Kamdar Kiritkumar Chandulal HUF Vs PCIT (ITAT Rajkot)
The ITAT Rajkot allowed the appeal filed by the assessee against the order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act for Assessment Year 2020-21. The dispute related to the assessee’s claim of agricultural income of ₹41.63 lakh, which had been accepted by the Assessing Officer during scrutiny assessment under section 143(3) read with section 144B of the Act.
The assessee had filed its return declaring nil taxable income and agricultural income of ₹41,63,806. The case was selected for limited scrutiny on the issues of agricultural income risk analysis and large agricultural income per acre compared to average agricultural income for the territory, land ownership type, and land type. During the assessment proceedings, the Assessing Officer issued detailed notices under section 142(1) seeking information regarding land holding, agricultural income, crop details, productivity, agricultural expenses, and supporting evidence.
The assessee submitted various details and documents before the Assessing Officer, including revenue records in Form Nos. 7/12 and 8A, details of agricultural income and expenses, cash flow statements, bank statements, balance sheets for multiple years, certificates from the Talati-cum-Mantri, crop-wise details, sale bills, and cash receipts. The assessee explained that the increase in agricultural income was due to full utilization of land for agricultural activities, improved crop yield, better irrigation facilities, favourable monsoon conditions, and improved farming practices. It was also submitted that the family jointly carried out agricultural activities over more than 41 acres of land.
