Transparent Agro Pvt. Ltd. Vs ITO (ITAT Delhi)
Delhi ITAT Upholds Reassessment and Denial of Agricultural Income Exemption; Section 68 Addition Remanded Where Loans Were Opening Balances
The Delhi ITAT upheld the reassessment and additions made in the case of a company claiming substantial exempt agricultural income, holding that the Assessing Officer was justified in reopening the assessments for AYs 2014-15 to 2016-17 based on tangible material gathered during scrutiny of subsequent years, which revealed that the assessee was not carrying on genuine agricultural operations. The Tribunal accepted the Revenue’s finding that the land had been leased to a hotel company, no evidence of agricultural produce, sale bills, transportation records or supporting bank entries had been furnished, and therefore the amounts shown as agricultural income and agricultural rent were rightly assessed as income from other sources. The Tribunal also held that the principle of res judicata does not apply to income-tax proceedings, and acceptance of similar claims in earlier years did not preclude fresh examination. However, for AY 2020-21, while sustaining the denial of exemption for agricultural income, the Tribunal remanded the addition under section 68 in respect of unsecured loans after noting the assessee’s contention, supported by audited financial statements and confirmations, that no fresh loans had been received during the year and the impugned amount represented only opening balances. Holding that this factual aspect required verification, the Tribunal restored the issue to the Assessing Officer with a direction that if no loan was received during the relevant year, no addition under section 68 could be made.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The appeal in ITA Nos. 623 to 627/Del/2026 for AYs 2014-15 to 2016-17, 2018-19 and 2020-21, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘Id. CIT(A), in short] dated 19.11.2025 for AY 2014-15, dated 19.11.2025 for AY 201516, dated 19.11.2025 for AY 2015-16, dated 19.11.2025 for AY 2018-19 and dated 28.11.2025 for AY 2020-21 against the order of assessment passed u/s 147 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 29.03.2022 for AY 2014-15, dated 29.03.2022 for AY 201516, dated 30.03.2022 for 2016-17, dated 22.04.2021 for AY 2018-19 and dated16.09.2022 for AY 2020-21 the Assessing Officer, Assessment Unit (hereinafter referred to as ‘Id. AO’). Identical issues are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience.
2. None appeared on behalf of the assessee despite issuance of notice. Hence we proceed to dispose of these appeals on hearing the Learned DR and based on materials available on record.
ITA No. 623/De1/2026 — Asst Year 2014-15 — Assessee Appeal
3. The Assessee is a private limited company incorporated on 11-06-2001 and stated to be engaged in agricultural activities since then. The return of income for the assessment year 2014-15 was filed by the Assessee company on 28-11-2014 declaring total income of Rs 1,21,578 and agricultural receipts at Rs 1,49,08,230 inclusive of rent received on agricultural land of Rs 18 lakhs and had also earned income from dividend. Both agricultural income and dividend income were claimed as exempt in the return of income. During the course of scrutiny assessment proceedings for assessment year 2016-17 and 2017-18, the agricultural activity claimed by the Assessee was found by the Learned AO to be bogus and unsubstantiated. The pattern noticed in those years coupled with the fact that assessee had been consistently claiming large amounts as agricultural income led the Learned AO to form a prima facie belief that similar bogus claims had been made in earlier assessment years also to evade tax . Accordingly, the case of the assessee for assessment year 2014-15 was reopened under section 147 of the Act vide issuance of notice under section 148 of the Act dated 31-3-2021 after obtaining due sanction from the competent authority in terms of section 151 of the Act. The case of the revenue is that the tangible material need not necessarily pertain only to the same year. Material arising in subsequent years can constitute valid information if it reveals a pattern or modus operandi indicating escapement of income in an earlier year. In the case of the assessee herein, detailed inquiries were carried out in assessment years 2016-17 and 2017-18 which unearthed the facts demonstrating that the assessee was not carrying on genuine agricultural activity and that the income shown as agricultural was in fact non-agricultural and unsubstantiated. Accordingly, the learned AO noted that such material was sufficient to form a bona fide belief that income claimed as exempt had actually escaped assessment within the meaning of Explanation 1 to Section 147 of the Act. Notice under section 148 of the Act stood issued to the assessee on 31-3-2021. In response, the assessee filed its return of income on 28-5-2021 declaring the same old total income of Rs 1,21,580 and requested for reasons recorded for reopening the assessment. Thereafter the case was transferred to faceless unit of the income tax department and notices were served through email of the assessee. No response was made to the notices by the assessee. Finally a show cause notice along with the draft assessment order was sent to the assessee. The assessee filed its reply for the same stating that post Covid 19, the entire finance and accounts department of the assessee had changed and the new staff is in the process of collating the details and requested for additional time. In the said letter, the assessee also again sought for reasons recorded for reopening the assessment and the sanction given by the approving authority in terms of section 151 of the Act.
4. The reassessment was completed under section 144 r.w.s. 147 r.w.s. 14413 of the Act on 29-3-2022 determining total income at Rs 1,50,29,810 after making addition of Rs 18,00,000 on account of rental income stated to be from agricultural land as income from other sources and treating the agricultural income as income from other sources in the sum of Rs 1,31,08,230.
5. The Learned CIT(A) upheld the validity of reopening of assessment under section 147 of the Act. In respect of additions made by the Learned AO, the Learned CIT(A) noted that in the assessment proceedings, the Learned AO had made detailed enquiries to verify the genuineness of the assessee’s claim of exemption on account of agricultural income. The Learned AO had not only examined the financial statements and books of accounts of the assessee but also referred to the findings of subsequent assessment years where field inspection and third party verifications were carried were conducted. The field enquiries and third party verification conducted revealed that the assessee had rented out its land to M/s Asian Hotels North Limited and was not itself carrying out any agricultural operations during the relevant period. Further, the assessee had not produced any sale bills, evidence of transportation or bank entries supporting the sale of agricultural produce. The assessee had only contended that it has been showing agricultural income regularly in earlier years which had been accepted by the revenue. This claim of the assessee was rejected by the Learned CIT(A) on the ground that principle of Resjudicata does not apply to income tax proceedings. Hence, on merits of the additions, the Learned CIT(A) upheld the action of the Learned AO and confirmed the additions. No contrary evidence has been produced by the assessee to controvert the findings of the lower authorities. Hence, we do not deem it fit to interfere in the orders of the learned CIT(A). Accordingly, the grounds raised by the assessee are dismissed.
6. In the result, the appeal of the assessee for the assessment Year 2014-15 is dismissed.
ITA No. 624/De1/2026 — Asst Year 2015-16 — Assessee Appeal ITA No. 625/Del/2026 — Asst Year 2016-17 — Assessee Appeal
7. The facts prevailing in these years are exactly identical to the facts prevailing in Assessment Year 2014-15 and hence the decision rendered by us hereinabove for Assessment Year 2014-15 shall apply mutatis mutandis for other assessment years also.
8. In the result, the appeals of the assessee for the Assessment Years 2015-16 and 2016-17 are dismissed.
ITA No. 626/De1/2026 — Asst Year 2018-19 — Assessee Appeal
9. For the assessment year 2018-19, there is no issue of challenge of validity of reopening under section 147 of the Act. However, with regard to the claim of exemption on account of agricultural income, the Learned AO granted partial relief in the assessment and made the similar addition by denying the claim of exemption of on account of agricultural income and making addition on account of rental income as was made in earlier years referred supra. The same was upheld by the Learned CIT(A). Hence the decision rendered by us herein above for earlier assessment years on merits hereinabove shall apply mutatis mutandis for assessment year 2018-19 also. Accordingly, the grounds raised by the assessee are dismissed.
10. In the result, the appeal of the assessee for the assessment year 2018-19 is dismissed.
ITA No. 627/Del/2026 — Asst Year 2020-21 — Assessee Appeal
11. The Learned AO in this year had denied the claim of exemption on account of agricultural income for the same reasoning as was adduced in the earlier years, which has been upheld by the Learned CIT(A). This has been already adjudicated by us hereinabove. Hence the grounds raised by the assessee in this regard before us are hereby dismissed.
12. The learned AO noted that the assessee was in receipt of unsecured loans of Rs 1,27,23,019. Since no details were filed by the assessee, the same was added as unexplained cash credit under section 68 of the Act by the Learned AO in the assessment completed under section 144 of the Act. Before the Learned CIT(A), the assessee contended that no fresh loan was taken nor was any repayment made during the year under consideration. The assessee placed on record the audited financial statements as on 31.3.2020 showing the carry forward balance of unsecured loans and submitted additional evidences as under:-
a) Name and addresses of lenders together with their PAN
b) Loan chart from Financial Years 2017-18 to 2019-20
c) Extract of tax audit report showing the relevant disclosure of loans received in Assessment Year 2018-19
d) Extracts of audited financials for financial years 2017-18, 2018-19 and 2019-20
e) Confirmations from respective parties for Financial years 2017-18, 2018-19 and 2019-20.
Despite all these documents and explanation, the Learned CIT(A) upheld the addition made by the learned AO.
13. We find that the assessee had taken a stand that no loans were received during the year under consideration. In support of this, the assessee had filed the relevant documents. This matter requires factual verification by the Learned AO. Hence in the interest of justice and fair play, we deem it fit and appropriate, to restore this appeal to the file of the learned AO for denovo adjudication in accordance with law. If on verification, it is found that no loan was received during the year, then no addition could be made under section 68 of the Act in the hands of the assessee. The assessee is also directed to co-operate with the expeditious disposal of the set aside assessment proceedings in its own interest by not taking unwarranted adjournments except due to exceptional or bonafide circumstances. With these observations, the appeal is restored to the file of the Learned AO and grounds raised by the assessee in this regard is allowed for statistical purposes.
14. In the result, the appeal of the assessee for the Assessment Year 2020-21 is partly allowed for statistical purposes.
15. To sum up, the appeals of the assessee for the Assessment Years 2014-15, 2015-16, 2016-17 and 2018-19 are dismissed and appeal of the assessee for the Assessment Year 2020-21 is partly allowed for statistical purposes.
Order pronounced in the open court on 24/07/2026.
