2017 (7) TMI 607 - AT - Income Tax

Addition u/s 68 - agriculture land income holding the same as income from other sources - Held that - The documentary evidences of the revenue officers in case of assessee, as noted above when produced before authorities below, should not have been ignored. Further, it is a fact that assessee has merely small interest income on savings. The assessee has no other income except agriculture income. Therefore, there is no material on record to show any vested interest or motive with the assessee to declare agriculture income higher than the actual amount. The authorities below have made and confirmed the addition of ₹ 18 lcs on account of income from other sources under section 68/69 but authorities below have failed to point out as to what income is earned by assessee from other sources because assessee has no other source of income except the agriculture income. The interest is from specified source and ascertained. Therefore, in the absence of any material on record that what is the other income of the assessee except that of agriculture income, in the case of Shri Jarnail Singh (Karta) (2008 (5) TMI 280 - PUNJAB AND HARYANA HIGH COURT) clearly applies in favour of the assessee. This fact is further strengthened by the fact that even in earlier years, assessee has shown the agriculture income. Therefore, there is no question of assessee earning any income from other sources other than the agriculture income. - Decided in favour of assessee.

Summary

Issues Involved:
1. Addition of ?18 lakhs under Section 68 of the Income Tax Act.
2. Classification of income from the sale of Safeda trees as 'income from other sources' instead of agricultural income.

Issue-wise Detailed Analysis:

1. Addition of ?18 lakhs under Section 68 of the Income Tax Act:

The assessee filed a return declaring an income of ?2,457 and agricultural income of ?23,21,222, which included ?18,00,000 from the sale of 1631 Safeda trees. The Assessing Officer (AO) accepted the agricultural income from Paddy and Wheat but questioned the income from the sale of Safeda trees. The AO noted that the Girdawari did not record the planting of Safeda trees and questioned the circumference of the land where the trees were claimed to be planted. The AO also pointed out that the sale price was received in cash and issued summons to the buyers, which were either returned or not complied with. The AO added ?18,00,000 as 'income from other sources' due to the failure of the assessee to produce the buyers for verification.

2. Classification of Income from Sale of Safeda Trees:

The assessee challenged the AO's addition before the CIT(A), arguing that the Safeda trees were planted on the boundaries and thus not recorded in the Girdawari. The assessee provided a certificate from the Halka Patwari and affidavits from the village Numberdar and neighbors confirming the plantation and sale of Safeda trees. The CIT(A) dismissed the appeal, stating that there was no documentary evidence of plantation and the cash receipt remained unverified.

Appellate Tribunal's Findings:

The Tribunal noted that the assessee had sufficient land holdings and had declared agricultural income in the past. The Tribunal observed that the AO did not dispute the agricultural income from other sources and that the assessee provided certificates and affidavits supporting the plantation of Safeda trees. The Tribunal criticized the AO for rejecting the certificates from revenue authorities without valid reasons and for not conducting thorough inquiries. The Tribunal also noted that the assessee had no other source of income except agricultural income and small bank interest.

The Tribunal relied on the decision of the Hon'ble Punjab & Haryana High Court in CIT Vs Jarnail Singh (Karta), which held that the certificate of the village Patwari indicating average income per acre could not be ignored. The Tribunal concluded that the addition of ?18 lakhs as 'income from other sources' was unjustified and deleted the addition.

Conclusion:

The Tribunal set aside the orders of the authorities below and deleted the addition of ?18 lakhs, treating the agricultural income from the sale of Safeda trees as genuine. The appeal of the assessee was allowed.