ITAT Bangalore Accepts Medical Grounds for 375-Day Delay and Sends Agricultural Income Dispute Back to CIT(A)

Background of the Dispute

The case of Adikarnataka Munivenkatappa Suresh Raj (HUF) Vs ITO came up before the Income Tax Appellate Tribunal (ITAT), Bangalore, concerning Assessment Year 2017-18. The assessee, a Hindu Undivided Family, had submitted a return of income on 24.10.2017 declaring nil taxable income, while reporting substantial agricultural income.

The return was picked up under limited scrutiny through CASS specifically to verify the high agricultural income declared. This triggered a sequence of statutory notices and assessment proceedings, ultimately resulting in an addition by the Assessing Officer (AO) and dismissal of the assessee’s appeal by the Commissioner of Income Tax (Appeals). The controversy eventually reached the Tribunal along with an application for condonation of a 375-day delay in filing the appeal.

Assessment Proceedings and Addition of Unexplained Income

Selection for Limited Scrutiny

  1. The case was flagged in CASS for limited scrutiny to examine the agricultural income disclosed in the return.
  2. A notice under Section 143(2) of the Income Tax Act 1961 was issued on 09.08.2018.
  3. This was followed by a detailed notice under Section 142(1) dated 23.08.2018, calling for supporting particulars and documentary evidence.

Details Furnished by the Assessee

In response to the statutory notices:

  • The assessee furnished survey-wise details of agricultural lands.
  • The details included information about:
    • Mango trees
    • Coconut trees
    • Sapota trees
    • Neelgiri trees
  • The assessee also reported capsicum cultivation and sales, stating that capsicum produce had been sold for a total consideration of ₹62,47,431.

These submissions were intended to substantiate the agricultural income declared as exempt.

Finding of the Assessing Officer

After examining the materials on record, the AO came to the conclusion that:

  • The agricultural operations and income, as claimed, were not adequately supported by corroborative evidence.
  • The documents and details provided were considered insufficient to establish:
    • The extent of agricultural activities
    • The quantum of income claimed to have arisen from such activities

Consequently, the AO treated a part of the income as unexplained and made an addition of ₹91,41,000 as unexplained income in the assessment order passed under relevant provisions.

Appeal Before CIT(A) and Ex Parte Dismissal

Filing of Appeal

Aggrieved by the assessment order and the addition of ₹91,41,000, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) – NFAC, Delhi (CIT(A)), challenging the AO’s conclusions regarding agricultural income.

Opportunities Granted by CIT(A)

The CIT(A) issued multiple notices to the assessee:

  • The order records that four separate opportunities were provided for the assessee to:
    • File written submissions
    • Furnish supporting documents
    • Present arguments or evidence in support of the claim of agricultural income

However, despite these repeated chances: