2022 (7) TMI 493 - AT - Income Tax

Addition as income from other sources as against agricultural income declared by the assessee - submission of assessee that since the assessee is holding 38.86 acres of agricultural land which is not in dispute, therefore, some benefit of agricultural income should be given to the assessee - HELD THAT - Holding of 38.86 acres of agricultural land by the assessee is not in dispute since CIT (A) has given a finding on this issue. The allegation of the Revenue is that the assessee failed to produce any evidence regarding the expenditure towards carrying out of such agricultural activities by him, the yield of flowers and vegetables and the sale of such products in the market. At the same time, holding of 38.86 acres of agricultural land is not in dispute. Therefore, in our opinion, some agricultural income should be made available to the assessee. On being a pointed query by the Bench at the time of hearing, the learned Counsel for the assessee submitted that the land is situated at Kurnool and rainfed. Considering the totality of the facts of the case and in the interest of justice, the benefit for the A.Y 2003-04, for the A.Y 2004-05 and for the A.Y 2005-06, as agricultural income, in our opinion, will meet the ends of justice. We hold and direct accordingly. The order of the CIT (A) for the above 3 years are accordingly modified and the AO is directed to give the benefit of agricultural income for A.Y 2003-04, for the A.Y 2004-05 and for the A.Y 2004-06 respectively. Grounds raised by the assessee are thus partly allowed.

Summary

Issues:
Appeals against CIT (A) orders for A.Ys. 2003-04 to 2005-06 on additions towards agricultural income.

Analysis:
1. Background: The appeals by the assessee challenged the CIT (A) orders confirming additions towards agricultural income for A.Ys. 2003-04 to 2005-06.

2. Assessing Officer's Findings: The Assessing Officer noted significant agricultural income discrepancies during assessment proceedings based on the statement recorded u/s 131 of the I.T. Act. The assessee's explanations lacked supporting evidence, leading to the treatment of agricultural receipts as "income from other sources."

3. CIT (A) Decision: The CIT (A) upheld the Assessing Officer's actions, emphasizing the absence of new evidences like vouchers or bills to substantiate agricultural activities. The remand report highlighted the lack of expenditure records for agricultural operations, questioning the credibility of the claimed agricultural income.

4. Tribunal Proceedings: The Tribunal considered arguments from both sides and reviewed the Assessing Officer and CIT (A) orders. Acknowledging the assessee's ownership of 38.86 acres of agricultural land, the Tribunal found merit in granting some benefit for agricultural income despite the absence of detailed expenditure evidence.

5. Tribunal's Decision: The Tribunal modified the CIT (A) orders, directing the Assessing Officer to allow agricultural income benefits of Rs. 25,000/- for A.Y 2003-04, Rs. 30,000/- for A.Y 2004-05, and Rs. 35,000/- for A.Y 2005-06, considering the land's rainfed nature. The appeals were partly allowed, providing relief to the assessee.

6. Conclusion: The Tribunal's decision balanced the ownership of agricultural land with the lack of detailed evidence, granting partial relief by allowing specific agricultural income benefits for the respective assessment years. The judgment aimed to ensure fairness and justice in determining the taxable agricultural income, considering the unique circumstances of the case.