2023 (11) TMI 982 - AT - Income Tax

Characterization of income - Agricultural Income or income from Other Sources - leased income generated from the agricultural land - as per CIT(A) appellant has not proved the facts of giving agricultural land on lease and has not proved that agricultural land was used for agricultural purposes and agricultural income as it claimed by the appellant is not substantiative - HELD THAT - As to the extent of 17 acres 35.58 guntas of land, income of Rs. 55.30 Lakhs was submitted to be generated. Admittedly the total land holding by the assessee is 45.25 acres. The argument of AR is that proportionately the agricultural income declared by assessee at Rs. 76,79,150/- commensurate to the total land holding. This argument of the assessee has not been verified by the authorities and also not supported by evidence. The arguments of the Ld.DR also cannot be brushed aside regarding the certificate dated 20.09.2016 issued by the Tehsildhar to be relatable to the year under consideration. All these things deserves to be verified in detail by the Ld.AO. In the interest of justice, we remand this issue to the Ld.AO for denovo consideration. Assessee is directed to file RTC documents in respect of each land revealing the cultivation that was carried out during the year under consideration. Accordingly, the Ld.AO is directed to verify all the relevant details and to consider the claim of assessee in accordance with law. Grounds raised by assessee stands allowed for statistical purposes.

Issues Involved:
1. Validity of the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)].
2. Confirmation of addition of Rs. 60,38,555/- by treating agricultural income as income from Other Sources.
3. Proof of agricultural land lease and usage for agricultural purposes.
4. Reliance on the remand report by the Assessing Officer (AO).
5. Substantiation of the total agricultural income declared by the assessee.
6. Assessment of income and demand raised.
7. Levy of interest under Sections 234A and 234B of the Income Tax Act.

Summary:

1. Validity of the Order Passed by CIT(A):
The assessee contended that the order passed by the CIT(A) was bad in law, void ab initio, and against the principle of natural justice, thus requiring quashing.

2. Confirmation of Addition by Treating Agricultural Income as Income from Other Sources:
The CIT(A) confirmed the addition of Rs. 60,38,555/- made by the AO by disputing the agricultural income and treating it as income from Other Sources. The assessee argued that this addition was against the facts and erroneous.

3. Proof of Agricultural Land Lease and Usage for Agricultural Purposes:
The CIT(A) held that the assessee failed to prove the facts of giving agricultural land on lease and that the land was used for agricultural purposes. The CIT(A) noted that the appellant did not furnish details or produce lessees for examination, thus rejecting the claim of lease rentals.

4. Reliance on the Remand Report by the AO:
The CIT(A) relied on the remand report issued by the AO, which the assessee argued was passed without hearing the appellant and without considering the facts and evidence available.

5. Substantiation of Total Agricultural Income Declared by the Assessee:
The assessee submitted that they had 45.25 acres of agricultural land and provided bills of vegetables sold amounting to Rs. 16,40,595/-. The AO observed that the certificate by the Tehsildhar was an estimate and not proof of actual agricultural income. The AO restricted the agricultural income to the amount for which evidence was provided.

6. Assessment of Income and Demand Raised:
The assessee argued that the income was erroneously assessed, and the demand raised was excessive.

7. Levy of Interest under Sections 234A and 234B:
The CIT(A) levied interest under Sections 234A and 234B of the Act, which the assessee contended was erroneous both on facts and law.

Tribunal's Decision:
The Tribunal noted that the arguments and evidence provided by the assessee, including lease agreements and details of agricultural income, were not adequately verified by the authorities. The Tribunal remanded the issue to the AO for de novo consideration, directing the assessee to file RTC documents revealing the cultivation carried out during the year under consideration. The AO was instructed to verify all relevant details and consider the claim of the assessee in accordance with law.

Conclusion:
The appeal filed by the assessee was allowed for statistical purposes, with the matter being remanded to the AO for further verification and consideration.

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