The AO, based on information from annual information returns observed that the assesee had cash deposits in his savings account. The AO stated that the assessee had failed to comply with two notices issued u/s 148 of the IT Act, 1961. AO passed an ex parte assessment order declaring the deposits as income from undisclosed sources u/s 69 of the Act. The Commissioner (appeals) observed that the landholdings by the family was used for agricultural purpose. Despite the evidence of the cold storage, the Commissioner (Appeals) denied the assessee’s claim that the income earned was from the sale of potatoes. On appeal:

The Tribunal held that the evidence indicating that the assesse owned the farmland alongside his family is undisputed. Therefore, it would be false to claim that the entire sale proceeds are in the possession of the assessee. The claim of agricultural income cannot be rejected when the assessee has provided information about its agricultural landholdings and established on record that it received money from the sale of agricultural products. It was further held that by investigating the issue of the family members’ shares in the income from potato cultivation on the land held in joint ownership, the Commissioner (Appeals) should have entered corroborating documentary evidence into the record. The Tribunal deleted the addition in full and the consequential penalty was hence deleted. (AY. 2009-10)