When entire agricultural produce was sold through Krishi Upaj Mandi, its beyond doubt

When entire agricultural produce was fully vouched and sold through Krishi Upaj Mandi, the sale is beyond doubt – ITAT

In a recent judgment, ITAT Jaipur has held that when entire agricultural produce was fully vouched and sold through Krishi Upaj Mandi, the sale is beyond doubt.

ABCAUS Case Law Citation:
4285 (2024) (10) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the addition on account of agricultural income treating it as undisclosed income.

The appellant was a private limited company engaged in agriculture activities. During the year under consideration, the assessee has disclosed agricultural income from agricultural holdings around 100 bigha.

However the Assessing Officer (AO) only accepted agricultural income to the extent of approx. 1/3^rd and treated the balance as undisclosed income.

During the assessment proceedings the AO on the basis of various report collected from different authorities treated the agriculture income as non genuine by bifurcating the income shown by the assessee as genuine and non genuine. The AO did not accept the sale of crop on the ground that appellant has not cultivated these crops during the year as these were not mentioned in the Khasra girdavari. The AO also rejected the claim of the appellant for production of one crop on the basis of report of Tehsildar obtained by him in earlier years that the average production of sarson in the area was much below than as reported by the assessee.

The Tribunal opined that the production of any crop is dependent upon the fertility of the land, irrigation facilities, seeds and manure used by him. In this case more particularly since the company was only having agriculture activities and the directors were experienced in the field therefore the production reported by the assessee was not on higher side when compared with the report of Tehsildar. Therefore, there is no reason to disallow the claim of the appellant for these agriculture produce.

The Tribunal opined that it is also a matter of common knowledge that Tehsildar is only reporting main crops in the Girdavari report and he did not mention each and every crop grown by the Appellant. The only basis of making the additions by the revenue authorities was reports obtained from Tehsildar and state Agriculture Department, which was not universally applicable and depends upon various factors like type of land irrigation facilities, soil, rain, seeds and quality of manure used by the farmer.

The Tribunal observed that the appellant had disclosed the Agriculture Income on the basis of various sale vouchers of sale of agriculture produce to Krishi upaj Mandi Samiti through Commission agents. The entire agricultural produce obtained by way of crops is fully vouched and has been sold through Krishi Upaj Mandi. Therefore, the sale was beyond doubt.

It was observed that confirmations of all the parties to whom agriculture crop was sold was submitted along with complete address and PAN. The AO had doubted on genuineness of the transaction without making any enquiry from these established traders. The AO had neither brought any material on record to disprove the sale vouchers nor enquiry had been conducted from the parties through whom the agricultural produce was sold. Thus any enquiry made from these parties would have disclosed the truth but this was not done by the AO. He has preferred to act on estimate and guess work.

The Tribunal further observed that the entire action of the revenue authorities in sustaining the addition was totally based on conjectures, guess work, and Surmises, otherwise there was no reasonable cause or ground or basis to reject the income disclosed by the Appellant. It is a settled preposition of law that suspicion however strong maybe but cannot take the place of evidence.

Accordingly, the impugned addition as deleted and the Tribunal allowed the appeal in favour of the assessee.

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