Rejection of agricultural income addition requires proper basis; matter remanded for fresh appellate adjudication.

An addition based on disallowing 50% of agricultural income could not be sustained where the assessee's books of account had not been rejected and the assessment record did not clearly establish that the income was treated as an application of income. The appellate record showed that the dispute turned on the treatment of the agricultural income without the necessary foundational rejection of books. The matter was therefore set aside to the CIT(A) for fresh adjudication in accordance with law after granting the assessee a reasonable opportunity of hearing.

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Issues: Whether the addition of 50% of the agricultural income was justified without rejecting the books of account and whether the matter required reconsideration by the appellate authority.

Analysis: The assessment record did not clearly show that the agricultural income was treated as an application of income. The assessee had maintained books of account, and the addition was made only by disbelieving the agricultural income without first rejecting those books. In these circumstances, the addition could not be sustained on the existing record and the dispute required fresh adjudication after granting reasonable opportunity of hearing.

Conclusion: The addition was not upheld and the matter was set aside to the file of the CIT(A) for decision in accordance with law.

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