ITAT Affirms: Agricultural Income Cannot Be Disbelieved Merely for Lack of Expense Claims
In a significant relief to Ishwar Chander Pahuja, the Income Tax Appellate Tribunal (ITAT), Delhi, allowed his appeal by recognizing the genuineness of his agricultural income claim of ₹23.36 lakhs for AY 2015–16.
The Assessing Officer had rejected the claim solely on the ground that no expenses were declared, suspecting the income as bogus and terming the sales as self-serving documents.
Despite having a four-decade track record in seed production and consistent agricultural income across years, the AO doubted the credibility due to sales to related parties and absence of Mandi tax.
The assessee clarified that expenses were met through seedling sales and no law mandated book maintenance under Section 44AA for agriculturists.
The Tribunal observed that agricultural income was regularly declared in earlier years without objections and that the AO wrongly invoked provisions applicable to business. It held that mere absence of expenses or Mandi receipts could not negate genuine farm operations, especially when supported by land documents and sale bills.
The Tribunal also noted the NFAC’s failure to grant video hearing, breaching principles of natural justice.
Citing the consistency of income and the assessee’s expertise, ITAT concluded that the claim was legitimate. The addition was deleted and appeal allowed in favor of the assessee.
The copy of the order is as under:
