Subal Chandra Nag Vs DCIT/ACIT (ITAT Ranchi)
Assessee had declared agricultural income of ₹6,10,000/- for AY 2014-15 & ₹6,12,500/- for AY 2015-16. Assessee owns 6 acres of agricultural land. During scrutiny, AO accepted the gross agricultural receipts of ₹16,07,370/- (AY 2014-15) & ₹17,34,240/- (AY 2015-16) & even computed net agricultural income at the same figures declared by Assessee. However, surprisingly, AO disbelieved the agricultural income & treated it as “Income from Other Sources”. CIT(A)/NFAC upheld the addition without properly appreciating facts.
Before Tribunal, Assessee submitted a certificate issued by the Village Mukhia confirming that he owns 6 acres of land with mango, guava & other fruit gardens, a pond from which fish are harvested, & cultivation of paddy, wheat & green vegetables. This certificate clearly established that Assessee is engaged in agricultural activities & earns agricultural income. The AR argued that once AO has himself accepted the agricultural receipts in the P&L account & even computed net agricultural income, he cannot treat the same income as non-agricultural without evidence. It was also argued that if agricultural income was disbelieved, even the gross agricultural receipts should have been removed from the profit & loss account, which AO did not do.
Departmental Representative supported the orders of AO & CIT(A). However, Tribunal observed that the certificate issued by the Village Mukhia conclusively proves ownership of agricultural land & existence of agricultural operations. Once the fact of agricultural land & actual cultivation is established, the income therefrom cannot be brought to tax under “Income from Other Sources”. Tribunal also noted that AO’s action was self-contradictory as he accepted the gross receipts but rejected only the net income without proper reasoning.
