ITAT aside addition of Rs. 26,18,834 & accepts assessee’s Joint Agricultural Income Claim [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has set aside an addition of Rs. 26,18,834 made by the assessing officer (AO) noting that agricultural income was jointly earned by the family of the assessee and not individual income.

For the Assessment Year (AY) 2011-12, the assessee had filed an income tax return declaring nil taxable income and showing agricultural income of Rs. 21,42,815. Similarly, for 2013-14, she declared nil taxable income and agricultural income of Rs. 28,53,542. The case was selected for scrutiny under the Computer Assisted Scrutiny System ( CASS ) due to the large agricultural income reported.

The Income Tax Bill 2025 - Click Here

The AO noted that the agricultural income was a cover for undisclosed income and added Rs. 26,18,834 to the assessee’s total income under the head income from other sources for 2011-12. The AO also reopened the assessment under Section 147 of the Income Tax Act, 1961, with prior approval from the Principal Commissioner of Income Tax (PCIT).

During the reassessment proceedings, the assessee submitted various documents, including books of accounts, bank statements, and affidavits, to substantiate the assessee's claim of agricultural income. She argued that the income was jointly earned by the assessee’s family and not solely by the appellant.

The Income Tax Bill 2025 - Click Here

The contentions raised by the assessee were not accepted by the AO and although the assessee appealed before the Commissioner of Income Tax Appeals [CIT(A)] there were ni favorable results.

The assessee’s counsel argued that CIT(A) had erred in confirming the addition of Rs. 27,67,834 as income from undisclosed sources, ignoring the evidence that were submitted by the assessee. The counsel contended that the agricultural income was genuine and had been verified under Section 133(6) of the Income Tax Act. The assessee also explained that the large sums reflected in the assessee’s bank account were related to a housing loan disbursement from Union Bank of India, which she had used for constructing the assessee’s residence. She provided bank statements, certificates, and an affidavit from Mr. Hasmukhbhai Dalwadi to support the assessee’s claims.

The Income Tax Bill 2025 - Click Here

The ITAT observed that the agricultural income was jointly earned by the assessee family. The ITAT concluded that the addition of Rs. 26,18,834 was unjustified and allowed the assessee’s appeal for both assessment years.

The Ahmedabad ITAT, comprising Suchitra Kamble (Judicial Member), allowed the assessee’s appeal.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates