Landowner’s ₹1.44 Cr Agricultural Income from Mango Sales Triggers Scrutiny: ITAT Deletes ₹1.20 Cr Addition [Read Order]

Mr. Mohammed Farooq Kanana, the assessee, is a landowner cultivating mangoes on about 24 acres of agricultural land in Manchuru Village, Andhra Pradesh. He declared Rs. 1.44 crore as agricultural income from the sale of mango produce for the Assessment Year 2020-21. He submitted documents such as land records, details of mango trees, expense statements, and affidavits from four contractors who purchased the mango crop.

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During the assessment, the AO observed that the agricultural income declared by the assessee was high. The AO referred the matter to a Verification Unit and relied on generic yield and market price estimates gathered from local enquiries and internet sources. Based on those figures, the AO reduced the agricultural income to Rs. 21.60 lakh and added the difference of Rs. 1.20 crore as unexplained cash credit under Section 68.

Before the Commissioner of Income Tax (Appeals) [CIT(A)], the assessee's counsel argued that he had filed all required evidence, including affidavits from the contractors who purchased the produce, and that the AO did not verify or question any of the contractors.

The assessee's counsel further argued that the AO ignored actual records and made an assessment entirely on estimated averages. The CIT(A) accepted the assessee’s submissions and deleted the addition.

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On appeal before the ITAT, the revenue argued that the assessee had not produced reliable proof of the sale value of mangoes and that the AO was correct in estimating income based on verification reports and market trends. They submitted that the agricultural income shown was excessive.

The two-member bench comprising Laxmi Prasad Sahu (Accountant Member) and Soundararajan K. (Judicial Member) observed that the assessee had produced affidavits from all four contractors who purchased the mango crop, and the AO did not make any enquiry to disprove those affidavits.

The tribunal observed that the AO did not call for confirmations, did not summon the contractors, and did not question the genuineness of the transactions. The Tribunal pointed out that the AO relied only on estimated figures and did not examine the actual facts already placed on record.

The tribunal explained that affidavits which remain unchallenged cannot be rejected based on assumptions or estimates. It further explained that the assessee had discharged his initial burden by submitting complete evidence, and once such evidence is filed, the AO must examine and verify it instead of substituting it with general market information.

The tribunal ruled that the CIT(A) correctly deleted the addition, as the AO failed to show any material to prove that the assessee’s agricultural receipts were not genuine. The tribunal upheld the CIT(A)’s order and dismissed the Revenue’s appeal.

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