The Banglore Bench of the Income Tax Appellate Tribunal (ITAT) comprising Judicial Member Beena Pillai and Accountant Member Chandra Poojari upheld the order of the Principal Commissioner of Income Tax (Pr. CIT) which had set aside the order of the Assessing Officer (AO) with a direction, to carry out fresh examination of the claim of agricultural income claimed to be exempt by the assessee under section 10 (1) of the Income tax Act.
The assessee, aggrieved by the order of the Pr.CIT, approached the ITAT Bench to seek redressal to this issue, contending grounds of validity of the order passed under Section 263 of the Income Tax Act, 1961.
The representative of appellant argued that merely because the issue was not elaborately discussed in the original assessment order, could not be a ground to invoke revisionary jurisdiction, particularly when the details were called for by the Ld.AO during the original assessment proceedings.
The appellant also submitted that, the assessee entered into agreement with farmers for production of hybrid seeds and that, the farmers upon the instructions and specifications and guidance by the assessee, carried on with the cultivation of agricultural produce. He submitted that, the assessee not only produces in the leased lands, but it is also producing in its own land, and hence the observation of the Principal Commissioner of Income Tax that the assessee is not directly involved in cultivating the land is incorrect.
It was also submitted that the production of basic seeds as well as hybrid seeds were part of basic agricultural operations carried out by the assessee on its own land as well as on leasehold land and that contract farming did not take away the character of basic operations carried out by the assessee, which were agricultural in nature.
It was observed by the Tribunal that, “From the materials placed before the AO it is prima facie inferred that the no details are filed by the assessee and the AO has not verified the exemption claimed by the assessee under section 10(1) of the income tax Act. Thus, in our view, the original assessment is completed without proper enquiries” and the order passed by the Principal Commissioner of Income Tax was upheld.
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