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Before: Shri V. Durga Rao & Shri G. Manjunatha
O R D E R
PER V. DURGA RAO, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 31.08.2022 relevant to the assessment year 2011-12.
Brief facts of the case are that the Assessing Officer has noticed from AIR information that the assessee has made cash deposits amounting to ₹.25,00,000/- in his savings bank account maintained with Canara Bank, Thathathripuram Branch, Namakkal and also on verification made in AST, it was found that the assessee has not at all filed any return of income for this assessment year. Since the assessee has failed to disclose fully and truly all material facts to the Department for his assessment, the Assessing Officer believed that the income atleast to the extent of ₹.25,00,000/- chargeable to tax has escaped assessment within the context and purview of section 147 of the Income Tax Act, 1961 [“Act” in short]. Accordingly, notice under section 148 of the Act was issued on 26.03.2018. After following due procedure, by accepting the sale consideration of agricultural property at ₹.3,60,000/-, the Assessing Officer has completed the assessment under section 143(3) r.w.s. 147 of the Act dated 17.10.2019 determining total income of the assessee at ₹.23,69,860/- by treating ₹.21,40,000/- as unexplained cash deposits under section 69A of the Act. On appeal, the ld. CIT(A) confirmed the assessment order.
3. On being aggrieved, the assessee is in appeal before the Tribunal. In the grounds of appeal
, the assessee has raised the following grounds:
1. On the facts and circumstances of the case the order of the first appellate authority in dismissing the appeal of the appellant is against facts and is not legally maintainable. 2 On the facts and circumstances of the case, the reassessment proceedings initiated by issue of notice u/s 148 dated 26.03.2018 is bad in law in as much as the notice has been served on the appellant on 16.07.2019, but the notice for proper initiation of the proceedings should have left the hands of the department on or before 31.03.2018.
On the facts and circumstances of the case, the reassessment proceedings initiated to assess the cash deposits made by the assessee in Canara Bank during the financial year 2010-11 is bad in law, in as much as such proceedings could be initiated only to assess the income embedded in such deposits.
On the facts and circumstances of the case, the AO and the first appellate authority are not justified in not properly considering the cash flow statement filed by the assessee explaining the cash deposits in the bank account which has been brought to assessment.
5. For the above grounds and other grounds to be urged during the hearing of the appeal, the appellant prays that the appeal may be allowed in the interest of equity and justice.” By relying upon the grounds of appeal
, the ld. Counsel for the assessee has submitted that the reassessment proceedings initiated under section 147 of the Act is barred by limitation in as much as the notice under section 148 of the Act was served on the assessee on 16.07.2019. In the Act, the provision begins as “no notice under section 148 shall be issued for the relevant assessment year ......” clearly indicates about issue of the notice and not service of the notice. It is also evident from the reply to the RTI application that notice under section 148 of the Act dated 26.03.2018 was dispatched to the postal authorities on 28.03.2018 and as per acknowledgement card, it was delivered to the assessee on 02.04.2018. The law envisage issue of notice and not service of notice. Hence, we find no infirmity in the order of the ld. CIT(A) on this issue and accordingly, the ground raised by the assessee is dismissed.
4. On merits, the ld. Counsel for the assessee has submitted that the cash deposit towards sale consideration of agricultural property has been accepted by the Department, whereas, the cash deposits towards agricultural income earned by the assessee was rejected is not correct.
On the other hand, the ld. DR supported the orders of authorities below.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. When the assessee was asked to explain/produce the evidence for the source of cash deposits made into his bank account maintained with Canara Bank during the year 2010-11, the assessee explained that he was working as teacher and he sold his ancestral agricultural land during the financial year 2010-11 and produced copy of sale deed bearing Doc. No. 556/2011 dated 07.02.2011. On verification of sale deed produced by the assessee, the Assessing officer found that the sale consideration of the agricultural property was ₹.3,60,000/- only and allowed the same being deposited into his bank account. However, the Assessing Officer disallowed the cash deposits of ₹.21,40,000/- for want of documentary evidence, which was confirmed by the ld. CIT(A). The assessee was also asked to produce cash flow statement for the period from 01.04.1998 to 31.03.2012. Though the assessee filed the cash flow statement, the Assessing Officer has rejected the same for want of evidence for the claims of agricultural income and poultry farm income, etc. On perusal of the assessment order, we find that the Assessing Officer failed to call for the details of total agricultural land possessed by the assessee and other relevant details as the sale consideration of the agricultural property deposited in the financial year 2010-11 was accepted by the Assessing Officer, whereas, the agricultural income claimed by the assessee was rejected is found to be not correct. Earning of agricultural income out of agricultural property cannot be ruled out. Accordingly, we set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to allow 50% of cash deposit of ₹.21,40,000/- as income earned from agricultural property.
In the result, the appeal filed by the assessee is partly allowed. Order pronounced on 15th February, 2023 at Chennai.