2021 (10) TMI 212 - AT - Income Tax

Tribunal allows appeal, vacates disallowance of agricultural income claim, citing lack of evidence.

The Tribunal vacated the disallowance of 20% of the assessee's agricultural income, finding no substantial evidence against the claim and following the ... Addition u/s 68 - bogus agricultural claim - disallowance of 20% of the agriculture income - HELD THAT:- When the disallowance of 20% of the agriculture income that was sustained by the CIT(A) while disposing off the appeals of the assessee for A.Y 2011-12 and A.Y 2012-13 had been vacated by the Tribunal [2021 (3) TMI 1264 - ITAT MUMBAI], therefore, there would be no justification much the less any basis to uphold the disallowance of 20% of the assessee’s claim of agriculture income for the year under consideration i.e A.Y. 2015-16. We, thus, in terms of our aforesaid deliberations vacate the disallowance of 20% of the assessee’s claim of agriculture income as was sustained by the CIT(A). - Decided in favour of assessee. Issues Involved:1. Disallowance of 20% of Agricultural Income as Unexplained Cash Credit under Section 68 of the Income Tax Act, 1961.Issue-wise Detailed Analysis:1. Disallowance of 20% of Agricultural Income as Unexplained Cash Credit under Section 68 of the Income Tax Act, 1961:The assessee filed her return for A.Y 2015-16 declaring an income of Rs. 1,46,34,160/- along with agricultural income of Rs. 1,03,02,193/-. The case was selected for scrutiny, and the Assessing Officer (A.O) observed that the assessee claimed to have earned agricultural income from mangoes and vegetables on land, most of which was categorized as 'not fit for agriculture' and under paddy cultivation during Kharif season.The A.O conducted field visits and obtained satellite images from ISRO, which revealed no active agricultural activity on the lands. The A.O concluded that the assessee's claim of agricultural income was not genuine and re-characterized the income as from 'Other sources,' assessing her total income at Rs. 5,56,55,850/-.The assessee appealed to the CIT(A), who observed that a survey action conducted earlier found nothing adverse regarding the agricultural income claim. The CIT(A) noted that for A.Y. 2014-15, the entire agricultural receipts were accepted as genuine, but 20% was added as 'unexplained expenditure' under Section 69C, which was later vacated on appeal. For A.Y. 2011-12 and 2012-13, the CIT(A) allowed only 80% of the agricultural income, disallowing 20%.The assessee appealed to the Tribunal, arguing that the CIT(A) relied on previous years' orders, where the Tribunal had vacated the 20% disallowance for A.Y. 2011-12 and 2012-13. The Tribunal noted that the facts and issues for A.Y. 2015-16 were similar to those years. The Tribunal observed that both the A.O and CIT(A) failed to provide substantial evidence against the assessee's claim and acted on surmises.The Tribunal concluded that since the disallowance for previous years was vacated, there was no justification for the 20% disallowance for A.Y. 2015-16. Thus, the Tribunal vacated the disallowance and allowed the appeal.Conclusion:The Tribunal vacated the disallowance of 20% of the assessee’s agricultural income, finding no substantial evidence against the claim and following the precedent set in previous years. The appeal filed by the assessee was allowed.