Assessee should maintain accounts of entire agriculture activity to substantiate claim

Assessee should maintain accounts pertaining to entire agriculture activity to substantiate the claim of agriculture income – ITAT

ABCAUS Case Law Citation:
ABCAUS 3067 (2019) (07) ITAT

Important Case Laws Cited/relied upon by the parties:
Smt. Prem Sundari vs. CIT

The present appeal was filed by the assessee against the order of the Commissioner of Income Tax Appeals in inter alia disbelieving the evidence for sale of agriculture produce.

The Assessing Officer (AO) during the scrutiny assessment observed that the assessee had paid substantial margin money for share trading however, he had not shown the income from such share trading in the return of income.

When asked, that the assessee explain the source of investment in margin money as agriculatural income of the father. However, he could not produce the bill/vouchers in support of agricultural income.

Thereafter, the AO treated the unexplained part of the margin money as unexplained income of the assessee and added the same to the return income.

Being aggrieved, the assessee went in appeal before the CIT(A) who confirmed the finding of the Assessing Officer by observing that the assessee had failed to explain the source of investment claimed to have been invested from his father’s agricultural income.

He further observed that the assessee had not brought on record any material evidence regarding production, storage and sales of the crops but for an affidavit which was not be sufficient to discharge the burden of proving the source of agricultural income of his father.

Therefore, the CIT(A) held that the assessee had failed to discharge the primary onus to explain the source of agricultural income of his father and his bank deposit and reconciliation of the bank deposit with agricultural income earned.

Before the Tribunal the assessee contended that the CIT(A) had erred in ignoring the possession of 50 Bigha of agriculture land and disbelieving the evidence for sale of agriculture produce from savings of father and the sale of crops supported by the Krishi Utpadan Mandi Samiti receipts issued and produced before the AO.

On the contrary, the Revenue submitted that the AO had observed in the assessment order that the agricultural land owned by the assessee’s father but assessee had declared agricultural income from the sale of accumulated produce of two and a half years towards cash deposit in the bank account. However, the assessee had not shown any withdrawals in anticipation to the agricultural operations carried out for earning the agricultural income.

It was further submitted that the assessee had failed to produce documentary evidence to proof cultivation of agricultural produce by way of Khasra Khatauni, source of irrigation, evidence on cold storage etc. It was further contended that the deposits in the bank account did not correlate with the proceeds emanating from Mandi Parishad.

The Tribunal observed that the agricultural land was owned by the assessee’s father. However, the assessee had not claimed such an agricultural income from his father either in the earlier assessment years or in the succeeding years. Over and above the assessee’s father was neither filing return of income nor any statement of account including income and expenditure statement of working of his agricultural income had been furnished by the assessee either before Authorities below or before the Tribunal so as to ascertain the correct amount of agricultural income.

The Tribunal noted that the assessee had failed to produce material documentary evidence to proof cultivation of agricultural produce by way of Khasra Khatauni, source of irrigation, evidence on cold storage etc. to justify the cash deposits in the joint bank account, which even the cash deposits did not correlate with the proceeds emanating from Mandi Parishad. Therefore, such large volume of agricultural income was rightly disbelieved by the CIT(A).

The Tribunal opined that for the purpose of claiming the benefit of the agriculture income, it is necessary to produce the material evidence to substantiate claim of agricultural income. Further, the assessee should maintain the accounts pertaining to entire agriculture activity.

Accordingly, the Tribunal upheld the order of the CIT(A) in sustaining the addition.

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