SHIVRAMEGOWDA RAMPURA DAYANANDA,MYSORE vs. INCOME TAX OFFICER WARD 1(2) MYSORE, MYSORE

In this appeal, the assessee has raised the following grounds: -

We have considered the submission of both sides and perused the materials available on record. The brief facts of the case are that the assessee is an individual and for the year under consideration filed its return of income on 31.03.2013, declaring a total income of Rs. 3,25,060/-. The return filed by the assessee was selected for scrutiny to examine the cash deposited during the demonetisation period. Accordingly, statutory notices under section 143(2) and section 142(1) were issued and served on the assessee. However, the assessee did not respond to such notices. Therefore, a show cause notice was issued to the assessee, granting a final opportunity to explain the source of cash deposited during the demonetisation period, in the bank account maintained with Karnataka Bank, totalling Rs. 20,18,500/-. In response, the 2 assessee submitted that he is engaged in the work of borewell drilling and installation of pumps in agricultural land and most of the work was done on a cash basis as the farmers used to pay by way of cash. The assessee further submitted that he had expenditure such as payment to the lorry owner, petrol bunks and material purchased for borewell installation. It was further submitted that the major source of income is agricultural income, and the agricultural land is in his wife’s name, and as she does not hold any bank account during the period, the cash was deposited in the assessee’s bank account. Since the assessee did not produce any proof of borewell digging activity, such as borewell vehicle and details of equipment and also did not produce any documents regarding the earning of agricultural income and agricultural land owned by his wife, the Assessing Officer (“AO”), vide order dated 24.12.2019 passed under section 143(3) of the Act, treated the cash deposit totalling to Rs. 20,18,500/-, during the demonetisation period, as an unexplained cash credit and added the same to the total income of the assessee.

During the hearing, the learned Authorised Representative (“learned AR”) submitted that since the assessee is mainly engaged in the business of drilling borewells for farmers, all its receipts are in cash, which are paid by the farmers. The learned AR submitted that the cash deposited during the demonetisation period was out of these cash receipts. Learned AR submitted that, given an opportunity, the necessary documents to support its claim shall be furnished for necessary verification.

In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open court on 19-Aug-2026. Sd/- Sd/-