SATYANARAYANA MATTA,WEST GODAVARI vs. INCOME TAX OFFICER, WARD-2, ELURU

In this case, the assessee is aggrieved with the order of the Ld.CIT(A), who has confirmed the addition relating to the cash deposits made into the bank account of Rs.1,30,000/- as unexplained cash deposits, invoking the provisions of section 69A of the Act. During the demonetization period, the appellant has deposited an amount of Rs.2.6 lakhs, out of which, the Ld.CIT(A) has already granted relief of Rs.1.3 lakh and sustained the balance, directing the Department to collect tax on the remaining amount, by invoking the provisions of section 115BBE of the Act. The Ld.CIT(A) did not agree with the contention of the assessee that the source of cash deposits of Rs.2.6 lakhs is out of agricultural income/rental income. The Ld.CIT(A) held that mere filing of pattadar passbook, claiming that he possesses some agricultural land will not conclusively prove that the assessee has got agricultural income during the year concerned. The Ld.CIT(A) has held that the assessee has not furnished Adangal or any other evidence in support of possession of said agricultural land during the year under consideration and also he carried out agricultural operations on such land. Whatever evidences filed actually belonged to earlier years and there was no concrete evidence to demonstrate that the assessee has got agricultural income of Rs.2.6 lakhs in the current year, which is claimed to have been deposited into the bank account during the demonetization period. As there is no evidence in support of carrying out agricultural activities during the year under consideration, the Ld.CIT(A) did not agree with the submissions of the assessee fully. But going through the declared income details, land holdings and nature of operations and applying the principle of preponderance of probability and balancing the interests of revenue and fairness, the Ld.CIT(A) gave relief of Rs.1.3 lakh as agricultural income and the remaining amount was treated as unexplained and to be added to the total income of the appellant.

Aggrieved by the part sustenance of the cash deposit to the extent of Rs.1.3 lakh, the assessee is in appeal before the ITAT, stating that the assessee has explained the sources for the deposits in the bank account during the demonetization period with cogent reasons and hence, the entire addition made by the Ld.AO should have been deleted. During the appeal proceedings, the Ld.AR of the appellant has relied on CBDT Instruction No.3/2017 dated 21.02.2017, in which CBDT has given Instructions to all the AOs. In this Instruction, it was clearly mentioned that an individual, who is not having business income, no further verification required to be made, if the total cash deposit is upto Rs.2.5 lakhs. The source of such amount can be either household savings/ savings from past income or amounts claimed to have been received from any other sources and amounts above this cut off amount only requires verification to ascertain the same as explained or not. In view of this clear direction, no verification is required by the Department with regard to the sources of cash deposits upto Rs.2.5 lakh. Hence, no addition can be made in this case, it was argued.

Ld.DR relied on the Orders of Ld.AO and Ld.CIT(A).

Heard both sides. The Instructions and Circular of CBDT are binding on Assessing Officers and hence no addition can be made. In this case, the assessee has deposited marginally higher than Rs.2.5 lakhs into his Savings Bank account and there being no business income, addition should not have been made by the Ld.AO in view of CBDT Instruction. In view of the same, the addition made by the Ld.AO is deleted. All other grounds/additional grounds of appeal are not adjudicated as the addition made by the Ld.AO is deleted based on CBDT Instruction mentioned above.

In the result, the appeal filed by the Assessee is allowed.