Addition made for excess agriculture productivity of fruits quashed. No disallowance can be made merely on basis of report of Agriculture Officer
ABCAUS Case Law Citation:
ABCAUS 3182 (2019) (10) ITAT
Addition made for excess agriculture productivity
In the instant case, appeal was filed by the assessee against the order of Commissioner of Income Tax (Appeals) in confirming the addition made by the Assessing Officer (AO) by not accepting the claim of the appellant of the agricultural income and treating the same as “Income from Other Sources”.
The assessee had electronically filed return of income for the relevant assessment year declaring inter alia agricultural income. The case was selected for scrutiny.
During the course of assessment proceedings, AO noticed that assessee was having agricultural land The assessee had stated to have grown crops like sugar cane, grapes, mango, jawar etc. The Assessee was asked to produce the details of sales affected along with documentary evidence. Assessee stated that the sales have been made at the farm site only and for which he produced self-made bills and vouchers.
To verify the productivity of the corps and the claim made by the assessee, AO issued notice u/s 133(6) of the Act to the District Superintendent Agriculture Officer. On the basis of the response received from District Superintendent Agriculture Officer, the AO noted that noted that the assessee had shown excess productivity of mangoes which was nearly double the average in the area.
The assessee was asked to explain the difference to which assessee inter-alia submitted that assessee had cultivated 400 trees in one acre of land but District Superintendent Agriculture Officer considered only 40 in one acre. It was therefore submitted that the data supplied cannot be compared with the actual cultivation of the assessee.
However, the AO did not find the submissions of the assessee as acceptable and held that assessee had over inflated the productivity details by around 45%. He therefore disallowed the extra productivity level of 45% above the average computation as given by District Superintendent Agriculture Officer and re-worked the excess production of and made its addition.
Aggrieved by the order of AO, assessee carried the matter before CIT(A), who upheld the order of AO.
Before the Tribunal, the assessee submitted that the assessee had planted the trees in a unique pattern and thereby increased the productivity. The assessee further submitted that AO had only considered the report of the District Superintendent Agriculture Officer selectively and where productivity of grapes, pomegranates, jawar etc. cultivated by the assessee was lower than the productivity stated by the District Superintendent Agriculture Officer, it was accepted by the AO.
The assessee submitted that without brining any material on record, AO had made addition on adhoc basis.
The Tribunal found that the AO had merely relied on the report of District Superintendent Agriculture Officer for working out the excess production. Further even on the basis of the report, he had held that 40% increase in productivity as stated by the Agricultural Officer was accepted.
The Tribunal noted that the AO did not carry out any verification of the agricultural land personally or by through any of his officials to verify the contentions made by the assessee. It was a fact that assessee had shown income from mangoes in earlier years which has not been disturbed by the authorities in earlier years.
The Tribunal opined that the AO could not have proceeded to make the disallowance merely on the basis of report of District Superintendent Agriculture Officer and without any evidence to the contrary in his possession.
Accordingly, the AO was directed to delete the addition made by the AO.
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