2015 (7) TMI 396 - AT - Income Tax

Agricultural Income Misclassification Reversed Due to Lack of Evidence

The Tribunal set aside the Commissioner of Income Tax(Appeals)'s decision to treat agricultural income as 'Income from other sources' for certain ... Treatment of agricultural income as 'Income from other sources' - proceedings u/s.153A - Held that:- There is no dispute with reference to the fact that assessee owned land of 29 acres 4 guntas purchased way back in 1997 and holding the possession from then onwards. Even though on the basis of orders of the Principal Jr. Civil Judge, Siddipet, the registration took place in 2012, assessee has been offering agricultural income in earlier years. In fact, the same was also accepted in AY.2006-07. Therefore, in AY.2006- 07, treating the agricultural income which was assessed as such as 'income from other sources' cannot be upheld. Concluded matters cannot be re-agitated in the proceedings u/s.153A unless there is evidence to the contrary. Since there is no incriminating material during the search, the treatment of the said income as income from other sources in AY.2006-07 is set aside - Decided in favour of assessee With reference to other assessment years, assessee's contentions that the lands were being cultivated by cultivators and assessee gets only net income requires examination. Neither the Assessing Officer enquired into this aspect nor CIT(A) even though contended before her, did not order the Assessing Officer to make enquiries. Books of Accounts as seen from the assessment order, are stated to be with the department only. Therefore, in the interest of justice, we set aside the orders in AYs.2003-04 to 2005-06 and 2007-08 to 2009-10 to the file of Assessing Officer to examine assessee's contentions in correct perspective. - Decided in favour of assessee for statistical purposes. Issues:Treatment of agricultural income as 'Income from other sources'Analysis:Issue: Treatment of agricultural income as 'Income from other sources'The appellant filed seven appeals against the Commissioner of Income Tax(Appeals)-I, Hyderabad's order, specifically challenging the treatment of agricultural income as 'Income from other sources'. The Assessing Officer considered the agricultural income as non-agricultural due to the lack of expenditure recorded for agricultural activities and the absence of evidence supporting agricultural operations besides land possession. The appellant argued that the agricultural income was shared with cultivators, who funded the activities, and no expenditure was incurred. However, the CIT(A) upheld the Assessing Officer's decision, emphasizing the need to prove agricultural activities and income derivation from the land. The appellant presented sale deeds, assessment orders, and submissions to establish land ownership and income generation from cultivation. The Tribunal noted the lack of proper inquiry by the Assessing Officer under section 153A and the absence of incriminating material during the search. Consequently, the Tribunal set aside the orders for AYs 2003-04 to 2005-06 and 2007-08 to 2009-10 for reassessment, emphasizing the necessity for a detailed examination of the appellant's contentions regarding agricultural income. The Tribunal allowed the appeal for AY 2006-07 and set aside the orders for the other years for further assessment by the Assessing Officer.This detailed analysis covers the issues involved in the legal judgment, focusing on the treatment of agricultural income as 'Income from other sources'. The Tribunal's decision highlights the importance of substantiating agricultural activities and income sources, emphasizing the need for thorough examination and proper inquiry by the Assessing Officer in such cases.