Shrishail Dhulappa Honavad Vs ITO (ITAT Bangalore)
No bills ≠ bogus: Bangalore ITAT deletes Sec 69A addition on agricultural income
In this case, the assessee had declared agricultural income from cultivation carried out on about 39 acres of land, and the Assessing Officer accepted neither the full claim nor the explanation for a portion of receipts amounting to Rs. 7,00,761. The addition was made under section 69A merely because bills and vouchers were not available for certain local market sales and for an amount routed through the assessee’s son.
The Tribunal noted that the ownership of agricultural land and the fact of agricultural activity were never disputed by the department. It also recorded that out of total agricultural receipts of Rs. 34,50,000, documentary evidence for Rs. 27,49,239 had already been furnished, and only the balance related to direct local sales where formal billing was not maintained. The Bench accepted that, in rural agricultural transactions, direct sales without formal invoices are common and that this by itself cannot justify treating the receipts as unexplained money.
On section 69A, the Tribunal held that the provision applies only when the assessee is found to be the owner of money and fails to satisfactorily explain its nature and source. Here, the assessee’s explanation was that the receipts arose from sale of agricultural produce grown on his land, and the AO had not brought any contrary material to show any non-agricultural source or to establish that the amount represented unexplained money. The addition, therefore, was held to be based merely on suspicion arising from lack of some vouchers, which is not enough in law.
The Tribunal also accepted the explanation regarding Rs. 1,84,969 received through the son’s bank account, observing that the department had not disproved the assessee’s case that it represented agricultural sale proceeds first credited to the son and later transferred to the assessee. Similarly, the balance amount of Rs. 5,15,792 was treated as direct sale proceeds of crops sold to traders and vendors from the field. Since the agricultural operations themselves were not doubted, the Tribunal found no basis to sustain the addition.
The appeal was accordingly allowed and the addition of Rs. 7,00,761 made under section 69A and taxed under section 115BBE was deleted. The ruling reinforces that absence of formal bills for part of agricultural sales cannot, by itself, justify treating such receipts as unexplained income.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
