Agriculturalist Is Not Supposed To Maintain Books Of Account U/s 44AA For Claiming Exemption U/s 10(1): Delhi ITAT

While granting exemption on agricultural income u/s 10(1), the Delhi ITAT held that assessee being an agriculturalist, is not supposed to maintain books of account as per Sec 44AA. Section 44AA of Income tax Act deals with the maintenance of books of accounts by certain persons carrying on business or profession. Finding regularity and consistency of declared agricultural income over the years and subsequent assessment years, Single Bench of S. Rifaur Rahman (Accountant Member) observed that assessee's income from agriculture falls u/s 10(1). As per section 10(1) of Income tax Act, agricultural income from land situated in India is entitled to tax exemptions. Facts of the case The assessee filed his return declaring an income of Rs.8,61,560/-. During e-proceedings, the AO observed that assessee is deriving salary income from Pahuja Seeds Pvt Ltd. as a Director, income from house property and income from other sources. The AO found that assessee has shown agricultural income of Rs.23,36,957/- u/s 2(1A) and claimed the same as exempt u/s 10(1). Thus, the assessee has claimed tax rebate on agricultural income of Rs.6,01,097/-. The AO however found that assessee has not claimed any expenses for agricultural income. The assessee has furnished the copy of holding of agricultural land at difference places and furnished copy of bills of sale of agricultural produce to the persons mostly his related parties. In view of the unsatisfactory explanation, the agricultural income declared by the assessee was disallowed. Observation of the Tribunal The Bench found that the AO noticed from the information submitted by the assessee that the assessee has not claimed any expenses for earning agricultural income. The AO rejected the submissions of assessee with the observation that assessee did not furnish any reasonable explanation and computation of agricultural income along with books of account maintained for the agricultural activities, noted the Bench. The Bench found that the assessee is graduated in agricultural science from Agricultural University, Ludhiana and he is into vegetable seeds business. The Bench also found that assessee is holding agricultural land in different places and the details of the sales were also submitted before the Assessing Officer. From the facts on record, the Bench noticed that income declared by the assessee from AY 2016-17 to 2023-24 was within the range of Rs.33 lakhs to Rs.38 lakh per annum, without claiming any expenditure. The Bench also noticed that the AO has expressed doubt over agricultural income mainly because assessee has not claimed any expenditure in the return of income. The assessee has submitted copy of bills of sale of agricultural produce to various persons, even though to the related parties, added the Bench. The Bench observed that the claim of assessee is genuine as he has submitted that the agricultural expenses were met out of sale of seedlings to farmers, which is acceptable. Therefore, pointing that there is no reason to suspect the income declared by the assessee, the ITAT allowed Assessee's appeal. Counsel for Appellant/ Assessee: S.C. Garg Counsel for Respondent/ Revenue: Om Parkash Case Title: Ishwar Chander Pahuja versus ACIT Case Number: ITA No.2560/DEL/2023 Click Here To Read/ Download Order

Agriculturalist Is Not Supposed To Maintain Books Of Account U/s 44AA For Claiming Exemption U/s 10(1): Delhi ITAT

Pankaj Bajpai

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