Savitha Harish Vs ITO (ITAT Bangalore)
Bangalore ITAT Restores ₹26.64 Lakh Agricultural Income Addition: Evidence Could Not Be Rejected Due to Portal Size Restrictions
.The assessee declared nil taxable income after claiming agricultural income of ₹26,64,274 as exempt. During scrutiny, she furnished details of buyers, agricultural landholdings, lease deeds, RTCs and bank statements. However, the sale invoices could not be uploaded owing to the file-size restrictions on the Income-tax portal, and permission was sought to submit physical copies.
Despite this request, the AO passed the assessment order within two days, denied the agricultural income exemption and treated the entire amount of ₹26.64 lakh as unexplained money under section 69A. The CIT(A) also rejected the additional evidence filed under Rule 46A and confirmed the addition.
The ITAT observed that documentary evidence was essential to determine the genuineness of the agricultural income. The assessee had explained during assessment itself that the invoices could not be uploaded because of portal limitations. Nevertheless, the AO completed the assessment without giving her a further opportunity, while the CIT(A) refused to admit the evidence subsequently produced.
Since several supporting documents had not been examined by the lower authorities, the Tribunal restored the matter to the jurisdictional AO for de novo adjudication after verification of the entire evidence. The AO was directed to provide the assessee a reasonable and adequate opportunity of hearing. The appeal was accordingly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. The assessee has filed the present appeal against the impugned order dated 27.01.2026, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”] for the assessment year 2017-18.
2. In this appeal, the assessee has raised the following grounds: –
General and all pervasive grounds
1. The order passed by the learned Commissioner of Income Tax (Appeals) under section 250 of the Act, is opposed to law, equity, weight of evidence, natural justice, probabilities, and facts and circumstances of the Appellant’s case.
2. The appellant denies himself liable to be assessed on a total income of Rs. 26,64,274/- as against the retuned income of Nil under the facts and circumstances of the case.
Grounds on rejection of additional evidence under rule 46A of the Income Tax Rules, 1962 and violation of principles of natural justice
3. The Learned Commissioner of Income Tax (Appeals) erred in law and on facts in refusing to admit the additional evidences filed by the Appellant under Rule 46A of the Income -tax Rules, 1962, without appreciating that the Appellant was prevented by sufficien t and reasonable cause from producing the same before the Learned Assessing Officer owing to the extremely limited time granted during the course of assessment proceedings.
4. The Learned Commissioner of Income Tax (Appeals) failed to appreciate that the additional evidences filed during appellate proceedings were crucial for proper adjudication of the matter and the rejection of such evidences has resulted in grave prejudice to the Appellant.
5. The Learned Commissioner of Income Tax (Appeals) erred in rejecting the additional evidences on factually incorrect observations, particularly the finding that the Appellant had not participated in the assessment proceedings and had failed to justify the a dmission of additional evidence.
6. The Learned Commissioner of Income Tax (Appeals) failed to appreciate that during the appellate proceedings, the Appellant had, through detailed written submissions, clearly explained the circumstances which prevented the Appellant from furnishing certain documents during the assessment proceedings.
7. The Learned Commissioner of Income Tax (Appeals) failed to appreciate that the rejection of the additional evidences has resulted in serious prejudice to the Appellant and amounts to violation of the principles of natural justice, as the evidences go to the root of the matter and are essential for proper adjudication of the issue involved in the appeal.
8. The Learned Commissioner of Income Tax (Appeals) ought to have appreciated that the show cause notice issued by the Learned Assessing Officer was served on 12.11.2019, requiring the appellant to furnish the details called for on or before 16.11.2019, thereby granting an unreasonably short time for compliance.
9. The Learned Commissioner of Income Tax (Appeals) ought to have appreciated that the appellant had submitted certain documents in response to the show cause notice on 15.11.2019, and had specifically informed the Learned Assessing Officer that the Appellant was unable to upload certain documentary evidences though available, owing to the restriction on the size of documents permissible for uploading on the Income-tax portal.
10. The Learned Commissioner of Income Tax (Appeals) erred in passing the impugned order without granting the Appellant a reasonable opportunity of being heard, despite the Appellant having specifically requested for an opportunity of personal hearing through video conference, thereby violating the principles of natural justice.
Grounds on the assessment of agricultural income as unexplained money under section 69A of the Act
11. The Learned Commissioner of Income Tax (Appeals) failed to consider that despite the appellant’s bona fide compliance and request, the Learned Assessing Officer completed the assessment proceedings on 17.11.2019 under Section 143(3) by making an addition o f Rs. 26,64,274/-, without granting the appellant reasonable opportunity to furnish the remaining documents.
12. The Learned Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 26,64,274/ -, wherein the Learned Assessing Officer had arbitrarily treated the appellant’s agricultural income as unexplained money under section 69A of the Act, withou t properly appreciating the evidence and explanations furnished by the appellant.
13. Without prejudice, the Learned Commissioner of Income Tax (Appeals) failed to appreciate that the learned Assessing Officer is not justified in invoking the amended provisions of section 115BBE of the Act to levy tax at the rate of 60% and surcharge thereon at 25% when the amendment to section 115BBE was prospective and consequently could not have been applied for the transaction undertaken during the year on the facts and circumstances of the case.
14. The appellant craves leave to add, alter, modify, delete or substitute any or all of the grounds and to file a paper book at the time of hearing the appeal.
15. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.
3. We have considered the submission of both sides and perused the materials available on record. The brief facts of the case are that the assessee is an individual and for the year under consideration filed its return of income on 05.08.2017, declaring a total income of Rs. NIL. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and 142(1) of the Act were issued and served on the assessee. As the assessee failed to respond to the statutory notices, final show cause notice was issued to the assessee as to why the assessment should not be completed on a best judgment basis under section 144 of the Act and the agricultural income claimed as exempt be not brought to tax under section 69 of the Act in the absence of documentary evidence regarding proof of agricultural holdings, details of purchaser to whom agricultural produce was sold, etc. In response, the assessee submitted the details of buyers, land holding details, copy of lease deeds, copy of RTC, bank statement. The assessee further submitted that the hard copy of the sale invoices will be produced manually. Since the assessee could not furnish the sale invoices till the completion of the assessment, the Assessing Officer (“AO”), vide order dated 17.11.2019, passed under section 143(3) of the Act, held that the assessee, despite the grant of ample opportunities, has failed to substantiate the agricultural income earned by her. Accordingly, in the absence of documentary proof or evidence regarding agricultural activities, the AO held that the assessee had failed to satisfactorily explain the agricultural income by supporting it with documentary evidence. Accordingly, the entire exemption of Rs. 26,64,274/- on account of agricultural income was denied, and the amount was added to the total income of the assessee under section 69A of the Act.
4. During the appellate proceedings before the learned CIT(A), the assessee filed an application seeking admission of additional evidence under Rule 46A of the Income Tax Rules, 1962 (“the Rules”). However, the learned CIT(A), vide impugned order, rejected the application filed by the assessee on the basis that no sufficient cause was demonstrated by the assessee as to why such evidence could not be furnished during the assessment proceedings despite adequate opportunities. Further, the learned CIT(A) noted that the assessee did not respond to the notice for a hearing via video conferencing. Accordingly, in the absence of any documentary evidence contrary to the findings of the AO, learned CIT(A) upheld the addition made under section 69A of the Act. Being aggrieved, the assessee is in appeal before us.
5. During the hearing, the learned Authorised Representative (“learned AR”) submitted that in response to the show cause notice issued by the AO, the assessee filed various details vide its submission dated 15.11.2019. The learned AR submitted that due to the size constraint for uploading the documents on the E -Portal of the Department, the assessee vide its submission dated 15.11.2019 requested to furnish the hard copy of the sale invoices. The learned AR submitted that despite the specific request of the assessee, within a period of two days, the AO passed the assessment order on 17.11.2019, making the impugned addition. The learned AR submitted that when these invoices were furnished before the learned CIT(A) vide application under Rule 46A of the Rules, the said application was rejected by the learned CIT(A). The learned AR submitted that the assessee has sufficient documentation in support of its claim of earning exempt income during the year under consideration, which has been claimed as exempt, and all these details are part of the paper book filed in the present appeal.
6. On the other hand, the learned Departmental Representative (“learned DR”) submitted that even though the assessee filed partial details during the assessment proceedings, the balance details now produced by the assessee have not been examined by any of the lower authorities, and therefore, need verification. Accordingly, the learned DR submitted that the matter may be restored to the file of the AO for necessary examination of the documents now furnished by the assessee.
7. Having considered the submission of both sides and perused the materials available on record, since the dispute in the present case is regarding the genuineness of the claim of the assessee of earning agricultural income, which was claimed as exempt, we are of the considered view that such a claim can only be established by documentary evidence. It is evident from the record that during the assessment proceedings, the AO sought various details from the assessee regarding agricultural holdings, agricultural land, proof of sale of agricultural produce, details of the purchaser, etc. We find that vide its submission dated 15.11.2019, the assessee filed partial details. From the perusal of the said submission, which forms part of the paper book from pages 13 – 15, we find that certain details, such as a hard copy of the sale invoices, could not be furnished due to size constraints in uploading those documents, and accordingly, the assessee sought permission to produce a hard copy of the same. However, within a period of two days, without granting any other opportunity to the assessee, the AO passed the assessment order denying the exemption claimed by the assessee in respect of agricultural income. Further, the learned CIT(A) also rejected the application filed by the assessee seeking admission of additional evidence under Rule 46A of the Rules. On perusal of the paper book, we find that the assessee has placed on record various documents in support of its claim of earning agricultural income. As some of these documents have not been examined by the lower authorities, we deem it appropriate to restore the matter to the file of the jurisdictional AO for de novo adjudication after verification of the details filed by the assessee. We order accordingly. We further direct the assessee to furnish any other details as may be sought by the AO for complete adjudication of the issue. Needless to mention, no order shall be passed without affording reasonable and adequate opportunity of hearing to the assessee. With the above directions, the impugned order is set aside, and the grounds raised by the assessee are allowed for statistical purposes.
8. In the result, the appeal by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 18-Aug-2026.
