No presumption that if assessee owns agril land, agricultural income arises automatically

No presumption that if assessee owns some agricultural land, agricultural income arises automatically – Supreme Court dismisses SLP

An income cannot be based on mere presumption that if the assessee owns some agricultural land, the income from agricultural operation arises automatically. Recently the Apex Court dismissed the SLP challenging the view taken by ITAT and confirmed by High Court.

ABCAUS Case Law Citation:
ABCAUS 3839 (2024) (01) SC

In the instant case, the assessee had challenged the order passed by the Hon’ble High Court in holding that no substantial question of law arises.

The Appellant Assessee was a partner in a partnership firm and also director of one private limited company. A search of the assessee’s husband’s residence and his associates were carried out under Section 132 of the Income Tax Act, 1961 (the Act).

Based on the documents, details, accounts seized from the premises of her husband and the assessee residing in the same place, notice under Section 153A read with Section 153C of the Act was issued. Later, a notice under Section 142(1) of the Act was issued to the assessee.

In the return filed in pursuance of notice 142(1) of the Act, the assessee claimed to have earned agriculture income which was not shown in the original return of income.

The assessee was called to furnish the details of agricultural income, and evidence etc. Since the assessee did not furnish the details or any evidence to support the agricultural income, the Assessing Officer (AO) rejected the claim of agricultural income and held that assessee has shown this amount to only support the availability of the cash for the later investments made by the assessee as per the cash flow statement submitted.

The assessee filed an appeal before the Commissioner of Income Tax (Appeals). The CIT(A) held that the veracity of the claim of such agricultural income had not been established as to what had been the gross receipts and expenses incurred.

CIT(A) observed that an income cannot be based on mere presumption that if the assessee owns some agricultural land, the income from agricultural operation arises automatically. In order to establish the income from agriculture the procedures have been laid out for maintaining the details of receipts and expenses which were to be furnished.

As a result, the CIT(A) upheld the decision taken by the AO and appeal was dismissed.

On further appeal, the ITAT also dismissed the appeal of the assessee.

Still not satisfied, the assessee filed an appeal with Hon’ble High Court for the following substantial question of law:

Whether the authorities below did not commit an error of law when they held that the onus was on the Appellant to prove that income returned as agricultural income is “not income from other sources” especially when there is no dispute that the appellant owns agricultural plantations”?

The Hon’ble High Court observed that the finding recorded by the CIT(A) was that nothing was forthcoming for accepting the agriculture income.

After perusing the findings recorded by all the authorities under the Act on this behalf, the Hon’ble High Court opined that substantial questions do not arise, and it affirmed the findings recorded on this behalf.

Still aggrieved, against the order of the High Court, the assessee filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court .

The Apex Court dismissed the Special Leave Petition (SLP) holding the the High Court had rightly recorded that no substantial question of law arose in the appeals filed under Section 260A of the Act.

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