The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has deleted an addition of ₹31.76 lakh made under Section 69A of the Income Tax Act, holding that genuine agricultural income cannot be treated as unexplained money merely because the assessee revised his computation of income.
The bench of Suchitra Kamble (Judicial Member) observed that the tax department ignored substantial documentary evidence proving the agricultural activities and receipts of the assessee.
The assessee had filed his return of income for Assessment Year 2020-21 declaring a total income of ₹5.72 lakh. The case was selected for scrutiny specifically on the issue of agricultural income. During assessment proceedings, the Assessing Officer treated agricultural receipts of ₹35.76 lakh as unexplained money under Section 69A and subjected the amount to taxation under Section 115BBE.
Aggrieved by the assessment order, the assessee approached the Commissioner of Income Tax (Appeals). However, the appeal was dismissed, leading to a further appeal before the ITAT.
Before the Tribunal, the assessee contended that he was a farmer deriving income from agricultural activities and had consistently disclosed agricultural income in earlier years as well. The assessee submitted various documents before the Assessing Officer, including: Bank statements reflecting agricultural receipts; Agricultural sale bills; Land ownership records such as 7/12 extracts; Gam Namuno 8A and Hak Patrak-6 (land revenue records); and Evidence of sale of agricultural produce under the Government’s Minimum Support Price (MSP) scheme.
The assessee also pointed out that agricultural sale bills exceeding ₹8 lakh were supported by corresponding credits in the bank account. Further, payments received from Gujarat Government agencies for agricultural produce were reflected in the bank passbook. According to the assessee, all these records had been placed before both the Assessing Officer and the CIT(A), but were ignored.
The department defended the assessment order and argued that the assessee had failed to satisfactorily establish that the receipts represented genuine agricultural income derived from agricultural produce.
The Tribunal noted that the assessee had furnished all relevant documentary evidence relating to agricultural income, including land records, agricultural produce bills, trading details, and bank statements showing corresponding credit entries. The Tribunal found that these documents had been completely overlooked by the Assessing Officer.
The Tribunal further observed that the assessee’s agricultural income had been accepted by the Income Tax Department in earlier years and that there was nothing on record to suggest that the agricultural activities had ceased during the relevant assessment year.
Importantly, the ITAT held that merely because the assessee revised his computation of income could not be a valid ground to reject or disallow otherwise substantiated agricultural income. The Tribunal concluded that the addition made under Section 69A as unexplained money was unsustainable in law.
Allowing the appeal, the ITAT deleted the addition of ₹31.76 lakh and held that the assessee had adequately established the genuineness of the agricultural income through documentary evidence. Consequently, the amount could not be taxed as unexplained money under Section 69A or subjected to the punitive provisions of Section 115BBE.
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