2020 (2) TMI 1031 - AT - Income Tax

Agricultural income - assessee had produced the document showing the agricultural land to the extent of 25.946 hectares - HELD THAT - Ends of justice required that the Principle of Consistency is required to be followed in respect of per hectare yield in the previous years, which is duly supported by the certificate issued by the Horticulture Department, relied upon by the AO, which also shows the per hectare yield as ₹ 84,000/-. Examining the matter from any angle i.e., either from the angle of previous history or from the angel of the certificate issued by the Horticulture Department, the assessee was able to establish the agriculture income of ₹ 21 Lakhs. Considering the past history of the case and the facts of the case in the year under consideration, we are of the view that it is fully proved and established that the assessee is engaged in the agricultural operations. The Ld.CIT (Appeals) has erred in confirming the finding of the AO that the assessee is not engaged in large scale agricultural operation. Since the agricultural income regularly shown by the assessee in earlier years has been accepted, the same is to be considered in the year under consideration also. Addition made by the Assessing Officer, confirmed by Ld.CIT(A) is wrong and required to be partly deleted. However, considering the past history and also the certificate issued by the Horticulture Department, we restrict the agriculture income to ₹ 22,68,500/- and sustain the addition of ₹ 10 Lakhs. Thus, the appeal of assessee is partly allowed.

Summary

Issues:
Assessment of agricultural income as income from other sources, confirmation of addition by CIT(A), grounds raised in appeal before the Tribunal, evidence presented by the assessee, scrutiny of agricultural activities by AO, reliability of affidavits, onus of proof on the assessee, consistency in assessment of agricultural income.

Analysis:
The appeal before the Appellate Tribunal ITAT Agra concerned the assessment of an individual's income for AY 2014-15. The Assessing Officer had treated a part of the agricultural income as 'income from other sources,' resulting in an addition of ?32,68,500 to the total income. The CIT(A) confirmed this addition, stating that the reasoning and computation of the Assessing Officer were correct. The appellant raised several grounds in the appeal before the Tribunal, challenging the addition and arguing that the agricultural income should be accepted based on past history and evidence of agricultural operations.

During the proceedings, the appellant presented a detailed comparison of agricultural income shown and assessed for previous assessment years. The appellant highlighted the acceptance of agricultural income in earlier years and provided evidence from the Horticulture Department to support the claimed income. The appellant emphasized the continuity of agricultural activities and land holdings, asserting that there was no change in facts for the current assessment year.

The Assessing Officer's detailed investigations raised doubts about the scale of agricultural activities carried out by the assessee. The AO questioned the lack of essential resources for cultivation and the absence of proof such as purchase records, labor payments, or agricultural equipment. The reliability of affidavits submitted by the assessee was also questioned, leading to a conclusion that the assessee had not adequately demonstrated the agricultural activities.

In its decision, the Tribunal considered the past history of the case and the evidence presented, including the certificate from the Horticulture Department. The Tribunal acknowledged the assessee's engagement in agricultural operations and disagreed with the CIT(A)'s finding that the assessee was not involved in large-scale agricultural activities. Ultimately, the Tribunal partially allowed the appeal, restricting the agricultural income addition to ?22,68,500 and sustaining an addition of ?10 lakhs. The Tribunal emphasized the importance of consistency in assessing agricultural income and the need to establish the onus of proof in such cases.

In conclusion, the Tribunal's decision reflected a balanced approach, considering the evidence presented by the assessee, the past history of agricultural income assessment, and the need for consistency in determining the income source. The judgment highlighted the significance of substantiating agricultural activities and income claims to avoid discrepancies in assessments.