Agriculture income can only be estimated by considering land holding size – ITAT

Agriculture income can only be estimated by considering land holding size. Even big farmers not maintain details expected by Tax Authorities – ITAT

ABCAUS Case Law Citation:
ABCAUS 2823 (2019) (03) ITAT

Important Case Laws Cited/relied upon by the parties
Sumati Dayal, 214 ITR 801
Durga Prasad More, 82 ITR 540.

In the instant case, the assessee was aggrieved by the confirmation of addition made by the Assessing Officer (AO) for cash deposited by the assessee in savings bank account treating it as unexplained credit u/s 68 of the Income tax Act, 1961 (the Act).

During the scrutiny proceedings, the AO learnt that the assesse hand made cash deposits in savings bank account. When asked about the source of the cash, the assessee explained that he had received advance for sale of his office space.

The AO directed the assessee to prove identify of creditors, genuineness of the transaction, and their credit-worthiness.

The AO also issued summons to the creditor who appeared and deposed that he has having agriculture land and was having agriculture income. He had two sons, and one of them was running pan-bidi shop and other one is working in dyeing mill.

The AO did not dispute identity of the creditor, but doubted his credit-worthiness to give the money in question to the assessee.

Hence, the AO made addition u/s 68 of the Act.

The CIT(A) dismissed the appeal of the assessee.

The Tribunal observed that the assessee, before the AO had produced the copy of the sale agreement and registry for flat sold and the AO had accepted this transaction as genuine and did not doubt it. Therefore, it should be construed that this amount was available with the assessee.

The Tribunal opined that the alleged vendee belonged to a lower strata of the society. One of his sons was running PAN shop and another one was working at dyeing mill. He was an agriculturist and could not maintain the accounts and monitor his activities in an organized manner.

The Tribunal questioned that the expectation of the Revenue authorities that he should submit details of agriculture produce, bank accounts, cost of cultivation, proof of sales which are highly alien to agriculture activities in India, and particularly for marginal farmers.

The Tribunal opined that generation of agriculture income could only be estimated by considering the land holding and even big farmers having big chunk of lands are not maintaining kinds of details expected by the Revenue Authorities.

The Tribunal observed that the vendee had deposed that he was having sufficient resources and paid advances for purchase of a office space. It was difficult to ascertain the exact affairs of what vendee planned for future of his children for acquiring such office space and from where he had arranged the money. But he remained strict to his stand that he gave money to the assessee.

The Tribunal opined that in such circumstances, if any unexplained money was possessed by him, ought to be considered in his case and not in the hands of the assessee.

The Tribunal opined that owner of 15 bigas of agriculture land with one son running pan-shop and another son working in dyeing mill, it can be expected he must have the sources for arranging the money in question for making investment in real estate.

The Tribunal held that the assessee was able to fulfill all the ingredient of section 68 and no addition deserved to be made in his hand.

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