Facts of the Case

The assessee, Nitesh Nath Shah Deo, filed an appeal against the order of the Additional/Joint Commissioner of Income Tax (Appeals), Bengaluru dated 28.03.2025 for Assessment Year 2015-16. The assessee owned approximately 64 acres of ancestral land and declared agricultural income of ₹13,20,000. The Assessing Officer disallowed the agricultural income on the ground that no evidence of agricultural operations was produced and treated the amount as non-agricultural income. During appellate proceedings, the assessee asserted that agricultural activities were regularly carried out on the land, and a remand report was called for from the Assessing Officer.

Issues Involved

Whether the agricultural income declared by the assessee was genuine, whether the disallowance made by the Assessing Officer was justified in light of physical verification carried out during remand proceedings, and whether the addition sustained by the appellate authority could be sustained.

Petitioner’s Arguments

The assessee submitted that the land in question was ancestral agricultural land and that agricultural operations were being carried out regularly. It was contended that crops such as paddy, wheat, pulses, mustard and vegetables were grown on irrigated land. The assessee relied upon the remand report obtained during appellate proceedings, wherein the Assessing Officer, after physical inspection through departmental inspectors, confirmed that agricultural operations were indeed being conducted on a substantial portion of the land.

Respondent’s Arguments

The Revenue supported the orders of the Assessing Officer and the appellate authority, contending that the assessee had failed to produce sufficient evidence at the assessment stage to substantiate the claim of agricultural income.

Court Order / Findings

The ITAT Ranchi noted that pursuant to directions during appellate proceedings, the Assessing Officer conducted a physical verification of the land through departmental inspectors. The inspection report confirmed that agricultural operations were being carried out on approximately 25 acres of land, that the land was irrigated, and that crops were grown during both Kharif and Rabi seasons. The Tribunal observed that the Revenue’s own verification conclusively established the existence of agricultural activity. Accordingly, the Tribunal held that the disallowance of agricultural income was unjustified and unsustainable in law.

Important Clarification

The Tribunal clarified that once the Revenue itself, through physical verification and remand proceedings, confirms agricultural operations on land owned by the assessee, the claim of agricultural income cannot be rejected merely on presumptions or absence of documentary evidence at the assessment stage.

Final Outcome

The appeal filed by the assessee was allowed, and the addition made on account of disallowance of agricultural income for Assessment Year 2015-16 was deleted in full.

Link to Download Order- https://www.mytaxexpert.co.in/uploads/1769079850_NITESHNATHSHAHDEORANCHIVS.DCITCIRCLE1RANCHIRANCHI.pdf

 

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