ITAT Mumbai Sends Back Rs 78.70 Lakh Agricultural Income Addition for Fresh Review; 80C Claim Rejected Due to Lack of Proofs

The assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai, challenging three issues, including unexplained cash credit under Section 68, cash deposits, and deduction under Section 80C.

During the assessment proceedings, the assessing officer observed that the assessee had shown a net agricultural income of Rs 78,70,208, on which the assessee had paid tax and claimed as an exemption. The AO asked the assessee to substantiate its exemption claim by filing the relevant details.

Even though the assessee was given multiple opportunities to submit the required documents, the assessee only uploaded the 7/12 extract issued on 08/11/2013 and the letter of intent issued by the National Horticulture Board. He failed to provide proper documents, such as sale bills, expense records, or updated land extracts, to prove that the income was genuinely earned from agriculture. Also, the document submitted by the assessee was not related to AY 2016-17.

Because of this, the assessing officer treated the entire amount of agricultural income of Rs 78,70,208 as an unexplained cash credit under section 68 of the Income Tax Act. The Commissioner of Income Tax (Appeals) also agreed with the AO.

The assessee submitted extra evidence before the tribunal, including sale bills of agricultural produce and details of cash deposits. He said that he is an agriculturist and did not maintain books of accounts, and the documents were in his warehouse in Ratnagiri. He said that after getting professional advice, the assessee recovered these documents. He requested the Tribunal to admit this additional evidence.

The tribunal accepted these additional documents, saying that they are important to decide the matter. However, as these proofs were not checked by the lower authorities, the Tribunal restored the matter to the lower authorities for fresh consideration.

Similarly, the addition of Rs 30,01,000 towards cash deposits was also sent back to the AO for fresh consideration because these cash deposits were made out of the income earned from the sale of the agricultural income.

However, the Tribunal rejected the assessee’s claim for a deduction of Rs 1,50,000 under Section 80C for the LIC premium, as the assessee failed to submit any proper documentary proof, such as LIC premium payment receipts, to substantiate its claim.