying that it was subsumed within the broader context of the agricultural income addition.

4. Non-adjudication of the source of loans received by the first appellate authority:
The assessee contended that the CIT(A) did not adjudicate the source of loans received. This issue was addressed by the Tribunal’s decision to remand the matter back to the AO for fresh examination, allowing the assessee to provide additional evidence regarding the loans.

5. Delay in passing the order by the CIT(A):
The assessee highlighted an unreasonable delay of about five months between the hearing and the passing of the order by the CIT(A). The Tribunal did not explicitly address this issue, focusing instead on the substantive issues of additions and remanding them for fresh consideration.

Conclusion:
The Tribunal partly allowed the appeal for statistical purposes, remanding the issues of additions under Section 68 and agricultural income back to the AO for fresh examination. The Tribunal directed the AO to provide the assessee with a reasonable opportunity to furnish additional evidence and to adjudicate the issues in accordance with the principles of natural justice. The appeal was thus partly allowed for statistical purposes.