Income from hybrid seeds production on leased lands, with exclusive control, supervision of operations, risk-bearing, qualifies as exempt agricultural income u/s 10(1); technical methods do not negate agricultural character.

ORDER

Per, Dr. Arjun Lal Saini, AM:

Captioned appeal filed by the assessee, pertaining to Assessment Year 2023-24, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by Commissioner of Income-tax (Appeals) dated 09.01.2026, which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3), r.w.s. 144B of the Income tax Act, 1961, vide order dated 29.03.2025.

2. Grounds of appeal raised by the assessee, are as follows:

1. That, the Ld. CIT(A) has wrongly confirmed the assessment order passed by the Ld. assessing officer u/s 143(3) r.w.s. 144B of the Income Tax Act, 1961.

(a). The notice issued u/s 143(2) of the Act is in violation of CBDT Instruction F. No. 225/157/2017/ITA-II dated 23.06.2017.

(b). That, the scope of limited scrutiny of the assessee has been expanded without following the mandatory procedure laid down by CBDT to expand the scope of a limited scrutiny or to convert limited scrutiny into a complete scrutiny.

2. That, the Ld. CIT(A) has wrongly confirmed the addition of Rs. 13,69,71,824/- by treating agricultural income as business income.

3.That, the Ld. CIT(A) has wrongly confirmed the addition of Rs. 23,643/- on account of unexplained cash credit u/s 68 of the Income Tax Act, 1961.

4. That, the Ld. CIT(A) has wrongly confirmed the addition of Rs. 8,95,024/- on account of unexplained expenditure u/s 69C of the Income Tax Act, 1961.

5. That, the Ld. CIT(A) has wrongly confirmed the addition of Rs. 6,444/- u/s 40(a)(ia) of the Income Tax Act, 1961.

6. That, the Ld. CIT(A) has wrongly confirmed the initiation of penalty proceedings u/s 274 r.w.s 270A and Section 271AAC of the Income Tax Act, 1961.

7. That, the Ld. CIT(A) has wrongly confirmed the levy of interest u/s 234A, 234B and 234C of the Income Tax Act, 1961.

8. That, the findings of the Ld. assessing officer and Ld. CIT(A) are not justified and are bad-in-law. The assessee craves to add, amend, alter and delete any of the above grounds of appeal.

Facts of the assessee’s case

3. The relevant material facts, as culled out from the material on record, are as follows. The assessee, before us, is a limited company and filed its Income Tax Return (ITR), u/s 139 of he Act, on 25.09.2023, declaring total income of Rs.4,34,55,388/-. The return so filed was processed u/s 143(1) of the Act and subsequently selected for scrutiny through CASS and notice u/s 143(2) of the Act, was issued to the assessee- company by the NaFAC, New Delhi. The case of the assessee has been selected for scrutiny under CASS to examine the issues of High Creditors / liabilities & Substantial payments shown to entities not registered under GST.

4. However, assessing officer has himself observed that no addition should be made on the issue for which the assessee’s case was selected for limited scrutiny, hence assessing officer, held as follows:

“3 Issues where variation is not proposed:

One of the reasons for selection of the