SAMPATH RAO POLSANI,HYDERABAD vs. ITO, WARD-11(2), HYDERABAD

The brief facts of the case are that, the assessee, who is an individual, filed his return of income for the A.Y. 2017-18 declaring income of Rs.14,530/- and agricultural income of Rs.40,00,000/-. Subsequently, the case of the assessee was selected for Limited Scrutiny under CASS for verification of agricultural income and cash deposits made during demonetisation period. During the course of assessment proceedings, notices were issued from time to time and in response thereto, the assessee furnished certain details and explanations in support of agricultural income and source for cash deposits.

During the course of assessment proceedings, the A.O. observed that, except furnishing pattadar pass books, the assessee failed to furnish any evidence in support of agricultural income declared in the return of income. The A.O. further observed that, the assessee has not furnished details regarding purchase of fertilizers, pesticides, seeds, labour charges and sale proceeds of crops. Therefore, the A.O. treated agricultural income of Rs.36,50,000/- as income from other sources. The A.O. further observed that, the assessee had deposited cash of Rs.7,50,000/- during demonetisation period and although the assessee claimed that, the said amount was out of earlier cash withdrawals and agricultural savings, the assessee failed to substantiate the same with supporting evidences. Therefore, the A.O. treated cash deposits of Rs.7,50,000/- as unexplained money under Section 69A of the Act, and completed assessment under Section 143(3) of the Act, determining total income at Rs.44,14,530/-.

Aggrieved by the assessment order, the assessee carried the matter in appeal before the Ld. CIT(A). However, none appeared on behalf of the assessee before the Ld. CIT(A) in spite of various notices issued during the course of appellate proceedings. Therefore, the Ld. CIT(A) proceeded to dispose off the appeal based on material available on record. The Ld. CIT(A), after considering the findings of the A.O., observed that the assessee failed to furnish necessary evidences to substantiate the claim of agricultural income and also failed to explain the source for cash deposits made during demonetisation period. The Ld. CIT(A) further observed that the assessee has not discharged the burden cast upon him to prove the genuineness of agricultural income as well as source for cash deposits. Therefore, the Ld. CIT(A) rejected the explanation of the assessee and sustained the additions made by the A.O. towards agricultural income treated as income from other sources and unexplained money under Section 69A of the Act.

The learned counsel for the assessee, Shri T. Chaitanya Kumar, Advocate, submitted that, although the assessee could not appear before the Ld. CIT(A) during the course of appellate proceedings, the assessee is now ready to furnish necessary evidences and explanations in support of agricultural income as well as cash deposits made during demonetisation period. The learned counsel for the assessee further submitted that, the Ld. CIT(A), without properly considering the issues on merits, sustained the additions made by the A.O. Therefore, he submitted that, one more opportunity may be granted to the assessee to present his case before the A.O.

The learned Senior A.R. for the Revenue, Ms. Aditi Goyal, on the other hand, submitted that, the assessee failed to furnish supporting evidences either before the A.O. or before the Ld. CIT(A) to substantiate the claim of agricultural income and source for cash deposits made during demonetisation period. The learned Senior A.R. for the Revenue further submitted that, the Ld. CIT(A), after considering the findings of the A.O., has rightly sustained the additions made by the A.O. Therefore, she submitted that, the orders of the lower authorities should be upheld.

I have heard both sides, perused the material available on record and had gone through the orders of the authorities below. Admittedly, the assessee could not appear before the Ld. CIT(A) during the course of appellate proceedings and the Ld. CIT(A) disposed off the appeal exparte based on material available on record. Although, the Ld. CIT(A) discussed the issues involved in appeal, but did not have benefit of examining the evidences and explanations, if any, to be furnished by the assessee in support of agricultural income and source for cash deposits made during demonetisation period. Since the assessee claims that, he is now in possession of necessary evidences to substantiate his claim and also expressed willingness to cooperate in set aside proceedings, in the interest of natural justice, I am of the considered view that, one more opportunity should be granted to the assessee. Therefore, I set aside the order of the Ld. CIT(A) and restore the issues involved in appeal to the file of the A.O. with a direction to re-examine the claim of agricultural income and source for cash deposits after affording reasonable opportunity of being heard to the assessee. The assessee is also directed to promptly cooperate and furnish necessary evidences before the A.O. Accordingly, the appeal filed by the assessee is treated as allowed for statistical purposes.

In the result, the appeal of the assessee is allowed for statistical purposes.

The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file