SHRI KRUSHNAKANT BHAILALBHAI PATEL,KHEDA vs. ITO, WARD-2, NADIAD

Assessee has taken two grounds of appeal; out of which ground no.2 is general in nature, which does not call for recording of any finding, hence, rejected. In ground no.1, the assessee has pleaded that the ld.CIT(A) has erred and confirmed addition of Rs.12 lakhs, which was added by the AO with aid of section 69 of the Income Tax Act, 1961.

Brief facts of the case are that the assessee has not filed any return of income under section 139 of the Act. It appears that department got information exhibiting the fact that the assessee has deposited a sum of Rs.12,74,400/- in cash in his saving bank account with Dena Bank, Mahudha Branch. Assessment was reopened under section 147 and notice under section 148 was issued and served upon the assessee. The assessee was confronted with regard to the source of such deposits with the bank. His statement was recorded under section 131 of the Act. The stand of the assessee was that he was agriculturist. Out of the past saving of two-three years, he has deposited the above cash in the bank account. The ld.AO was not satisfied with the above explanation on the ground that the assessee was having 15-16 bighas of agriculture land which is jointly held by nine coparceners, and therefore, he was not possessing sufficient agriculture land which could demonstrate generation of income to this extent, that out of the saving Rs.12,74,400/- could be deposited. Hence, he treated the deposit of Rs.12 lakhs out of unexplained sources. Accordingly, he made the addition. Appeal to the CIT(A) did not bring any relief to the assessee.

In response to the notice of hearing, CNK & Associates, LLP, Chartered Accountants under the signature of Alok B. Shah, partner of the firm filed written submissions. However, no one has come present on behalf of the assessee to argue the appeal.

With the assistance of the ld.DR, I have gone through the record carefully along with the submissions. The assessee has annexed details of agriculture land in the shape of form no.7/12. Though the documents are in Gujarati, but I have perused it. The emphasis of the assessee is that section 69 under which addition has been made is not applicable in the case of the assessee. He further contended that this section employs expression “may” which contemplates that if the assessee failed to explain the source, then such money may deemed to be the income of the assessee for the said financial year. Thus, according to the assessee, this expression gives a discretion to the AO to treat the said deposits with the bank as unexplained income of the assessee or not. Since the assessee is an agriculturist, he has no other source of income, therefore, on the strength of the decision of the Hon’ble Supreme Court in the case of CIT Vs. Noorjahan Noorjahan, 237 ITR 570 (SC), which affirmed the decisions in the case of CIT Vs. Noorjehan, 123 ITR 3, CIT Vs. Moghul Darbar, 216 ITR 301, DCIT Vs. Rohini Builders, 256 ITR 360 and Mitesh Rolling Vs. CIT, 258 ITR 278, it is submitted that additions ought not to have been made. In the submissions, the ld.counsel for the assessee has made reference to the following decisions:

I have gone through the record carefully. Section 69 of the Income Tax contemplates that where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable articles, and such article is not recorded in the books of account, if any maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of such valuable articles or thing, or the explanation offered by him is not, in the opinion of the AO satisfactory, then such valuables may be deemed to be the income of the assessee for such financial year. There is no dispute that this section employs “may”. It contemplates that the observation of the AO to treat the money, bullion, jewellery etc. found in the possession of the assessee, whose source was not explained as income of the assessee. It is pertinent to bear in mind that this discretion has to be exercised judiciously after considering overall facts and circumstances of the case. In the case of P.K. Noorjahan, this lady was a pardashin (पदा�नशीन). Thus, according to the custom, she could not venture out of the home and if that be situation, how one can assume that she has earned unexplained income. In that state of affairs, the Hon’ble Supreme Court has explained the meaning of expression “may” and observed that the AO has discretion to treat a particular item as explained or not. In the present case such circumstances are not discernible. The assessee has been maintaining a saving bank account. He has deposited money in that account. He is bound to explain the source of such money. He simply stated that he is agriculturist, but he failed to prove the source of agriculture income. The land holding shown to the AO is insufficient to believe that it has given rise of the income to this extent. Therefore, after perusing the orders of the Revenue authorities, I do not find any merit in this appeal. It is dismissed.

In the result, appeal of the assessee is dismissed. Pronounced in the Open Court on 15th November, 2019.