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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Shri Sudhanshu Srivastava & Shri Amarjit Singh
PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s appeal for A.Y. 2010-11, arises from order of the CIT(A), Ahmedabad-5 dated 25-02-2015, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.
All the grounds of the assessee from 1.1 to 2.1 are interconnected to the common issue of confirming the following additions made by the ld. CIT(A).
I.T.A No. 927/Ahd/2015 A.Y. 2010-11 Page No 2 Agricultural income Rs. 20,18,700/-
(ii) Unexplained cash credit Rs. 19,46,719/-
(iii) Agricultural income as other sources Rs. 3,00,000/-
The fact in brief is that assessee has filed return of income declaring income of Rs. 47,652/- on 31st March, 2011. The case was subject to scrutiny and notice u/s. 143(2) of the act was issued on 29th August, 2011. The assessment u/s. 143(3) of the act was completed on 18th March, 2013 and assessing officer has made addition as cited in the grounds of appeal filed by the assessee. The fact pertaining to the additions made by the assessing officer is as under:-
Bogus Agricultural Income
During the course of assessment, the assessing officer has noticed that assessee was having bank account with Oriental Bank of Commerce, Shahibaugh branch, Ahmedabad having deposit of Rs. 35,62,013/- including cash deposit of Rs. 18,18,700/- and assessee was also having another bank account in the name of his minor daughter Falguni S. Bhatt in which there was deposit of Rs. 27,30,770/- including cash deposit of Rs. 15,00,770/-. The assessee has explained that the source of cash deposit in his bank account was out of surplus cash balance and agricultural income. In this regard, the assessing officer has asked the assessee to explain all the debit and credit entries in the aforesaid bank account and also asked to furnish evidence of holding agricultural land and copies of agricultural accounts for the last 3 years. In response to show cause notice, the assessee explained
I.T.A No. 927/Ahd/2015 A.Y. 2010-11 Page No 3 that all the cash deposits were out of his agricultural receipts and withdrawal made from the aforesaid bank account. The assessee has also submitted copies of agricultural land holding statement of 7/12 and form no. 8 from the period 2008 to 2012. The assessee has also submitted copies of income tax return along bank statement and agricultural income proof of earlier year along with copy of account of agricultural income for the current year and the details of the debit and credit entries in the aforesaid bank account. The assessing officer was not fully agreed with the reply of the assessee and asked further detail pertaining to credit and debit in the bank accounts held by the assessee. On not receiving the further detail, the assessing officer has issued show cause notice that he is going to make additions of the following credit entries appearing in both the accounts as under:- MINOR FALGUNI U/G SANJAY 9222010027760 ANANDRAY BHATT DATE OF TRANSECTION AMOUNT CREDIT/DEPOSIT MODE OF CREDIT
28-May-2009 630000 TRANSFER 2-Jun-2009 800000 CASH ll-Jun-2009 300000 TRANSFER 16- Jim-2009 700000 CASH 2-Jul-2009 200000 TRANSFER 3-Jul-2009 770 CASH 4-Jul-2009 100000 TRANSFER TOTAL 2730770 ACCOUNT NO 9222010007750 SANJAY ANANDRAY BHA1T DATE OF TRANSECTION AMOUNT CREDIT/DEPOSIT MODE OF CREDIT
1 -May-2009 8500 CLEARING 6-May-2009 5000 TRANSFER 6-May-2009 4000 CLEARING 13-May-2009 8500 CLEARING
I.T.A No. 927/Ahd/2015 A.Y. 2010-11 Page No 4 22-May-2009 5000 TRANSFER 2-Jun-2009 5000 CASH 4-Jun-2009 30000 CASH 6-Jun-2009 25000 CASH l-Jul-2009 75000 CASH 2-Jul-2009 25000 CASH 2-Jul-2009 100000 CASH 4-Jul-2009 125000 CASH 7-Jul-2009 10000 CASH ll-Jul-2009 6300 TRANSFER 20-Jul-2009 50000 TRANSFER 21-M-2009 100 TRANSFER 23-Jul-2009 10000 TRANSFER 8-Aug-2009 26000 TRANSFER 13-Aug-2009 69000 CASH 2-Sep-2009 25500 CASH 19-Sep-2009 215000 CASH l-Oct-2009 5000 TRANSFER l-Oct-2009 2000 CASH 7-Oct-2009 7000 TRANSFER 12-Oct-2009 200000 CLEARING 29-Oct-2009 759 CLEARING 17-Nov-2009 9200 CASH 2-Dec-2009 200000 CASH 3-Dec-2009 200000 CLEARING 14-Dec-2009 10000 CLEARING 23-Dec-2009 1100000 TRANSFER 24-Dec-2009 425000 CLEARING 28-Dec-2009 300000 CASH 5- Jan-20 10 154 INTEREST 22- Jan-20 10 75000 CASH 27-Jan-2010 200000 CASH
I.T.A No. 927/Ahd/2015 A.Y. 2010-11 Page No 5 He has further asked the assessee to furnish detail of his family member and supporting evidences of agricultural expenses and asset and liability statement. The assessee vide his letter dated 22nd Jan, 2013 submitted the detail as under:- "As per your above referred notice details required is as under.
Bank details of Minor Falguni U/G Sanjay Bhatt A /c No. 9222010027760 are as under:- Date Of Amount Mode Of Transferred from A/ c Holder Transaction Credit / Credit (A/cNo.) Deposi 28-May- 630000 Transfer 9222011004124 Alka Bhatt-Mother -67 2009 2-Jun-2009 800000 Cash Cash Deposit Cash withdrawn on 28/05/2009 and cash on hand deposited in bank ll-Jun-2009 300000 Transfer 9222011004124 Alka Bhatt-Mother 16-Jun- 700000 Cash Cash Deposit Cash withdrawn on 12/06/2009 were 2009 deposited 2-M-2009 200000 Transfer 9222010007750 Sanjay Bhatt- Father 3-Jul-2009 770 Cash Cash Deposit Cash withdrawn earlier deposited 4-M-2009 100000 Transfer 9222010007750 Sanjay Bhatt -father Total 2730770 All transactions in the accounts were done to facilitate my daughter foreign education expenses. This tuition expenses were eligible for chapter VI-A deduction. For your reference I attached foreign education tuition fee statements from College of Technology London, student visa letter and accommodation letter.Bank statement of daughter attached. a) Bank details of Sanjay Bhatt A /c No. 9222010007750 are as under:- Date of Amount Mode Of Credit Transferred From (A/cNo.) A/ c Holder Transaction Credit/. 1-May-09 8500 Clearing 6-May-09 5000 Transfer Transfer from Pension a/s no Sanjay Bhatt 922121000047 6-May-09 4000 Clearing 13-May-09 8500 Clearing 22-May-09 5000 Transfer 9222011004124 Alka Bhatt
I.T.A No. 927/Ahd/2015 A.Y. 2010-11 Page No 6 2-Jun-09 5000 Cash Cash Deposit 4-Jun-09 30000 Cash Cash Deposit 6-Jun-09 25000 Cash Cash Deposit l-Jul-09 75000 Cash Cash Deposit 2-Jul-09 25000 Cash Cash Deposit 2-Jul-09 100000 Cash Cash Deposit 4-Jul-09 125000 Cash Cash Deposit 7-Jul-09 10000 Cash Cash Deposit ll-Jul-09 6300 Transfer Transfer from Pension a/s no Sanjay Bhatt 922121000047 20-Jul-09 50000 Transfer 8831131000339 Sanjay Bhatt 21-Jul-09 100 Transfer Transfer from Pension a/s no Sanjay Bhatt 922121000047 23-Jul-09 10000 Transfer 8831131000339 Sanjay Bhatt 8-Aug-09 26000 Transfer 8831131000339 Sanjay Bhatt !3-Aug- 69000 Cash Cash Deposit 09 2-Sep-09 25500 Cash Cash Deposit 19-Sep- 215000 Cash Cash Deposit 09 l-Oct-09 5000 Transfer 9222011004124 Alka Bhatt l-Oct-09 2000 Cash Cash Deposit 7-Oct-09 7000 Transfer 9222011004124 Alka Bhatt 12-Oct- 200000 Clearing Borrowed from friend for 09 daughters education 29-Oct- 759 Clearing 09 17-Nov- 9200 Cash Cash Deposit 09 2-Dec-09 200000 Cash Cash Deposit 3-Dec-09 200000 Clearing Borrowed from friend for daughter education 14-Dec- 10000 Clearing Bank wrongly credited debit 09 entry made on same date
I.T.A No. 927/Ahd/2015 A.Y. 2010-11 Page No 7 23-Dec- 1100000 Transfer Borrowed from friend for Rakesh 09 daughters education purpose Trbovandas A/cNo. 9222011002601 Brahmbhatt 24-Dec- 425000 Clearing Borrowed from friend for 09 daughters education 28-Dec- 300000 Cash Cash Devosit 09 5-Jan-09 154 Interest 9222010007750 Sanjay Bhatt 22-Jan- 75000 Cash Cash Deposit 09 27-Jan- 200000 Cash Cash Deposit 09 Total 3562013
(2) My family consist following. m Alka Sanjaybhai Bhatt - Wife - Copy of return of A. Y. 2008-2009, 2009-2010 and 2010-2011 is attached. No return for A. Y. 2011-2012 & 2012-2013 were not filed. a Falguni Sanjaybhai Bhatt - Daughter m Love Sanjaybhai Bhatt - Son 3) I have carried out agricultural activity on my agricultural land. Since long I doing agricultural activity. For your reference I attach my earlier year income statement of District office, vadali, Village Gamdi. I have purchased tractor with loan to carry out my agricultural activity. Hence in the income tax return all income of agricultural activity shown by deducting all valid agricultural expenses. Land at hatoj share 50% Land at Gamdi share 36% (This land acquired injoint name of all family members) Land*at Gamdi share 100% Survey No. 90A/C. No. 137 4) My assets include all agricultural land. Copy of land holding attached with this letter. I have taken loan from L& T finance for tractor. - Copy of loan statement attached for your reference. 5) Attach detailed cash account from 01/04/2009 to 31/03/2010. Hence you are requested to kindly take above details in your record and take steps for further proceedings" The assessing officer again not satisfied with the detail submitted by the assessee and further asked the assessee to furnish the following detail:- -Shri Himanshu V. Patel C.A. appeared and filed part details. No proper explanation upto the satisfaction filed regarding credit entries in the bank accounts of his daughter Falguniben and in his name. No complete details of family members given. No details regarding income and Agriculture income given. Details of assets and liabilities statement was not given.
In view of the above you are finally requested to submit following details/ explanation. (i) Cash book of Alkaben from 01.04.2009 to 31.03.2010. (ii) Details of Jewellery pledged for gold loan to HDFC Bank by Alkaben. (iii) Total expenses towards the education of daughter of assessee at U.K. from 01.04.2009 to till date with copy of passport, immigration certificate, copy of Visa etc. (iv) Details of Money exchange for foreign remittance for education of daughter at U.K. with supporting evidence. (v) Details of credit entries and confirmation of persons from whom loan was taken with all supporting evidences.
I.T.A No. 927/Ahd/2015 A.Y. 2010-11 Page No 8 (vi) Please produced Shri Rakesh Tribhuvandas Brahmbhatt from whom loan of Rs. 11,00,0007- taken with all supporting evidences to prove his genuineness credit worthiness of transaction and when the same was repaid. (vii) Produced assessee for verification. Falling which unexplained credit in bank will be added in the hands of the assessee. Case adjourned to 28.01.2013 at 11.00 a.m." The assessing officer observed that assessee’s agricultural land was not having any irrigation facility and he was of the view that as per forecasting report the production of agricultural land of 1.2324 hectare comes to 291 kg and estimated the maximum earning from the land held by the asssessee to the amount of Rs. 10,000/- per annum. Accordingly, the assessing officer has treated Rs. 3 lacs as excess agricultural income shown by the assessee as income from other sources.
Unexplained investment
The assessing officer stated that assessee was having bank account no. 9222010007750 with Oriental Bank of Commerce in which there was cash deposit of Rs. 18,18,700/- and there was also another saving bank account no. 92220100277 with Oriental Bank of Commerce in the name of his minor daughter. The assessing officer stated that assesse has failed to establish the source of cash deposit amounting to Rs. 18,18,700/- in the bank account maintained in the name of the assessee and Rs. 2 lacs in the bank account maintained in the name of his minor daughter of the assessee. Therefore, cash deposit of Rs. 18,18,700/- and Rs. 2 lacs totalling to Rs. 20,18,700/- was added to the total income of the assessee.
Unexplained credit
I.T.A No. 927/Ahd/2015 A.Y. 2010-11 Page No 9
The assessing officer stated that the assessee has explained that source of credit entries appearing in the bank account were from the money borrowed from his friends for the purpose of education of his daughter. The assessing officer has stated that the total amount on such unexplained credit entries was to the amount of Rs. 19,46,759/- and out of which Rs. 11 lacs was obtained from Rakesh T. Brahmbhatt and stated that from copy of bank account of Rakesh T. Brahmbhatt it was noticed that the deposit of cash of Rs. 11 lacs was reflected before issuing the cheque to the assessee.
Considering the above facts and circumstances and for want of confirmation, the assessing officer has treated the deposit of Rs. 19,46,759/- unexplained and added to the total income of the assessee.
Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.
During the course of appellate proceedings before us, the ld. counsel has furnished the paper book comprising detail and copies of documents furnished before the assessing officer and CIT(A) at the time of hearing. The ld. counsel has contended that the assessing officer has made the additions on assumption basis without considering and disproving that source of income from agricultural, withdrawal made from the bank and the amount borrowed from friends and relatives for the purpose of education of the daughter of the assessee. The ld. counsel has also contended that assessee has been using tractor and hybrid seeds for agricultural operations and without considering these material facts, the assessing officer has estimated the agricultural income at lower side on assumption basis. On the I.T.A No. 927/Ahd/2015 A.Y. 2010-11 Page No 10
We have heard both the sides and perused the material on record. The assessee is an individual and his main source of income was from agricultural income and the assessee was having agricultural land to the extent of 3.95 bighas during the year under consideration. The assessee has declared total income of Rs. 47,652 mainly pension income derived from AMC and agricultural income of Rs. 6,91,925/-. During the course of assessment, the assessing officer noticed that cash deposit to the amount of Rs. 18,18,700/- on different dates in his bank account and cash deposit aggregating to the amount of Rs. 15,00,770/- in the bank account maintained in the name of his minor daughter. The assessee explained that the source of cash was out of agricultural income and out of cash withdrawal from the bank account. The assessing officer has reduced the agricultural income after referring forecast study report and un-irrigated land of the area. The assessing officer has treated the cash deposit of Rs. 1818700/- and cash deposit of Rs. 2 lacs in the account of the assessee and in the account of the daughter as unexplained. However, the CIT(A) has estimated the agriculture income at Rs. 25,000/- and treated the cash deposit to the amount of Rs. 17,68,700/- as unexplained. Regarding credit entries in the bank account, the assessing officer has treated the amount of Rs. 19,46,759/- as unexplained after stating that equivalent cash of Rs. 11 lacs was deposited in the bank account of the lender Shri Rajesh Brahmbhat before issuing of cheque of the assessee and the assessee had not offered explanation with regard to other entries. For the reasons cited above, the assessing officer
I.T.A No. 927/Ahd/2015 A.Y. 2010-11 Page No 11 has also reduced the agricultural income to the amount of Rs. 3 lacs and treated the same as income from other source. After perusal of the material on record, it is gathered that during the course of assessment, the assessee has furnished the detailed explanation about the cash and credit entries appearing in the bank account maintained in the name of assessee and bank account in the name of his minor daughter. The assessee has submitted copies of income tax returns along with bank statements and agricultural income of earlier years. The assessee in his submission has given the detail as date of transaction, amount of credit/deposit, mode of credit, transfer from account no, name of the account holder etc. pertaining to the foreign education expenses of his daughter. In respect of claim of agricultural income earned by the asesssee, the assessee has produced copies of extract of 7/12 along with certificate form Taluka Vikas Adhikari in respect of amount of agricultural income earned by the assessee. The assessee submitted that he has been using tractor for the agricultural activity evident from the tractor loan obtained from the L & T. F.H. He has also claimed that due to technical development and availability of hybrid seeds now all fruits and vegetables are available throughout the year which the assessing officer has not considered and estimated the agricultural income on assumption basis. It is noticed that assessing officer as per his own analysis rejected the claim of assessee in respect of credit entries appearing in the bank account from the loan obtained from his friends/relatives without issuing any show cause notice to the assessee. It is further noticed that ld. CIT(A) has sustained the addition reiterating the facts referred by the assessing officer. In the light of the above facts and circumstances, we observed that assessing officer has not specifically disproved the material
I.T.A No. 927/Ahd/2015 A.Y. 2010-11 Page No 12 Shri. Rakesh T. Brahmbhatt in respect of his earning of agricultural income after verification/examination of the relevant evidences. Further, the assessing officer has not issued any show cause notice to the assessee for rejecting his claim of credit entries appearing in the bank account. In the light of the above facts and material, we observed that assessing officer has not categorically disproved the detailed explanation and material furnished by the assessee before disallowing the claim of the assessee. Considering the above facts and circumstances, we observed that it will be appropriate to restore this case to the file of assessing officer for adjudicating afresh as directed above after affording appropriate opportunity to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 23-09-2019 (SUDHANSHU SRIVASTAVA) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 23/09/2019
I.T.A No. 927/Ahd/2015 A.Y. 2010-11 Page No 13 आदेश क" ""त"ल"प अ"े"षत / Copy of Order Forwarded to:-
Assessee
Revenue
Concerned CIT
CIT (A)
DR, ITAT, Ahmedabad
Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील"य अ"धकरण, अहमदाबाद