Agricultural Income Exemption Denied: Land Not Under Cultivation
Summary in Key Points:
- Issue: Was the assessee’s claim for agricultural income exemption justified?
- Facts: The assessee claimed an exemption for agricultural income. An Income Tax Inspector’s spot enquiry report stated the land was plotted and not cultivated. The assessee offered no explanation. The Commissioner (Appeals) noted letters from revenue officials confirming no crops and the land’s classification as plots in revenue records. The Tribunal also found the assessee failed to prove cultivation.
- Decision: The court held that, based on the facts, the claim of agricultural income was not tenable.
Important Note: This decision highlights the importance of providing evidence to support claims of agricultural income. The consistent reports from various officials, coupled with the assessee’s failure to provide any counter-evidence, led to the denial of the exemption. It underscores the need for taxpayers to maintain proper documentation and be prepared to substantiate their claims with credible evidence of actual agricultural operations.
HIGH COURT OF TELANGANA
Patnala Srinivas
v.
Income-tax Officer
ALOK ARADHE, CJ.
and J. SREENIVAS RAO, J.
and J. SREENIVAS RAO, J.
ITTA 127 of 2008
JANUARY 2, 2025
A.V. Krishna Koundinya, Adv. for the Petitioner. Vijhay K. Punna, Sr. SC for the Respondent.
JUDGMENT
Alok Aradhe, Cheif Justice. – Mr. A.V.A.Siva Kartikeya, learned counsel for the appellant.
Mr. J.V.Prasad, learned Senior Standing Counsel for Income Tax Department for the respondent.
2. This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) has been filed by the assessee. The subject matter of the appeal pertains to assessment year 2000-01. The appeal was admitted on following substantial question of law:
“Whether the Assessing Officer has rightly invoked Section 69A of the Income Tax Act, 1961 and made an addition of Rs.2,25,000/-, which was the amount returned by the assessee as an agricultural income?”
3. Facts giving rise to filing of this appeal briefly stated are that the assessee is carrying on the business of supplying building construction material. The assessee filed the return of income for the assessment year 2000-01 on 20.05.2002, in which the assessee disclosed his income for business as Rs.82,450/- and agricultural income of Rs.2,25,000/-. The Assessing Officer completed the assessment under Section 143(3) of the Act and determined the income of the assessee at Rs.3,07,450/-. The Assessing Officer by an order dated 30.11.2004 made an addition under Section 69A of the Act of Rs.2,25,000/- as agricultural income.
4. The assessee thereupon filed an appeal before the Commissioner of Income Tax (Appeals)-VI, Hyderabad. The Commissioner of Income Tax (Appeals) by an order dated 17.03.2005, inter alia held that no basis has been disclosed by the assessee for his share of income as Rs.2,25,000/-. The Commissioner of Income Tax (Appeals) also took note of the letters dated 23.09.2004 and 28.09.2004 issued by Executive Officer, Hayathnagar Mandal, Ranga Reddy District and Deputy Collector and Mandal Revenue Officer, Hayathnagar Mandal, Ranga Reddy District respectively and recorded a finding that no crops were grown on the said land and the same was shown as plots in the land revenue records. Accordingly, the appeal was dismissed.
5. Being aggrieved, the assessee filed an appeal before the Income Tax Appellate Tribunal, Hyderabad Bench ‘B’. The Income Tax Appellate Tribunal by an order dated 19.01.2007 has affirmed the order passed by the Commissioner of Income Tax (Appeals) and has dismissed the appeal. Hence, this appeal.
6. Learned counsel for the assessee submitted that the Income Tax Appellate Tribunal ought to have appreciated that Section 69A of the Act had no application to the obtaining factual matrix of the case in as much as the assessee had disclosed a sum of Rs.2,25,000/- as his agricultural income. It is further submitted that the Mandal Revenue Officer had given a report for financial year 2001-02 in respect of agricultural income of the assessee and therefore for the previous year, it could not be held that the land in question has already been plotted and no agricultural operation is carried out. Therefore, it is contended that the finding recorded by the Income Tax Appellate Tribunal is perverse.
7. On the other hand, learned Senior Standing Counsel for the Revenue has submitted that no substantial question of law arises for consideration in this appeal and the matter is concluded against the assessee by findings of fact.
8. We have considered the rival submissions made on both sides and have perused the record.
9. Section 69A of the Act deals with unexplained money. We find substance in the submission made by learned counsel for the assessee that provisions of Section 69A of the Act per se may not apply to the case of the assessee. The issue which requires consideration in this appeal is whether the assessee carried out any agricultural operations for the assessment year 2000-01. The Inspector of Income Tax deputed by Assessing Officer for spot enquiry has reported after visiting the land that the same has been marked into plots and is not used for cultivation. The material collected by the Assessing Officer during the course of the enquiry was forwarded to the assessee and his comments were sought for. However, the assessee did not offer any explanation. The Commissioner of Income Tax (Appeals) has taken into account the letters dated 23.09.2004 and 28.09.2004 issued by Executive Officer, Hayathnagar Mandal, Ranga Reddy District and Deputy Collector and Mandal Revenue Officer, Hayathnagar Mandal, Ranga Reddy District respectively, in which it is stated that no crops were grown on the land and the same was shown as plots in the land revenue records. The Income Tax Appellate Tribunal has also found that the assessee has failed to establish that the land in question was under cultivation. Thus, the authorities under the Act, on the basis of meticulous appreciation of evidence on record have found that the land in question was already plotted and no agricultural operations were carried out by the assessee. Therefore, the claim of agricultural income is not tenable. The aforesaid findings of fact are based on meticulous appreciation of evidence on record and by no stretch of imagination can be said to be perverse. It is well settled in law that this Court in exercise of powers under Section 260A of the Act cannot interfere with the finding of fact until and unless the same is demonstrated to be perverse. (see Syeda Rahimunnisa v. Malan Bi by LRs (2016) 10 SCC 315 and Principal Commissioner of Income Tax, Bangalore v. Softbrands India Private Limited
10. In view of preceding analysis, the substantial question of law framed by this Court is answered against the assessee and in favour of the Revenue.
11. In the result, we do not find any merit in the appeal. The same fails and is hereby dismissed.
Miscellaneous applications, if any pending, shall stand closed. There shall be no order as to costs.