Case Law Details
Jesal Jatin Desai Vs ITO (ITAT Surat)
In the case of Jesal Jatin Desai v. ITO (ITAT Surat), the Income Tax Appellate Tribunal (ITAT) addressed the appeal concerning the disallowance of agricultural income by the Assessing Officer (AO) for the assessment year 2017-18. The assessee, an individual with agricultural land holdings of 8.69 acres, claimed agricultural income of Rs. 8,10,470. However, the AO disallowed the full agricultural income on the grounds that the assessee failed to provide sufficient supporting evidence, such as invoices or receipts for the sale of agricultural produce and bills for expenditures incurred. Despite the fact that the assessee had shown agricultural income consistently in past years, the AO maintained that mere declarations without supporting documentation were insufficient to prove the legitimacy of the claimed agricultural income.
The ITAT, after reviewing the case, noted that the agricultural land holding was not disputed by the lower authorities and that the assessee had consistently reported agricultural income in previous years. However, the tribunal upheld the disallowance of a portion of the claimed agricultural income due to the absence of documentary evidence, which is necessary for substantiating such claims. The ITAT allowed a portion of the agricultural income (Rs. 5,00,000), acknowledging the consistency in the assessee’s agricultural activities, but upheld the disallowance of the remaining Rs. 3,10,470. As a result, the appeal was partly allowed, with the remaining agricultural income claim being disallowed for lack of supporting evidence.
FULL TEXT OF THE ORDER OF ITAT SURAT
1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi [for short to as “NFAC/Ld. CIT(A)”] dated 22.04.2024 for assessment year 2017-18, which in turn arises out of assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 30.12.2019.
2. Rival submissions of both the parties heard and record perused. The Ld. Authorized Representative (Ld.AR) for the assessee submits that assessee is an individual, also partners of various firms and proprietor of M/s Jaidev Communications. During the year under consideration, assessee earned income from business, capital gains and from other sources. The assessee while filing his return of income has shown agricultural income of Rs.8,10,470/- and such agricultural income shown for rate purpose. The assessee has shown agricultural income from several past assessment years and such agricultural income is accepted without any variation. The assessee has agricultural receipt on account of agricultural income of Rs.11,53,980/-and claimed expenditure of Rs.3,43,510/- and thus showing net agricultural income of Rs.8,10,470/-. The assesse is having agricultural holding of 8.69 acres. The lower authorities have not disputed the area of agricultural land holding by assessee. The Assessing Officer disallowed the agricultural income by taking view that assessee has not furnished supporting evidence in the form of bills or invoices for sale of agricultural yield or any bills of expenditure. The Ld. AR for the assessee submits that in the agricultural activities, there is no practice of obtaining such receipt. Even otherwise, assessee has shown such agricultural product in local market. The Ld. AR for the assessee submits that assessee has shown agricultural income of Rs.6,64,800/- in assessment year 2015-16, Rs.7,90,380/- in assessment year 2016-17 and Rs.8,80,420/- in assessment year 2018-19 respectively. The return of income in previous years are placed on record. Copy of agricultural holding is also placed on record. The Ld. AR for the assessee submits that in series of decisions of this co-ordinate Bench had allowed agricultural income, wherein the holding of agricultural land is not a dispute. To support her submission, Ld. AR for the assessee relied on the following decisions:
> Vasant Kanji Gala vs. ACIT [ITA No.684 & 685/SRT/2023 dated 31.01.2024]
> Jatin Ravindranath Desai vs. ITO [ITA No.322/SRT/2024 dated 06.08.2024]
3. On the other hand, Ld. Sr-DR for the Revenue supported the order of lower authorities. The Ld. Sr-DR for the Revenue submits that assessee was repeatedly asked to furnish the copy of receipt of sale of agriculture produce or any evidence to substantiate that assessee is really involved in agricultural activities. No supporting evidence was furnished by assessee either before Assessing Officer or before Ld.CIT(A). In absence of supporting evidence, the assessee failed to prove his agricultural income. The Ld. Sr-DR for the Revenue submits that mere offering agriculture income ip so facto will not prove that assessee is involved in agricultural income and earned agricultural income.
4. I have considered the contention of both the parties and have gone through the orders of lower authorities carefully. I have also deliberated case law relied upon by Ld. AR of the assessee. I find that Assessing Officer made the addition of agricultural income under section 68 of the Act by taking view that assessee could not furnish any sale invoices or bills of expenditures incurred for doing agricultural activities. The Assessing Officer also held that land holding cannot justify for agricultural income, which was shown in the return of income. The Ld. CIT(A) confirmed the action of Assessing Officer. I find that no independent investigation was carried out by the lower authorities. Holding of agricultural land is not disputed by lower authorities. The sole ground for disallowance of agricultural income and treating the same under section 68 of the Act for the want of vouchers of sale bills or bills of expenditure. I find that assessee is consistently showing his agricultural income in previous assessment years in assessment years 2015-16 and 2016-17 though, assessee is gradually increasing his agricultural income. Considering the area, size of land holding and assessee is consistently showing his agricultural income, out of total income of Rs.5,00,000/- is allowed. The rest of Rs.3,10,470/- is upheld. This ground of assesee’s appeal is partly allowed.
5. In the result, the appeal of the assessee is partly allowed.
Order pronounced in open court on 14th October, 2024.
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