2016 (5) TMI 904 - AT - Income Tax

Addition u/s.69A - income shown against sale of Mosambi - claim of agricultural income - Held that - Assessee during the course of appeal proceedings, has filed another letter from Talati which shows Mosambi trees appearing in the 7/12 extracts for F.Y. 2006-07 and 2011-12. However, the authenticity of the letter was not verified by the CIT(A) on the ground that there was no request for admission of additional evidence. The extent of agricultural land held by the assessee is not doubted by the AO. Thereafter, what is the extent of other agricultural income out of such land has not been considered by the AO. The records also show that the assessee is not doing any business as there is no discussion by the AO in the body of the assessment order on this issue. Under these circumstances when it is the claim of the assessee that only source of income is agriculture, therefore, in our opinion, the matter requires a re-visit to the file of the AO with a direction to give one more opportunity to the assessee to substantiate his case with necessary evidence to his satisfaction. Needless to say the AO shall give due opportunity of being heard to the assessee and decide the issue as per law. We hold and direct accordingly. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Addition of unexplained money u/s.69A of the I.T. Act based on agricultural income of the assessee.

Analysis:
The appeal was against the addition of ?6,55,685 made by the AO under section 69A of the I.T. Act, concerning the agricultural income of the assessee. The facts revealed that the assessee deposited ?9,12,537 in his bank account, attributing it to the sale of agricultural land. However, the AO found discrepancies in the claim as no proof of investment in a residential house was produced. The AO also noted unverified agricultural income of ?6,80,000. Subsequently, the AO issued a notice u/s.148 after recording reasons. The AO summoned Md. Saleem and Co. to verify the transactions, but discrepancies were found in the bills produced by the assessee. The AO, after multiple investigations, added ?6,55,685 as unexplained money u/s.69A.

CIT(A) Decision:
The CIT(A) upheld the AO's decision, emphasizing that the Talati's statement and the denial of bill issuance by Md. Saleem and Co. were crucial. The CIT(A) found the explanation provided by the assessee unsatisfactory. The CIT(A) rejected the challenge to the notice u/s.147/148, stating it was based on the assessee's statement. The CIT(A) affirmed the addition u/s.69A, considering the amounts credited to the assessee's bank account as owned by him due to lack of maintenance of books of account.

Appellate Tribunal Decision:
The Tribunal allowed the appeal for statistical purposes, directing a re-visit to the AO for the assessee to substantiate his case with necessary evidence. The Tribunal found discrepancies in the AO's consideration of agricultural income and directed granting the assessee another opportunity to present evidence. The Tribunal emphasized the need for due process and proper verification before concluding on the agricultural income issue.

In conclusion, the Tribunal's decision highlighted the importance of substantiating claims with evidence and ensuring a fair opportunity for the assessee to present their case. The matter was remanded to the AO for a fresh assessment based on the additional evidence to be provided by the assessee.