The Income Tax Appellate Tribunal (ITAT), Chennai bench has held that the income tax department cannot insist the assessee to produce vouchers for agricultural produces traded in the local markets.
The assessee disclosed a sum of Rs. 20,00,000/- from agriculture. However, the Assessing Officer restricted the same to ₹12,00,000/- and the remaining amount of ₹8 lakhs was added to the taxable income for the reason that the assessee could not produce bills and vouchers for sale of agricultural produce.
The assessee contended that when the cultivation is not disputed, the Assessing Officer ought not to have disallowed any portion of amount disclosed by the assessee.
The Tribunal noted that the assessee also could not produce any receipts for expenditure incurred.
The Tribunal further noted that the fact remains that the adangal extract available before the lower authorities and before this Tribunal establishes that the assessee was cultivating paddy, coconut, teak, etc. on the subject land.
“Therefore, the CIT(Appeals) is not justified in saying that the assessee could not establish the fact of cultivation. The fact of cultivation is established by the assessee. Both the authorities below dispute the sale of agricultural produce. Since the assessee could not produce bills and vouchers for sale of agricultural produce and expenses, the claim of the assessee was disbelieved.”
“The Assessing Officer as well as the CIT(Appeals) have to appreciate the fact that the agricultural products in this country are traded in unorganized sector. The workforce in the agricultural sector is unorganized. When the agricultural products are traded in unorganized sector in the country, expecting the assessee to produce bills for sale of agricultural produce is something which cannot be produced by the assessee. Moreover, when the assessee engages labourers in carrying out agricultural operation and incur expenditure, producing vouchers is something uncalled for. What is to be seen is that whether the assessee has cultivated the land as claimed. When the assessee claims that the land was cultivated with certain crops and when the Assessing Officer has taken up the assessment for examination after three or four years from the relevant financial year, no material evidence will be available on the land to show that the assessee has cultivated as claimed. The only evidence available is the record maintained by the State Government in its Revenue Department,” the Tribunal said.
Allowing the contentions of the assessee, the Tribunal held that when agricultural produce including coconuts is traded in unorganized market like Uzhavar Sandhai and other local market, expecting the assessee to produce bills and vouchers is nothing but asking the assessee to perform an impossible task.
“The only reason for disallowance is that the assessee could not produce bills and vouchers for sale of agricultural produce and receipts for expenses. Apart from that, the assessee has established by producing copy of adangal extract that the land in question was subject to cultivation. In those circumstances, this Tribunal is of the considered opinion that there is no reason to disallow any part of claim,” the Tribunal said.
Subscribe Taxscan Premium to view the Judgment
