ITAT Deletes Section 69A Addition as Agricultural Income Was Supported by Documentary Evidence

Parshotmbhai Patel Vs ITO (ITAT Ahmedabad)

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, allowed the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), for Assessment Year 2020-21. The dispute concerned an addition of ₹31,76,222 made under Section 69A of the Income-tax Act towards alleged unexplained agricultural income and its taxation under Section 115BBE.

The assessee had filed a return declaring total income of ₹5,72,650. The case was selected for scrutiny on the issue of agricultural income. During the assessment, the Assessing Officer treated agricultural receipts of ₹35,76,222 as unexplained money under Section 69A. The assessee’s appeal before the CIT(A) was dismissed.

Before the Tribunal, the assessee submitted that he was a farmer who had consistently disclosed agricultural income in earlier years. He contended that all supporting evidence had been furnished during the assessment proceedings, including bank statements showing agricultural receipts, agricultural sale bills, Uttara No. 7/12 extract, Gam Namuno 8A, Hak Patrak-6 (land ledger), and proof of sale of agricultural produce under the Government’s Minimum Support Price scheme to Government State Civil Supply Ltd. The assessee also pointed to bank credits received from the relevant Gujarat Government agency and argued that these documents had been ignored by both the Assessing Officer and the CIT(A). The Revenue maintained that the assessee had failed to establish that the receipts represented agricultural income.

After examining the record, the Tribunal observed that the assessee had produced all relevant documents supporting his agricultural income, including land records, agricultural produce bills, and bank statements reflecting the credit entries. It held that these materials had been ignored by the Assessing Officer. The Tribunal further noted that the Department had accepted the assessee’s agricultural income in earlier years and that he continued to derive agricultural income during the relevant assessment year. It held that merely because the assessee had revised his income could not be a valid ground for rejecting or disallowing the agricultural income. Accordingly, the Tribunal held that the addition made under Section 69A as unexplained agricultural income was unsustainable and allowed the appeal.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

The appeal filed by the assessee is against the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 04.08.2025 for the Assessment Year (in short “AY”) 2020-2 1.

2. The assessee has raised the following grounds of appeal:

“(1) That on facts, and in law, the learned NFAC has erred in not considering the grievously submissions, evidences filed, particularly the fact of having revised the computation of has in on income to correct the bona fide mistake, and addition the erred confirming Rs.31,76,222/ made u/s 69A of the Act towards unexplained agricultural income, and taxing it u/s 11588E of the Act.

(2) That on facts, in law, and on evidence on record, the learned NFAC ought to have accepted that there was a bona fide error in showing double agricultural income due to software/technical glitch, and ought to have deleted the entire addition as prayed for.

(3) The appellant craves leave to add, alter, amend any ground of appeal.”

3. The assessee filed return of income on 30.01.2021 declaring total income of Rs.5,72,650/-. The case of the assessee was selected for scrutiny for the reasons “agricultural income”. Notice u/s 143(2) of the Income Tax Act, 1961 (in short “the Act”) was issued and duly served on assessee. The Assessing Officer (in short “the AO”) observed that the assessee has shown agricultural receipts of Rs.35,76,222/- as unexplained money u/s 69A of the Act.

4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

5. The Ld. Authorised Representative (in short “Ld. AR”) for the assessee submitted that the assessee is a farmer and has income from agricultural activities and regularly offering his agricultural income in his return of income in past years also. The assessee has given the details of bank statement in respect of the agricultural income along with the agricultural bills before the AO. During the assessment proceedings the assessee also filed his ownership proof in Uttara No.7/12 extract as well as Gam Namuno 8A 85 Hak Patrak-6 (land ledger). These documents categorically mention that assessee is drawing agricultural income, in fact the bills which were submitted was more than Rs.8,00,000/- and the same was credited/received by the assessee in his bank statement on 11.04.2019. The assessee also sold his agricultural produce in the government scheme of minimum support price to the Government State Civil Supply Ltd. The assessee has received from the relevant Gujarat Government Agency certain amount and the same is reflected in his passbook on 08.04.2019 and 28.02.2020. All these details were before the AO as well as before the CIT(A), but both the authorities ignored the same.

6. The Ld. Departmental Representative (in short “Ld. DR”) for the Revenue relied upon the assessment order and the order of the Ld. CIT(A). The Ld. DR further submitted that the assessee did not prove that the assessee received agricultural income or any other amount deriving from agricultural produce.

7. Heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the assessee has given all the relevant documents related to his agricultural income including that of the agricultural produce, details of land extracts, the bills connected to the agricultural trading/produce to the concerned parties and the bank statement giving the details of the said credit entries. The AO has totally ignored these details given by the assessee. In fact, the agricultural income in the past years have been accepted by the Department and in continuation the assessee is deriving the agricultural income from his agricultural activities in A.Y. 2020-21 as well. Thus, merely on the basis that the assessee has revised his income cannot be the criteria for rejecting/disallowing the assessee his agricultural income. Therefore, the addition u/s 69A of the Act as unexplained agricultural income does not sustain.

8. In result, appeal of the assessee is allowed.

Order pronounced in the open court on 18.06.2026