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2015 (9) TMI 1350 - ITAT HYDERABAD

2015 (9) TMI 1350 - ITAT HYDERABAD - TMI - Treating the agricultural income as ‘income from other sources’ - Held that:- Exact quantum of agricultural income which could reasonably be earned from the agricultural land holding is a matter of debate or further enquiry, but, the fact that assessee is having agricultural income cannot be disputed or doubted considering the evidences brought on record by assessee. However, considering the fact that the entire receipts from agricultural operations is .....

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f agricultural produce. If assessee is able to substantiate the net agricultural income shown by him with supporting evidence, the same has to be accepted, other wise, AO can estimate the agricultural income on a reasonable basis after giving an opportunity to assessee to establish his claim. With the aforesaid observations, we set aside the impugned order of ld. CIT(A) and remit the matter back to the file of AO for considering afresh after due opportunity of being heard to assessee. - Decided .....

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e departmental authorities in treating the agricultural income of ₹ 62,35,000 as income from other sources . 3. Briefly the facts are, assessee is an individual. For the AY under consideration assessee filed his return of income on 22/03/2010 declaring total income of ₹ 1,74,570. In course of assessment proceeding, AO while examining computation of income filed by assessee along with return of income noticed that assessee has shown net agricultural income of ₹ 62,35,000. He, th .....

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e company has passed journal entries towards payment by debiting debtors account thereby indicating that payments were received by assessee from debtors directly. He observed that assessee did not furnish any evidence to show receipt of sale proceeds from the debtors, but, only stated that amounts were received from the debtors directly in cash. AO observed, assessee even failed to furnish names and addresses of the persons from whom sale proceeds were received. AO opined that when both assessee .....

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He was of the view that assessee has built up the story of agricultural income to explain the investments made in two companies, namely, Vainavi Industries Ltd. and Converge Communications (P) Ltd. Thus, ultimately, AO completed the assessment by treating agricultural income of ₹ 62,35,000 as income from other sources , which resulted in determination of total income of assessee for the year under consideration at ₹ 64,09,570. Being aggrieved of the assessment order so passed, assess .....

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l income shown by him. Ld. CIT(A) observed, though, assessee has entered into lease agreements with 17 persons, but, total lease rent paid amounted to ₹ 2,88,260, which is meager considering the income earned by assessee from agricultural activities. Further, she observed that the actual lease rent claimed to have been paid by assessee as per the details submitted was not in terms with the amount payable as per lease deed. Ld. CIT(A) observed, mere furnishing of MRO/Tahsildar Certificate d .....

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he entire amount was paid to assessee by debtors of ASCPL and that too in cash. Ld. CIT(A) observed, debtors from whom payments were claimed to have been received are located in various parts of the country and assessee was not able to furnish the addresses of those persons. She, therefore, finally concluded that as assessee has failed to substantiate his claim of agricultural income with proper evidence, the decision of AO in treating it as income from other sources deserves to be upheld. 5. Ld .....

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persons have stated before him that assessee has taken on lease agricultural land belonging to them and was carrying on agricultural activity. Therefore, when assessee is having substantial agricultural land holding and is carrying on agricultural activity, there is no reason to disbelieve agricultural income shown by assessee. It was submitted, in support of his claim, assessee has not only produced the details of land holding with supporting evidence like Pattadar passbook, lease agreements e .....

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t in the books of the company. As far as the allegation of ld. CIT(A) with regard to the variance in lease rent claimed to have been paid and as mentioned in the lease deed, ld. AR submitted, at the time of entering into lease deed amount per acre was mentioned at ₹ 5,000. If 10% increase in the lease rental for each year is taken into account, the amount claimed to have been paid by assessee would be the same. Thus, it was submitted by ld. AR, agricultural income shown by assessee is to b .....

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of the agricultural produce, but, assessee claimed to have received the sale proceeds from the debtors of the said company in cash. Ld. DR submitted, when assessee failed to furnish adequate evidence to prove such fact by furnishing the detailed addresses of the concerned debtors from whom he claimed to have received the amount, his statements cannot be accepted. He further submitted, lease rental paid by assessee to the land owners is very meager considering the amount of agricultural income c .....

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ssessee has also submitted details of agricultural income earned, expenditure incurred in undertaking agricultural activity like purchase of raw materials, etc. as well as a certificate from MRO/Tahsildar, showing the yield of agricultural produce. It is also not disputed that assessee was having by way of lease, substantial agricultural land holding to the extent of about 48 acres in East Godavari District, which is considered to be a very fertile area. It is also a fact on record that in cours .....

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assessee s claim of agricultural income primarily for the reason that entire receipts from agricultural activities is in cash and the expenditure incurred by assessee is also in cash. It has further been observed by the departmental authorities that the lease rental paid by assessee to the land owners is very very less compared to the agricultural income claimed to have been earned by assessee. Further, it has been observed by departmental authorities that, though, assessee claimed to have recei .....

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shows that assessee is engaged in agricultural activity, there is no justifiable reason to disbelieve assessee s claim of agricultural income, though, may not be to the extent declared by assessee. Moreover, when assessee has submitted a certificate from MRO/Tahsildar indicating the agricultural produce grown by assessee, the said evidence brought from a govt. authority cannot be brushed aside lightly unless positive evidence is brought on record to disprove the claim of assessee. As far as all .....

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