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TMI Blog2024 (9) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... ne and assessee has submitted that the agricultural expenses were met out of sale of seedlings to farmers is acceptable. If at all required, assessee would have grossed up the sales by including the seedlings sales and claimed the agricultural expenditure. Therefore, no reason to suspect the income declared by the assessee. Accordingly, the grounds raised by the assessee are allowed. - Shri S. Rifaur Rahman, Accountant Member For the Assessee : Shri S.C. Garg, CA For the Revenue : Shri Om Parkash, Sr. DR ORDER The assessee has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals), Delhi [ Ld. CIT(A) , for short]/National Faceless Appeal Centre (NFAC) dated 21.08.2023 for the Assessment Year 2015-16. 2. The assessee has raised following grounds of appeal :- 1. The Ld. AO erred in law and on facts in disallowing the claim of the assessee of having earned agricultural income at Rs. 23,36,957/- and the Ld. CIT(A), NFAC erred in law and on facts in confirming the action of the Ld. AO treating the same as bogus without making any verification in the facts and circumstances of the case. 2. The Ld. AO erred in law and on facts in making the addition of Rs. 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 142(1) of the Income-tax Act, 1961 (for short the Act ) and served on the assessee. The e-proceedings were conducted as per the option of the assessee and informations were filed as and when called for. The Assessing Officer observed that assessee is deriving salary income from Pahuja Seeds Pvt. Ltd. as a Director, income from house property and income from other sources. During assessment proceedings, Assessing Officer observed that assessee has shown agricultural income of Rs. 23,36,957/- under section 2(1A) of the Act and claimed the same as exempt u/s 10(1) of the Act, thus the assessee has claimed tax rebate on agricultural income of Rs. 6,01,097/-. The Assessing Officer further observed that assessee has not claimed any expenses for any agricultural income. Because of this, Assessing Officer was of the opinion that claim of agricultural income appeared doubtful. Accordingly, assessee was asked to furnish complete details with supportive evidence for the income from agriculture and to furnish explanation with supporting evidences to justify the reasonability and genuineness of the claim of exemption of agricultural income. In reply, the assessee has furnished the copy of holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the year as agricultural income. Mother seed is provided to the assessee by the related concerns for whom he produces the seeds. Other expenditure on production is met by sales of seeds of lower quality and seedlings (poudh) to the mobile vendors / kitchen gardeners. The vegetables which are not convertible into seeds are sold in the open market. This system of accounting the agricultural income has been adopted by the assessee consistently year after year and has been accepted in scrutiny assessments since many years. Submissions in this regard made before Assessing Officers from time to time are placed at Page 122, 125, 135, 138, 141, 143, 146, 149 157 of the paper book. 4. Agricultural income declared over the years : Agricultural Income declared by the assessee from AY 1988-89 to A Y 2015-16 are placed at Page 89 of the paper book. The agricultural income in the subsequent years are as under: Assessment Year Agricultural Income declared 2016-17 34,90,019 2017-18 38,76,467 2018-19 33,83,588 2019-20 34,05,617 2020-21 33,90,794 2021-22 33,87,821 2022-23 33,73,133 2023-24 33,43,300 5. AO's observations : In Para 4 of the order, the AO noticed that the assessee had not claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... di Tax. No Mandi Tax or Sales Tax etc. is applicable on agricultural produce sold outside Mandi therefore, no registration with Sales Tax or Mandi was required for related concerns purchasing seeds from the assessee. (iv) As a matter of fact, the AO was largely influenced by the fact that the assessee had sold his produce to related concerns. Vegetable seeds are not shelf products. No other company would purchase seeds from the assessee in view of the fact that the assessee has related concerns dealing in the same products. Any other company would entertain doubt about the quality of seeds since the quality cannot be verified by visual inspection. Since the related concerns are assured about the quality, it does not pose any problem either for the related companies or for the assessee. For this reason, the assessee sells all his production to the related entities. In the process, both the assessee as well as the companies gain extra benefit in the form of quality assurance as well as protection of secrets involved in hybrid seeds. (v) The Ld. AO was also not justified in considering the bills issued by the assessee (Page 27, 31, 32, 33, 36-41) as self-serving documents. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of hearing through video conferencing may kindly be afforded so that the appellant can forward oral arguments before your honor. The request was made in those proceedings since the portal did not enable the Seek Video Conference Request Button. The Ld. CIT (Appeals) NFAC did not grant any opportunity for personal hearing through VC. 8. On the other hand, ld. DR for the Revenue relied upon on the orders of the lower authorities. 9. Considered the rival submissions and material placed on record. I observed that the Assessing Officer noticed from the informations submitted by the assessee that the assessee has not claimed any expenses for earning agricultural income. With the above observation, the details were called for from the assessee and after observing the submissions of the assessee, the Assessing Officer rejected the submissions of the assessee with the observation that assessee did not furnish any reasonable explanation and computation of agricultural income along with books of account maintained for the agricultural activities. I observed that assessee is graduated in agricultural science from Agricultural University, Ludhiana and he is into vegetable seeds business. It i ..... 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