2024 (11) TMI 1213 - AT - Income Tax

Unexplained income of cash deposits in savings bank account - sale proceeds of Agricultural land assessed as long term capital gain - assessee submitted that the assessee is in possession of substantial agricultural land along with his brother and involved in production of export quality roses in poly house. For this purpose, the assessee has also availed bank loan. HELD THAT - We find that in support of agricultural income the assessee has relied on statistical data report prepared by Professor of Economics Agricultural College, Pune but the said report cannot be sacrosanct for the purposes of proof of agricultural income and the assessee needs to substantiate the same before the AO with proper and supporting evidences. At the same time we find that the assessment order was passed ex-parte i.e. in the absence of assessee and first appeal order was passed after considering the remand report sent by the Assessing Officer. Under these circumstances we find that the assessee could not support his case properly before the AO, thus we deem it appropriate to set-aside the order passed by Ld. CIT(A) and remand the matter back to the file of the Assessing Officer with direction to pass assessment order afresh - The grounds raised in this appeal are accordingly allowed for statistical purposes.

Summary

Issues:
1. Addition of cash deposits in savings bank account as unexplained income.
2. Addition of long term capital gain on sale of agricultural land.
3. Disallowance of deduction claimed under section 54F of the Income Tax Act.

Analysis:

1. Cash Deposits in Savings Bank Account:
The appellant contested the addition of Rs. 31,58,740 as unexplained income from cash deposits in the savings bank account, arguing that the funds were proceeds from agriculture sales. The appellant, an agriculturist, presented evidence of agricultural activities, including production of export-quality roses, tomatoes, and wheat. The appellant claimed that the entire amount deposited in the bank was from the sale of agricultural produce. The appellant provided 7/12 extracts and statistical data reports to support the agricultural income claim. The appellant also highlighted previous cases where similar estimates of agricultural income were accepted. The Tribunal noted the ex-parte assessment and remanded the matter to the Assessing Officer for a fresh assessment, emphasizing the need for proper substantiation of agricultural income.

2. Long Term Capital Gain on Sale of Agricultural Land:
Regarding the addition of Rs. 39,32,662 as long term capital gain on the sale of agricultural land, the appellant argued that the land was not a capital asset as it was situated more than 8 kilometers from the nearest municipality. The appellant provided a certificate from the Public Works Department stating the distance from the municipality. Additionally, the appellant claimed that the sale proceeds were invested in a residential building, making them eligible for deduction under section 54F. The Tribunal observed discrepancies in the assessment, including a change in the fair market value reported by the Assessing Officer in the remand report. The Tribunal directed the Assessing Officer to reevaluate the capital gain issue, considering the evidence presented by the appellant and providing a fair opportunity for the appellant to respond.

3. Disallowance of Deduction under Section 54F:
The appellant challenged the disallowance of the deduction claimed under section 54F of the Income Tax Act. The appellant provided additional evidence, including a certificate and proposed plan for a residential house, to support the claim. The Tribunal noted the discrepancies in the assessment regarding the valuation of the property and the denial of the deduction under section 54F. The Tribunal directed the Assessing Officer to reconsider the appellant's claim for deduction under section 54F, taking into account the evidence provided.

In conclusion, the Tribunal allowed the appeal for statistical purposes and remanded the case back to the Assessing Officer for a fresh assessment, emphasizing the need for proper substantiation of agricultural income and a fair evaluation of the capital gain and deduction claims.