The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) has deleted an addition of ₹11 lakh made against a farmer for an alleged unexplained investment in agricultural land, holding that the irrigation certificate, electricity bills and affidavits furnished by him sufficiently explained the source of the investment.
The bench of T.R. Senthil Kumar (Judicial Member) and Annapurna Gupta (Accountant Member) observed that the income tax authorities had not disputed the evidence produced by the assessee or conducted an inquiry to disprove his claim that his joint family had earned agricultural income over eight years.
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Considering the assessee’s background as an agriculturist living in a small village in Rajasthan’s Dausa district, the Tribunal held that it would be asking too much to expect him to retain extensive documentary evidence of every agricultural operation.
The appeal concerned assessment year 2015–16. The Income Tax Department reopened the assessee’s assessment after receiving information that he had purchased agricultural land for ₹25 lakh. The property had been registered on March 14/15, 2014, and part of the consideration, amounting to ₹11 lakh, was paid during the assessment year under consideration.
The Assessing Officer found that the assessee had declared income of ₹2,69,380 in his return. During the reassessment proceedings, the officer concluded that the source of the ₹11 lakh investment had not been adequately explained and added the amount to the assessee’s income.
The National Faceless Appeal Centre, acting as the Commissioner of Income Tax (Appeals), upheld the addition. The assessee then approached the ITAT.
Although the assessee had also challenged the validity of the reassessment proceedings, that ground was not pressed before the Tribunal and was dismissed. The Tribunal therefore considered the merits of the ₹11 lakh addition.
The assessee consistently maintained that the investment came from the accumulated funds of his joint family, whose members were engaged in agricultural operations.
He stated that he lived in a small village in Dausa district, where banking facilities were not available in the vicinity. To support his explanation, he submitted an irrigation certificate, electricity bills relating to the irrigation well and affidavits from himself and his father.
According to the assessee, the irrigation certificate showed that he and members of his father’s joint family undertook agricultural activities on 60 bighas of land. The affidavits stated that the family had earned an estimated ₹55 lakh from agriculture over the preceding eight years.
The Tribunal also noted that the assessee had declared agricultural income of ₹2,69,380 in his return for the relevant year.
The appellate authority had found the evidence insufficient, observing that the assessee had not produced separate documentary evidence of land ownership, possession and cultivation.
It also noted the absence of details or records concerning crops, agricultural inputs, harvesting, transportation and sale of produce. On that basis, it upheld the addition treating the investment as unexplained.
The Tribunal disagreed with the approach adopted by the lower authorities. It observed that the Revenue had not identified any infirmity in the documents submitted by the assessee.
The bench noted that the irrigation certificate supported the claim that the assessee and his joint family carried out agricultural operations on 60 bighas of land. The electricity bills further supported the use of irrigation facilities.
The Tribunal observed that the Department had neither alleged that the irrigation certificate was false nor disputed that it recorded irrigation of the land by the assessee and his family.
The bench also took into account the affidavits stating that the family had earned ₹55 lakh in agricultural income over eight years. It recorded that the Revenue had not disputed those facts or conducted an inquiry or investigation to disprove them.
Considering the evidence together and the assessee’s circumstances, the Tribunal held that the explanation of agricultural income was sufficient to account for the ₹11 lakh investment. The additional records sought by the Revenue, it said, would have supplemented the evidence already furnished; the authorities had not discarded that existing evidence.
The ITAT held that the assessee had sufficiently established the source of the ₹11 lakh invested in agricultural land during the relevant year. It directed the deletion of the addition and allowed the appeal.
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