1999 (10) TMI 91 - AT - Income Tax

Summary

Issues:
Challenge to the order passed by AO under s. 158BC(c) of the IT Act, 1961 regarding treating a part of the income as agricultural income or income from undisclosed sources.

Analysis:
The appeal was against the AO's order in a block assessment under s. 158BC(c) of the IT Act, 1961. The grounds argued were related to the treatment of income as agricultural or from undisclosed sources. The AO questioned the genuineness of the agricultural income shown in the return and asked for proof of expenditure. The AO calculated the income from agricultural and non-agricultural activities, treating the latter as income from undisclosed sources. The total undisclosed income was taxed at 60%.

During the hearing, the counsel argued that the query on agricultural income was raised belatedly, and relied on a letter from the Tehsildar as evidence of accurate agricultural income. The counsel also argued against tampering with agricultural income, citing legal precedents. The Departmental Representative supported the AO's order, questioning the Tehsildar's qualifications and relying on information from Krishi Gian Kendra.

The Tribunal considered the evidence and arguments presented. It noted the lack of detailed records supporting the agricultural income claimed by the assessee. The information from Krishi Gian Kendra was deemed not directly applicable to the case. The Tribunal found it impossible to determine the actual agricultural income based on the evidence presented by both parties.

The Tribunal highlighted that the case was a block assessment under new search and seizure provisions. It noted that no incriminating evidence was found during the search. The Tribunal concluded that the AO's attempt to convert agricultural income into taxable income was not justified, especially considering the lack of undisclosed investments or seized assets. The entire addition of undisclosed income was deleted, resulting in the quashing of the assessment order.

The Tribunal emphasized that the decision was based on the specific facts of the case and might not apply universally. It did not find it necessary to discuss each legal precedent cited, as they were considered in reaching the decision. Ultimately, the appeal was allowed, and the addition of undisclosed income was deleted, leading to the quashing of the assessment order.