2022 (6) TMI 1096 - AT - Income Tax

Source of Cash deposited into the Bank Account - Agricultural income - advances received from customers in land transactions - assessee is an individual engaged in the business of trading in land on very small scale, helping his father and mother who running a tea shop at Adgaon as conducting agricultural activity on land taken on rent - HELD THAT - The net agricultural income is not possible in view of possession of agricultural land in 52R which is not sufficient. It is also noted the sale bills of agricultural produce were furnished before the AO but however the AO held the bills obtained from merchant who is non-existent. There is no dispute with regard to possession of agricultural land whether it is own or on rent by the assessee and the balance amount out of the addition made by the AO u/s. 68 are out of gross agricultural income or turnover on account of land transactions activity. The assessee also furnished bills substantiating production of agricultural produce. CIT(A) ought to have considered the agricultural activity. It is also noted it was claimed by the assessee that the advances received from customers were refunded before year end but we find no such verification done by both the authorities below to confirm whether such advances were refunded or not. AR also did not bring on record anything to show that the advances from customers refunded before year end either before the CIT(A) nor before us. We deem it proper to restrict the addition to an extent of Rs.12,90,000/- being 50% of Rs.25,80,000/- on account of non furnishing of requisite details regarding the refund made to customers on account of advances received on land transactions. Thus, the order of CIT(A) is modified as indicated above accordingly and grounds raised by the assessee are partly allowed.

Summary

Issues:
Confirmation of addition of Rs.25,80,000 as undisclosed income by CIT(A) despite the claim of agricultural income.

Analysis:
The Appellate Tribunal ITAT Pune heard an appeal by the assessee against the Commissioner of Income Tax (Appeals)-2, Nashik's order for the assessment year 2013-14. The primary issue under consideration was whether the CIT(A) was justified in confirming the addition of Rs.25,80,000 as undisclosed income, disregarding the claim of agricultural income. The assessee, engaged in land trading and agricultural activities, had Rs.47,20,000 in their bank account treated as undisclosed income by the Assessing Officer (AO). The CIT(A) found that while some deposits were explained, the balance of Rs.25,80,000 was claimed to be gross agricultural income and turnover from land transactions. The CIT(A) noted that the assessee failed to fully prove the source of these deposits, especially related to agricultural activities. Although the assessee provided bills and claimed advances received from customers were refunded, no verification was done to confirm this. Consequently, the Tribunal restricted the addition to Rs.12,90,000 (50% of Rs.25,80,000) due to insufficient details regarding the refund of advances from customers in land transactions. The appeal was partly allowed, modifying the CIT(A)'s order accordingly.

In conclusion, the Tribunal partially allowed the assessee's appeal, emphasizing the lack of conclusive evidence regarding the claimed agricultural income and advances refunded from customers in land transactions. The decision highlighted the importance of substantiating financial transactions, especially in cases involving undisclosed income and agricultural activities. The judgment underscored the need for thorough verification and documentation to support claims made during tax assessments, ultimately leading to a modification of the CIT(A)'s order in favor of the assessee to a limited extent.