Huge Agricultural Income Accepted as Genuine – No Contrary Evidence from AO

Vinubhai Keshavbhai Rabadiya Vs ITO (ITAT Surat)

Huge Agricultural Income Accepted as Genuine  – No Contrary Evidence from AO – Onus Discharged, Addition Unsustainable

Assessee declared agricultural income of ₹26,20,240 for AY 2016-17, compared to ₹4,04,995 in preceding year. AO treated ₹20,65,295 as unexplained “excess” agricultural income & disallowed expenses, alleging inflated claim. CIT(A) confirmed the addition.

Before Tribunal, Assessee explained that agricultural land was jointly held with family members; in the relevant year, brother did not take his share, resulting in higher agricultural receipts being reflected entirely in Assessee’s hands. Assessee produced land records, details of crops (sugarcane), sale bills to Sahakari Mandali, expense vouchers, and previous year’s bifurcation. Tribunal noted  that none of these facts were disputed by AO or CIT(A).

Tribunal held that merely because income increased substantially, it cannot be rejected when documentary evidences substantiate cultivation, yield & sale. Observation of CIT(A) that vouchers were “self-made” was found unjustified since expenses were supported and directly linked to cash-crop cultivation. As the entire agricultural activity stood proved & revenue brought no contrary material, Tribunal deleted the entire addition & allowed appeal.

FULL TEXT OF THE ORDER OF ITAT SURAT

This appeal is filed by the Assessee against the order dated 12.03.2025 passed by the Addl/JCIT(A)-8, Mumbai [hereinafter referred to as “CIT(A)” for short] u/s 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act” for short] for Assessment Year 2016-17.

2. The Assessee has raised following grounds of appeal :-

“1. Learned CIT(A) erred in making order by upholding addition made by ITO without considering facts, circumstances of our case and submission made by us during appeal proceedings even though agriculture income and expense duly explained with supporting evidence.

2. Learned CIT(A) erred in upholding deemed addition made by ITO, because once we duly explained genuineness of agriculture income along with supporting evidence, the onus sifts on the Assessing Officer to falsify the said material or bring new material on record. Mere rejection of good explanation does not convert good proof into no proof.”

3. The assessee filed the return of income for AY 2016-17 on 28.03.2017 declaring total income of Rs.1,39,620/-. The assessee had shown net agricultural income of Rs.26,20,240/-. The return was duly processed u/s 143(1) of the Act and was selected for Limited Scrutiny Assessment to examine whether the claim of agricultural income was correct, considering the larger agricultural income in comparison to total income. Accordingly, notice u/s 143(2) of the Act was issued on 19.09.2017 and thereafter subsequent statutory notices were issued to the assessee which were replied to by the assessee. The assessee also filed details of agricultural income along with the balance-sheet and other details of agricultural income. The Assessing Officer observed that, during the immediately preceding year i.e. 2015-16, the assessee had shown net agricultural income of Rs.4,04,995/-; whereas for AY 2016-17 he had shown net agricultural income of Rs.26,20,240/-. Thus, there was an increase of Rs.22,15,245/-. The Assessing Officer made addition of Rs.20,65,295/-, by disallowing the alleged excess agricultural income.

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

5. The Ld. AR submitted that in this particular assessment year i.e. AY 2016­17, the assessee who was possessing agricultural land with his brother, had declared the agricultural income including that of the income earned from the entire land cultivation without bifurcating the share of his brother, as his brother has not taken any agricultural share in this particular year. Thus, the increase was not hypothetical, but arose because his brother has not taken his share of the agricultural income. The Ld. AR further submitted that the assessee has large agricultural land along with his brother and they were jointly cultivating it since so many years and, therefore, the bills which were produced by the assessee should have been taken into account by the Assessing Officer as well as CIT(A).

6. Ld. DR pointed out that the assessee did not properly explain his agricultural income and had not presented any details of the land transactions. The Ld. DR relied upon the order of the CIT(A) and the assessment order.

7. We have heard both the parties and perused all the relevant material available on record. The Assessing Officer as well as CIT(A) do not dispute the fact that the assessee, along with his brother, is holding either parcels of land, out of which 3 pieces of land are held by the assessee exclusively and 5 pieces of land are jointly owned with his brother, father and mother. The assessee is also cultivating a cash crop i.e. sugarcane and has sold the same to the Sahakari Mandali and has produced all the details about the agricultural produce in the previous year as well as in the present assessment year i.e. AY 2016-17 before both the authorities. These details were not disputed either by the Assessing Officer or by the CIT(A). The details of his brother’s share for the previous year were also given by the assessee, including the Income-tax Returns for the present assessment year. These factual details were not at all disputed by the Assessing Officer or by the CIT(A). Merely stating that the assessee has declared higher agricultural income in the present year cannot deny the benefit of exclusion of agricultural income which was genuinely earned by the assessee in the present assessment year. The observations of the CIT(A) that the vouchers were self-made in respect of expenses appears to be not justifiable. The details given by the assessee before us categorially reveal that the assessee has incurred those expenses for cultivating the cash crop. Thus, the expenses disallowed by the Assessing Officer was also not justifiable. Therefore, the appeal of the assessee is allowed.

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

Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 03.12.2025.