To establish the fact that the assessee cultivated the land the Adangal extract is a must

In a recent judgment, ITAT Chennai has stated that  to establish the fact that the assessee cultivated the land and eared agricultural income, the Adangal extract from the Village Administrative Officer is a must.

Case Details:
ITA No.12/Mds/2015  Assessment year : 2009-10
M. Murugaiah vs.  Income Tax Officer
Date of Order: 01/04/2016

Brief Facts of the Case:
The assessee in his icome tax return has shown Rs. 4426495/- as opening balance of capital. On enquiry by the Assessing Officer, he claimed to have cultivated lands for more than ten years and earned the abovesaid amount as agricultural income. However, Assessing Officer disbelieved the claim of the assessee and estimated that the assessee might have earned 25% of the opening capital balance from agricultural activity. Accordingly, he added the balance of  Rs. 3319872/- treated it as income from business.

The primary contention of the assessee was that The Village Administrative Officer had also certified that he was cultivating the land and earned agricultural income for the last ten years. Whereas, the Department opposed the certificate produced from the Village Administrative Officer on the ground that it did not indicate that the assessee cultivated the land and earned agricultural income.

Excerpts from ITAT Judgment:

We have considered the rival submissions on either side and also perused the material available on record. Government of Tamilnadu is maintaining cultivation account at the village level. The Adangal extract or Village Account No.2 will indicate the cultivation made by the respective persons. In fact, the Adangal extract is prepared survey numberwise by the Village Administrative Officer at the interval of six months. Therefore, the Village Administrative Officer has to certify on the basis of the Adangal extract that was maintained by him in the regular course of official functioning. The copy of the certificate issued by the Village Administrative Officer does not refer to the Adangal extract which was expected to be maintained by him. A casual certificate given by the Village Administrative Officer will not establish the fact that the assessee cultivated the lands. To substantiate the certificate, the assessee has to necessarily obtain the Adangal extract from the Village Administrative Officer. In the case before us, the Assessing Officer himself accepted that 25% of the capital balance to the extent of ` 11,06,623/- may be from agricultural income. Therefore, the Assessing Officer has not doubted the cultivation in toto. At the same time, the Assessing Officer has no basis for restricting the claim at 25%. When the assessee has produced the certificate from the Village Administrative Officer, the Assessing Officer might have examined the Village Administrative Officer after calling for the relevant records from him. Unfortunately, no such exercise was done by the Assessing Officer. In those factual circumstances, this Tribunal is of the considered opinion that restricting the agricultural income at 25% is not justified. By taking into consideration the copies of the agreements for taking the lands on lease and certificate given by the Village Administrative Officer, the estimation made by the Assessing Officer in the assessment order is not justified. This Tribunal is of the considered opinion that estimating the agricultural income at 50% of the opening capital balance would meet the ends of justice. Accordingly, the orders of the lower authorities are modified and the Assessing Officer is directed to take 50% of the opening capital balance of Rs. 44,26,495/- as income from agriculture. The remaining 50% shall be treated as income from business.

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