Facts of the Case

The assessee, Deepak Vegpro (P) Ltd., filed its return of income for Assessment Year 2022-23 claiming exemption of agricultural income amounting to ₹98,460. The claim was based on the contention that certain land owned by the assessee was leased out for agricultural purposes to M/s Bhagwati Farms during the relevant year. The Assessing Officer, while passing the assessment order dated 23.02.2024, disallowed the claim on the ground that the assessee failed to establish that the land was actually used for agricultural activities. The assessee carried the matter in appeal before the CIT(A), Jaipur-4, who confirmed the disallowance, leading to the appeal before the Tribunal.

Issues Involved

Whether the assessee had satisfactorily proved that the land in question was used for agricultural purposes during the relevant year, whether rental income received from leasing land could be treated as agricultural income in absence of supporting evidence, and whether the matter required remand for fresh verification.

Petitioner’s Arguments

The assessee submitted that the land was leased to M/s Bhagwati Farms and was used for agricultural activities during the year under consideration. Reliance was placed on certain documents claimed to be annexed to the paper book, including revenue-related records. It was argued that the lower authorities erred in confirming the disallowance and that the assessment order deserved to be set aside.

Respondent’s Arguments

The Revenue contended that the assessee had failed to furnish any cogent evidence either before the Assessing Officer or before the CIT(A) to establish agricultural use of the land. It was submitted that no lease deed, revenue record, or girdawari report evidencing crops grown or identifying the tenant was produced. However, the Revenue had no objection if the matter was remanded to the Assessing Officer for fresh adjudication.

Court Order / Findings

The ITAT Jaipur observed that the Assessing Officer had specifically recorded that the assessee failed to furnish evidence to show agricultural use of the land, including absence of any lease agreement or supporting documents. The Tribunal further noted that the CIT(A) had categorically observed that no girdawari report or revenue record had been produced despite being mentioned in the index of the paper book. The Tribunal found that even during the hearing before it, the assessee could not demonstrate that such evidence had been furnished before the lower authorities. Considering the request of the assessee for another opportunity and the absence of objection from the Revenue, the Tribunal held it appropriate to remand the matter to the Assessing Officer for fresh decision after granting proper opportunity to the assessee to produce all relevant material.

Important Clarification

The Tribunal clarified that the burden to prove that income qualifies as agricultural income lies squarely on the assessee. Documentary evidence such as revenue records, girdawari reports, and lease arrangements are crucial to establish actual agricultural use of land. However, in the interest of justice, where such evidence was not earlier placed on record, a fresh opportunity may be granted.

Final Outcome

The appeal filed by the assessee was allowed for statistical purposes. The issue relating to disallowance of agricultural income of ₹98,460 was remitted to the Assessing Officer for fresh adjudication after granting the assessee another opportunity of being heard and to produce relevant evidence in support of its claim.

Source Link- https://itat.gov.in/public/files/upload/1767614084-3uUfsA-1-TO.pdf

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