ITAT Deletes Rs 31.76 Lakh Section 69A Addition, Accepts Farmer’s Agricultural Income Claim

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has provided major relief to a Gujarat farmer, Mr. Parshotmbhai Patel, by deleting an addition of Rs. 31,76,222 that had been treated by the Income Tax Department as unexplained income under Section 69A of the Income Tax Act.

Background of the Case

The assessee, a farmer from Modasa in Gujarat, had filed his income tax return declaring total income of Rs. 5,72,650. He had shown agricultural income and his return was picked up for scrutiny. In the course of assessment proceedings the AO held that agricultural receipts of Rs.35,76,222 were not properly explained and levied addition.

The assessee aggrieved by the order of AO filed appeal before CIT(A). However, the CIT(A) dismissed the appeal.

The assessee challenged the addition before the ITAT and explained that he was engaged in agricultural activities and was regularly earning and reporting agricultural income in the earlier years as well. He furnished a number of documents in support of his claim including land possession documents, sale bills of agricultural produce, bank statements showing receipt of sale proceeds and proof of payments received from government agencies under Minimum Support Price (MSP) scheme.

The assessee submitted that all the documents relevant to prove agricultural operations and income were submitted before the tax authorities. He further submitted that the difference in reporting of agricultural income was due to bona fide mistake and due to technical/software error resulting in duplication of agricultural income in the computation.

On perusal of the records, the Tribunal observed that the assessee had produced sufficient documentary evidence that he was carrying on agricultural activities and earning agricultural income. The Tribunal noted that the AO had not properly appreciated land records, agricultural bills and bank statements placed on record.

The Tribunal also pointed out that agricultural income declared by the assessee in earlier years had been accepted by the Income Tax Department. Since there was no material to suggest that the assessee had ceased agricultural activities during the relevant year, the claim of agricultural income could not be rejected merely because a revised computation had been filed.

Holding that the addition was made without properly appreciating the evidence available on record, the ITAT ruled that the amount of Rs. 31,76,222 could not be treated as unexplained money under Section 69A.

The Tribunal therefore deleted the addition and allowed the assessee’s appeal.