The Surat Bench of Income Tax Appellate Tribunal ( ITAT ) partially allowed the claim of Rs. 5,00,000/- of the agricultural income, while upholding the disallowance of Rs. 3,10,470/- due to the lack of supporting evidence, such as sale invoices and bills of expenditure, to substantiate the agricultural activities and income.
Jesal Jatin Desai,appellant-assessee,was an individual, a partner in multiple firms, and the proprietor of M/s Jaidev Communications. For the assessment year(AY) in question, the assessee reported income from business, capital gains, other sources, and agricultural activities, claiming a net agricultural income of Rs. 8,10,470/- after deducting expenses of Rs. 3,43,510/- from agricultural receipts of Rs. 11,53,980/-. The assessee’s agricultural holding of 8.69 acres was not disputed by the authorities.
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The Assessing Officer (AO) disallowed the agricultural income, citing the absence of supporting evidence such as sale invoices or bills of expenditure related to the agricultural activities. The AO contended that the mere declaration of agricultural income was insufficient to prove its legitimacy without documentation to substantiate the sale and related expenses.
The Authorised Representative (AR) for the assessee countered that agricultural practices typically did not involve obtaining such receipts and argued that the agricultural produce was sold in the local market. The assessee had also consistently declared agricultural income in previous assessment years—Rs. 6,64,800/- in A.Y. 2015-16, Rs. 7,90,380/- in A.Y. 2016-17, and Rs. 8,80,420/- in A.Y. 2018-19—supporting the claim with copies of these returns and documents confirming the agricultural holdings.
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Despite this, the Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s order, agreeing that the lack of evidence to substantiate the agricultural income was a significant issue.
A single member comprising Pawan Singh (Judicial Member) after considering the arguments and reviewing relevant case laws, acknowledged that the land holding was not disputed, but the absence of documentary evidence led to the disallowance of the agricultural income.
However, the tribunal partially allowed the appeal, accepting Rs. 5,00,000/- of the claimed agricultural income and upholding the disallowance of Rs. 3,10,470/-.
In conclusion, the assessee’s appeal was partly allowed, with a portion of the agricultural income being accepted and the remaining income being disallowed due to insufficient evidence.
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