SHRI JAYESHBHAI J. AMIN,,ANKLESHWAR vs. THE INCOME TAX OFFICER, WARD- 2(2),, BHARUCH

Per contra, the Ld.Senior Departmental Representative 9. supported the order of the Ld.CIT(A) and contended that the bills produced by the assessee were not substantiated and the purchaser party have denied to have done any transaction with the assessee and the assessee has not made any claim before the AO that land belonged to his brother was also utilised by him. Therefore, the Ld.CIT(A) has justified in his action.

We have heard the rival submissions and perused the material 10. available on record. We find that the Ld.CIT(A) has categorically admitted in para 14.1 of the appellate order that it is undisputed fact that the assessee was holding approximately 27 vighas of agricultural land which is supported of by copy of 7/12 and 8A certificate and also from the certificate Talati. It is also observed by Ld.CIT(A) from the remand report dated 04.06.2015 that agricultural activities were being carried out by the assessee on the agricultural land owned by him. Further, there was also agricultural land of Shri Anil Amin who is the brother of the appellant who was

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holding 67 vighas of agricultural land which were given to the assessee for carrying out agricultural activities and for keeping the agricultural income with him. In support of this, the assessee has filed an affidavit from Shri Anil Amin as well as copy of passport indicating that Shri Anil Amin was residing out of India from 2007. Therefore, the assessee was earning agricultural income from his brother’s agricultural land also. We, further note that the Ld.CIT(A) has observed from the remand report of the AO that there is some difference of agricultural crop grown on the land as per reports of the Talati. However, it is noticed that the Ld.CIT(A) has observed that merely because no information was available regarding crops undertaking in 7/12 or difference in crop 7/12 and in Talati certificate (i.e. only one certificate out of 3 certificates) does not mean that no agricultural activity was undertaken on the land. Therefore, the submission of the assessee were found to be enable. We further note that the assessee has shown agricultural income in earlier years which has been duly accepted by the Department. Therefore, considering the fact that the assessee was carried agricultural operations of approximately 94 vighas (27 vighas belong to assessee and 67 vighas belonging to his brother) on which he

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had grown various crops like cotton and sugar cane. These crops were duly sold off the market at a good price. Further, the assessee has claimed gross agricultural income at Rs.9.44 lakhs and filed details of agricultural produce at 16.95 lakhs. Therefore, considering 1/3rd of the net agricultural income the agricultural income shown at Rs.5.59 lakhs is appears to be reasonable. Further, the Co-ordinate Bench of Ahmedabad Tribunal in the case of ITO vs. Kirtsinh Vakhatsinh Gohil (HUF) in [ITA No.1340/Ahd/2009] has held that the assessee is holding agricultural land to the tune of 18.19 acres which is not denied by the Revenue. The AO has treated sale of cotton crops before bogus on the basis of statement of partner of the B.J.Factory. However, the partner was not allowed to cross-examination. Therefore, it was held that transaction cannot be regarded to be bogus on the basis of the enquiry conducted at the back of the assessee. The facts of the assessee case are similar to afore said case as the assessee is also holding 94 vighas agricultural land and doing agricultural activity thereon, which has been accepted by the Department. Further, the assessee has shown the agricultural income in earlier years which has not been disputed. Therefore, merely because the

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statement of a same purchaser who was examined at the back of the assessee, therefore, the transaction cannot be regarded as bogus. In view of above facts and considering the totality of the facts we are of the considered opinion that the Ld.CIT(A), was not justified in accepting part of Rs.2 lakhs as agricultural income and balance of Rs.3,59,730/- as non-agricultural income. Therefore, the addition of Rs.3,59,730/- sustained by the Ld.CIT(A) is therefore directed to be deleted, accordingly this ground of appeal of the assessee is allowed.

Ground No.2 states that Ld.CIT(a) has erred in ignoring the 11. opening cash on hand and addition of unexplained cash credit.

Brief facts of the case are that the AO noticed that there was 12. cash deposit of Rs.15,72,000/- on various dates in the bank account of the assessee. It was explained by letter dated 22.03.2013 that the assessee has deposited the cash amount in bank account out of sale proceeds to agricultural produces. It was further submitted that when at a relevant time, as and when needed or needs arise for purchase of intended agricultural land the funds were withdrawn from bank and when deed did not materialize for which cash amount

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was withdrawn from bank were again deposited by him in the bank account over the period and the same were in respect of sale of agricultural produces and in respect of cash withdrawn from he said bank account only. It was further submitted that the assessee had no other source except in respect of agricultural activity carried out by him and partner in firm. However, the AO did not found the reply to be satisfactory, hence treated the cash deposit of Rs.15,72,000/- as unexplained income.

The assessee carried the matter before Ld.CIT(A). However, 13. the Ld.CIT(A) observed that the assessee has failed to furnish evidence to show that deposits in the bank account were out of agricultural income, however there was withdrawal and deposit of cash amounts in the bank account of the appellant at certain intervals. In other words, there has been deposits and withdrawals and further deposits and again withdrawals in the case of the appellant and therefore, concept of peak theory can be applied in his case. Since the Ld.CIT(A) has upheld the addition of Rs.3,59,730/- on agricultural income, hence it was held that while applying the peak theory in the case of the assessee this amount of Rs.3,59,730/- considered as unaccounted cash available in his

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hands. Therefore, the AO was directed to apply the peak theory in the case of the appellant in respect of deposits and withdrawals of cash amount in the bank and availability of unaccounted cash of Rs.3,59,730/- in his hand and if any excess cash is found to be deposited in such bank account then the same be treated as unexplained cash income of the appellant.

Being aggrieved, the assessee filed this appeal before this 14. Tribunal. The ld.Counsel submitted that the Ld.CIT(A) has considered the unexplained cash of Rs.3,59,730/- available as cash in the hand of the assessee for working of peak theory in respect of cash deposit in the bank account. However, the said agricultural income is not unexplained as claimed in the ground no.1 above, therefore the same is very much available for explaining cash deposits and peak theory of bank deposits in the bank account. It was further contended that the Ld.CIT(A) has failed to consider his opening cash balance as per cash book submitted by the assessee which is placed at paper book, page 196. It was submitted that the assessee was having opening cash on hand and cash balance as per cash book as on 01.04.2009 at Rs.11,58,000/-. The details of which are placed at paper book, page 201. However, the Ld.CIT(A)

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accepted the contention of the assessee that cash balance deposited in the bank account out of cash withdrawals made from the bank account, but did not consider the opening cash on hand of Rs.11,58,000/- for set off of peak credit calculation purpose. The Ld.CIT(A) has ignored the submission of the assessee and not given any specific direction to AO to consider the opening cash on hand of Rs.11,58,000/- while giving final direction in his order. Therefore, it was submitted that cash deposit into the bank account were on account of withdrawals made from the bank account was accepted by the AO during the verification of additional evidences, but the AO has not made any adverse remarks in the remand report against the cash of bank book submitted along with additional evidences as could be seen from the copy of remand report placed at paper book 150 to 178. Therefore, it was directed that if the AO has considered opening cash on hand as on 01.04.2009 as “Zero” then the cash deposits of Rs.50,000/-, Rs.1 lakh, Rs.1.90 lakhs amounting to Rs.3.40 lakhs as on 23.04.2014 and have been considered as unexplained cash deposits because of non-consideration of opening cash on hand of Rs.11,58,000/-. It was further submitted that the closing cash on hand as on 31.03.2009 of Rs.11,58,000/- this should

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have been considered as the opening cash on hand as on 01.04.2009 while determining the peak cash in the period of 01.04.2009 to 31.03.2010.

On the other hand, the ld.Senior Departmental Representative 15. supported the order of the Ld.CIT(A).

We have heard the rival submissions and perused the material 16. available on record. As we have also held in Ground No.1 above with agricultural income of Rs.3,59,730/- is not from unaccounted source, therefore this amount is available for working out peak credit in respect of bank deposits. We further note that the assessee has claimed opening cash balance at Rs.11,58,000/- as on 01.04.2009 as appearing at page no.196 to 201 on which the AO has not made any adverse remarks in his remand report. Therefore, this opening cash balance was available for working out peak credit in respect of bank deposits. However, we find that the ld.CIT(A) has not given any direction with regard to considering these opening cash in hand of Rs.11,58,000/-. Since the opening cash balance of Rs.11,58,000/- is supported by the cash book which were filed before Ld.CIT(A) as additional evidence, therefore, we are of the

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considered opinion that while working out the peak theory of cash deposits this opening cash balance of Rs.11,58,000/- and agricultural income of Rs.3,59,730/- are required to be considered for working out of peak and thereafter only if any excess cash amount is found to be deposited such may be treated as unexplained cash income of the assessee if any, accordingly, this ground of appeal of the assessee is allowed.

In the result, appeal of the assessee is allowed. 17.

The order pronounced in the open court on 23.07.2019. 18.

Sd/- Sd/- (BHAVNESH SAINI) (O.P.MEENA) (�याियकसद�यतथा/JUDICIAL MEMBER) (लेखासद�यकेसम� /ACCOUNTANT MEMBER) सुरत/ Surat, �दनांक Dated: 23rd July, 2019/S.Gangadhara Rao, Sr.PS Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat