RAMKUMAR THANGARAJ,CUDDALORE vs. INCOME TAX OFFICER, WARD 1, CUDDALORE, CUDDALORE

The Assessee raised the following grounds of appeal : “Ground No. 1- Erroneous confirmation of addition u/s 69A:

Briefly, the facts of the case are that the appellant is an Individual. No regular Return of Income was filed under the provisions of section 139 of the Income Tax Act, 1961 for the Assessment Year 2012-13 by the appellant. Subsequently, based on the information that the appellant made cash deposits of Rs.30,00,000/- in the Savings Bank account maintained with HDFC Bank Ltd., Cuddalore Branch during the previous year relevant to assessment year under consideration, the Assessing Officer formed an opinion that income got escaped assessment from tax, accordingly a notice u/s.148 of the Act was issued to on 27.03.2019. In response to notice u/s.148 of the Act, the appellant filed the return of income declaring total income at Rs.10,1030/-. Against the said return of income, the assessment was completed by Income Tax Officer, Ward-1, Cuddalore (hereinafter called ‘AO’) vide order dated 20.03.2024 passed, Cuddalore passed u/s.143(3) r.w.s 147 of the Income Tax Act, 1961 at a total income of Rs.34,93,437/-. While doing so, the Assessing Officer made addition of cash deposits in the bank account maintained with HDFC Bank Ltd of Rs.39,43,828/- as unexplained money of the appellant and also interest income of Rs.43,000/- rejecting the explanation of the appellant, that the cash deposits were made out of agricultural income.

Being aggrieved by the above assessment order, the appellant filed an appeal before the ld.CIT(A) contending that the Assessing Officer ought to have accepted the explanation of the appellant that the cash deposits were out of the sale proceeds of the agricultural produce. It is further contended that the Assessing Officer ought not have disbelieved the explanation of the appellant merely because the appellant had not shown the agricultural income as the same was exempt from tax. The appellant also produced the copies of the vouchers issued by M/s.Rahul Cardamom Company and M/s.R.C.Company amounting to Rs.39,00,026/-. However, the ld.CIT(A) rejected the above explanation of the appellant on the ground that the appellant failed to prove that the cash deposits were made out of the sale proceeds of agricultural produce, in view of the fact that the appellant does not own any agricultural land. The contention of the appellant that the agricultural activities were carried on by growing Cardamom on the lease hold land was rejected by the Commissioner in view of the restrictions imposed by the Kerala Land Reforms Act, 1963 and further the ld.CIT(A) observed that the appellant had failed to furnish the proof of activity of tilling of land obtaining lease holding land etc. The ld.CIT(A) also doubted the accumulation of such huge cash, the ld.CIT(A) placing reliance on the decision of the Hon’ble Gujarat High Court in the case of CIT Vs. Nisuku Farms [2013] 39 taxman.com 111 (Gujarat) confirmed the addition and also on the decision of CIT Vs. Construction Engineers [2017] 249 Taxman 260 (J & K) (HC) and also placed reliance on the decision of Sumati Dayal Vs. CIT 214 ITR 801 and decision of Hon’ble Supreme Court in the case of Durga Prasad More 82 ITR 540. However, the ld.CIT(A) deleted the addition made on account of interest income of Rs.43,000/-by holding that the credits pertained to succeeding assessment year.

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal. The learned Counsel submits that the appellant is engaged in the agricultural activity involving cultivation of Cardamom and Pepper on 8 Acres of lease holding land situated at Popparai Village, Idukki District, Kerala. The ld.Counsel submits that the cash deposits of Rs.30,00,000/- on 16.02.2012 and Rs.9 lakhs on 28.03.2012 were made out of the sale proceeds of Cardamom and pepper and in support of this, purchases vouchers from M/s.Rahul Cardamom Company and M/s.R.C.Company were produced. The learned Counsel submits that the Assessing Officer as well as the ld.CIT(A) ought not have confirmed the addition on mere surmises and suspicion, when the appellant had discharged the burden cast upon it by proving that the appellant had carried on the agricultural activity.

On the other hand, the learned Sr.DR submits that the ld.CIT(A) had passed a very detailed and speaking and reasoned order and the appellant had failed to discharge the onus of proving the earning of agricultural income and therefore, the ld.CIT(A) had rightly rejected the contention of the appellant.

We heard rival submissions and perused the material available on record. The issue that arises for our consideration is whether the explanation offered by the appellant in support of the sources of the cash deposits in the bank account was rightly rejected by the ld.CIT(A). It is an undisputed fact that the appellant made cash deposits of Rs.30,00,000/- on 16.02.2012 and Rs.9,00,000/- on 28.03.2012 in the bank account maintained with HDFC Bank Limited, Cuddalore. When the appellant was called-upon to explain the source of the cash deposits, the appellant had explained that the cash deposits were made out of the sale proceeds of Agricultural Produce of Cardamom and Pepper produced on lease holding lands. In support of this, the copies of the purchase vouchers from two traders i.e.M/s.Rahul Cardamom Company and M/s.R.C.Company were produced. However, the Assessing Officer observed that no agricultural activity was performed by the appellant in the absence of any proof of agricultural activity carried on by the appellant. Therefore, he concluded that appellant could not have earned the agricultural income and treated cash deposits as unexplained money of the appellant. On appeal before the ld.CIT(A), the ld.CIT(A) taking into consideration the provisions of Kerala Land Reforms Act, 1963 restricting the leasing of agricultural land and the fact that there is no proof of the agricultural activity carried on by the appellant confirmed the findings of the ld.CIT(A) placing reliance on the following decisions :  Hon’ble Supreme Court in the case of Durga Prasad More 82 ITR 540  CIT Vs. Nisuku Farms [2013] 39 taxman.com 111 (Gujarat)  CIT Vs. Construction Engineers [2017] 249 Taxman 260 (J & K) (HC)  Sumati Dayal Vs. CIT 214 ITR 801

We had carefully perused the copies of the lease agreements furnished in paper book page no.18 to 49 and abstract of agricultural income, purchase vouchers and the copies of the purchase vouchers of buyers. We are of the considered opinion that no credence can be given to the lease agreement as they were not registered as required under the provisions of Registration Act. Further, we find that the copies of purchase vouchers issued by M/s.Rahul Cardamom Company and M/s.R.C.Company, the details of delivery of the produce were not given. And also, no proof of carrying on agricultural activity was produced neither before us nor before the Lower Authorities. In the circumstances, we are of the considered opinion that the ld.CIT(A) had rightly concluded that the appellant could not have earned the agricultural income and therefore, the explanation offered in support of the sources of the cash deposits is not a plausible one. We do not find any illegality or perversity in the findings of the ld.CIT(A), accordingly, appeal filed by the assessee stands dismissed.

In the result, appeal filed by the assessee stands dismissed. Order pronounced in the open Court on 6th August, 2026.