Agriculturist is not required to maintain books of accounts U/S 44AA: ITAT Bangalore
Shri Ganesh Vasudeva Shet (ITA No. 1105/Bang/2024)
Facts:
1. Disallowance of Agricultural Income:
The appellant declared agricultural income of ₹81,45,189, which the Assessing Officer (AO) initially added back to the total income as unexplained income, as the same was not backed with documentation, as required by Sec 44AA of the Income Tax Act.
The assessee argued that ₹9,29,559 from the sale of minor crops like coconut, arecanut, and cocoa could not be documented with sale receipts because these were sold in local markets and small quantities, which made it impractical to maintain sale bills. For the rest of the amount, bills were produced.
2. Ad Hoc Disallowance of Expenses:
An ad hoc disallowance of 25% of the agricultural income (amounting to ₹13,58,740) for expenses, on the grounds that the appellant did not maintain sufficient records to justify the expenses.
ITAT Bangalore held as below:
1. It is common for small-scale agriculturists not to maintain sale receipts for local market sales. There is no reason to disbelieve the assessee’s claim
2. The revenue also did not establish that the assessee had any undisclosed sources of income.
3. So the addition should be deleted.
4. There was also no basis for the arbitrary 25% disallowance made by the CIT(A), as no evidence was provided that the expenses were not incurred for agricultural purposes.
The copy of the order is attached herewith:
