Farmer Declared Rs. 33.64 Lakh Agricultural Income; ITAT Treats Rs. 28.79 Lakh as Unexplained Income Due to Lack of Evidence

The ITAT Hyderabad has provided partial relief to taxpayer Chinna Reddy Gillella by reducing an unexplained agricultural income addition made by the Tax Department in the Assessment Year 2018-19.

The assessee (Chinna Reddy Gillella) had e-filed his income tax return (ITR) for the Assessment Year 2018-19, declaring an agricultural income of Rs 3.24 lakh. The assessee’s case was selected for “limited scrutiny”, and a notice dated September 28, 2019, was issued under Section 143(2) of the Act.

During the assessment proceedings, the tax authorities had noted that the agricultural income declared by the assessee for the year under consideration was significantly higher in comparison to the last three preceding and succeeding years.

Accordingly, the assessee was asked to explain the source of the agricultural income shown by him and also to submit relevant documentary evidence in support. When no submission was made from the assessee’s side, the tax authorities treated the impugned agricultural income as unexplained cash credit under section 68 of the Income Tax Act and assessed the total income at Rs 36.88 lakh.

The aggrieved assessee filed an appeal before the lower appellate authority, i.e., Commissioner of Income Tax (Appeals) [CIT(A)]. However, the impugned addition was sustained, and the appeal was decided ex parte due to the assessee’s non-participation in the appellate proceedings.

Thereafter, the assessee approached the ITAT Hyderabad and furnished land details, extracts of revenue records, particulars of agricultural activities, and bank records. It was also argued that agricultural income declared in earlier and subsequent years had been accepted by the department. The appeal before the tribunal was filed 84 days late; hence, the assessee had sought condonation of the delay, explaining that “the accountant who was looking after the income tax matters had failed to monitor the income tax portal and had not informed the assessee about the disposal of the appeal by the CIT(A)”.

The tribunal found the reason genuine; hence, the delay was condoned in the interest of justice. When the case was thoroughly analysed by the tribunal, it noted that the assessee had failed to adequately explain the unusually high agricultural income during the relevant year; the department could not ignore the fact that he owned agricultural land and had regularly disclosed agricultural income in other years. Accordingly, the ITAT estimated reasonable agricultural income at Rs 4.85 lakh and restricted the addition to Rs 28.79 lakh, thereby granting partial relief to the assessee.