The Income Tax Appellate Tribunal (ITAT), Bangalore Bench has granted relief to a landowner who reported Rs 1.82 crore income from mango sales, after the Income Tax Department added Rs 1.20 crore as unexplained cash credit under Section 68 of the Income Tax Act.
The case involved an assessee from Chittoor district, Andhra Pradesh, who owned around 22 acres of mango orchards. He filed his income tax return for AY 2020-21, declaring income of about Rs 48 lakh. However, tax officials questioned the high receipts from fruit sales and treated Rs 1.20 crore as unexplained income.
Tax Department's Argument
The department's Verification Unit estimated the mango yield based on online sources, assuming an average yield of 3-4 tonnes per acre and a price of around Rs 10,000 per tonne and concluded that total turnover could not exceed Rs 43 lakh.
After estimating 50% as expenses, officials calculated taxable income at Rs 21.6 lakh and treated the remaining Rs 1.20 crore as unexplained cash credit, claiming the farmer failed to justify the source of income.
Tribunal's Findings
The ITAT Bangalore, however, dismissed the department's appeal and upheld the findings of the Commissioner of Income Tax (Appeals), who had earlier deleted the addition.
The tribunal observed that the taxpayer had submitted:
- Affidavits from contractors involved in mango cultivation,
- Proof of buyers and payments, and
- Evidence of agricultural activity on the farm.
It held that the assessing officer relied only on internet-based estimates without verifying on-ground facts such as variety, quality or actual yield of the mangoes.
"The assessee discharged the burden of proof under Section 68. The Assessing Officer neither examined the buyers nor disproved the evidence filed," the ITAT noted.
What This Means for Taxpayers
Tax experts say the ruling reinforces that when agricultural income is properly supported by documentation, the tax department cannot rely solely on online estimates to make additions.
The decision also highlights the importance of maintaining clear records - buyer invoices, sales affidavit and yield details to substantiate agricultural earnings.
The case sets an important precedent for farmers and landowners engaged in fruit and crop cultivation, emphasizing that proper verification and factual assessment must guide tax proceedings, not assumptions or general data.
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