Agricultural Receipts Treated as Unexplained Income u/s 68: ITAT Grants Opportunity to Substantiate Claim [Read Order]
Observing that the claim could not be rejected without verification, the ITAT set aside the orders and remitted the matter to the AO, directing that the assessee be given proper opportunity to submit evidence and cooperate with the proceedings.
Unexplained - Income - taxscan
Unexplained - Income - taxscan
The Hyderabad Bench of Income Tax Appellate Tribunal ( ITAT ) grants an opportunity to substantiate claim on agricultural receipts treated as unexplained income under section 68 of Income Tax Act,1961.
Mohammed Azhar, appellant-assessee, filed his return of income for Assessment Year 2018-19 on 07.02.2019, declaring Nil total income and agricultural income of Rs. 33,30,102. The case was selected for limited scrutiny due to the high agricultural income.
During assessment, the appellant did not respond to the notices. The Assessing Officer (AO) found gross agricultural receipts of Rs. 83,25,256, against which expenses of Rs. 49,95,154 were claimed. As no evidence of landholding, agricultural activity, or expenses was furnished, the Officer treated the entire receipts as unexplained income under section 68 and completed assessment under section 144 on 05.04.2021, determining income at Rs. 83,25,256.
The Commissioner of Income Tax(Appeals)[CIT(A)] dismissed the appeal ex-parte for non-prosecution. The assessee then filed a further appeal before the tribunal.
The assessee counsel submitted that the assessee was a genuine farmer who could not appear before the authorities due to unavoidable reasons. It was argued that treating the entire agricultural receipts as income under section 68 caused injustice, as the appellant owned 36 acres of agricultural land and carried out cultivation. An affidavit and ownership documents were also filed, and a request was made for another opportunity to prove the claim with evidence.
The Departmental Representative opposed this request, stating that sufficient opportunities had already been given by the AO and the CIT(A), but the assessee failed to respond or submit proof. Hence, the orders of the lower authorities were supported.
The two member bench comprising Vijay Pal Rao (Vice President) and Madhusudan Sawdia (Accountant Member) noted that the assessee had not complied before the AO or the CIT(A) but had later produced documents showing ownership of 36 acres of agricultural land. It held that the claim of agricultural income could not be rejected without verification.
In the interest of natural justice, the tribunal set aside the order and sent the matter back to the AO for fresh examination, directing that proper opportunity be given to the assessee to submit evidence and that the assessee cooperate in the proceedings.
Accordingly,the appeal was allowed for statistical purposes.
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