ASHA SINGH,VARANASI vs. INCOME TAX OFFICER, WARD - 1(3), VARANASI

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH (SMC), VARANASI BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.191/VNS/2024 Assessment Year: 2017-18 Asha Singh v. Income Tax Officer C-4/33, Sarai Goverdhan Ward 1(30 Chetganj Varanasi Varanasi (U.P) TAN/PAN:ASMPS7129J (Applicant) (Respondent) Applicant by: Shri Ashish Bansal, Advocate Respondent by: Shri Deepak Yadav, D.R. O R D E R This appeal has been preferred by the Assessee against the order dated 03.09.2024, passed by the Addl/JCIT(A)-3, Bengaluru for Assessment Year 2017-18.

2.0 The brief facts of the case are that the assessee e-filed her return of income for the year under consideration on 31.07.2017 declaring a total income of Rs.4,53,330/-. The case of the assessee was selected for Limited Scrutiny under Computer-Aided Scrutiny Selection (CASS) for the reason of “cash deposit during demonetization period”. The Assessing Officer (AO) issued statutory notices, requiring the assessee to furnish the details of source of cash deposits during the demonetization period. Since there was no response from the side of the assessee, the AO issued show cause notice dated

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21.11.2019, in response to which the assessee furnished her reply as under:

“I am a old widowed lady of over 67 year age deriving income mostly from Bank deposits, investments and agricultural income derived from ancestral inherited agricultural land holdings through generations. I am an income tax assessee for over 20 years and regularly filing my Income Tax Returns, without fail. Being an aged, widowed lady with failing health and mobility, it is of great comfort to her to keep cash received from such agriculture produce, with herself for her daily needs of maintenance. This demonetization process completely devastated her and she was left with no other option but to deposit her hard earned money, basically meant to look after her old age needs and livelihood, to prevent it from getting wasted as a piece of worthless paper. The cash deposited out of her past savings and income.” 2.1 During the course of assessment proceedings, it was noticed by the AO that the assessee had made cash deposits aggregating to Rs.14,65,000/- in her six different bank accounts of six different Banks. The AO issued notices under section 133(6) of the Income Tax Act, 1961 (hereinafter called 'the Act’) to all the Banks and obtained the bank statements, wherefrom the AO noticed that the assessee had neither made any major withdrawal nor deposit during the period from 01.04.2016 to 08.11.2016. Therefore, the AO was of the view that it is very

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hard to believe that any cash in hand was lying with the assessee as on 08.11.2016. After considering the submissions of the assessee and the materials on record, the AO accepted the cash in hand as on 08.11.2016 at Rs.2,50,000/- and treated the balance amount of Rs.12,15,000/- out of the total cash deposits of Rs.14,65,000/- as unexplained money of the assessee and added the same to the total income of the assessee under section 69A of the Act.

2.2 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under section 271AAC(i) of the Act, separately.

2.3 Aggrieved, the Assessee preferred an appeal before the Ld. First Appellate Authority, who dismissed the appeal of the assessee and confirmed the order of the AO.

2.4 Now the assessee has approached this Tribunal challenging the order of the Addl/JCIT(A)-3, Bengaluru, by raising the following grounds of appeal:

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Officer while computing the tax liability against the appellant in terms of assessment order dated 26.12.2019. 2. BECAUSE the ownership of agricultural land holding of 60 bighas and agricultural income of Rs.12,18,178/- disclosed by the appellant having been accepted by the ld. Assessing Officer, the CIT(A) has erred in treating Rs.2,20,000/- which having been allowed by the ld. Assessing Officer as cash in hand on 08.11.2016. as the overall agricultural income of the appellant during the year under consideration. 3. BECAUSE the CIT(A) has erred in law as well as on facts in alleging that the appellant failed to prove by way of documentary evidence the financial capability of Shri Vinod of making cash payment to the tune of Rs.12,45,000/- towards purchase of mangoes from the appellant, as the appellant has duly stated before the authorities below that the said payment has been made by Sri Vinod out of realization from sale of mangoes over the period. 4. BECAUSE the CIT(A) has erred in observing that in the absence of bank statement of Sri Vinod it could not be ascertained that he has withdrawn cash from the from his account for making payment towards purchase of mangoes from the appellant as he had made payment to the appellant out of cash realization from sale of mangoes over the period during the year under consideration. 5. BECAUSE, the provisions of section of Section 69A were not applicable in the present case, as the appellant has duly disclosed the source of cash deposits in her bank account, duly confirmed by the purchaser of payment having been made to the appellant, section 69A id deeming provision and

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fiction out of fiction cannot be created, once the agricultural income during the year having been accepted by the ld. Assessing Officer. WITHOUT PREJUDICE TO THE AFORESAID 6. BECAUSE the source of cash deposits aggregating to Rs.14,62,000/- during demonetization period in the bank accounts maintained by the appellant were out of well- defined sources being; i) Rs.12,45,000/- realized from Sri Vinod for the mango orchard of 60 bighas owned by the appellant, in exchange for all mangoes produced on the tress on the said land; and ii) accumulated out of past savings held by the appellant over the period having been disclosed in regular course; no adverse view should have been adopted by the authorities below, so as to tax the same as unexplained money liable for taxation under section 69A of the Act, and applying higher rate of taxation as per the provisions of section 115BBE of the Act. 7. BECAUSE the observation of the authorities below that there were no major cash deposit or cash withdrawals during the period 01.04.2016 to 08.11.2016, therefore she could not have so much cash in hand on 08.11.2016 which she could have deposited in her bank account, as the appellant has already explained that owing to her old age, she had to keep cash readily available with her for emergencies as also she is not comfortable in depositing the cash in the bank account, however, due to demonetization

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she had no other option but to deposit the entire SBN in the bank accounts. 8. BECAUSE, the CIT(A) has erred presuming that the cash deposit in bank account as "other income" of the appellant on the premise that the appellant has interest income during the year of Rs.5,15,355/- for which an estimated investment of Rs.85,00,000/- would have been made and the same is not in commensuration with the agricultural income declared by the appellant in the earlier years and erroneously held that the appellant is also in receipt of "other income". 9. BECAUSE the CIT(A) has erred in observing that merely declaration of Rs.12,45,000/- as agricultural income does not prove the said amount as explained money as the only reason for the appellant to declare the said amount as agricultural income was the same would be treated as exempt without entailing any tax liability on the appellant as there was no such basis with the CIT(A) to observe the same. 10. BECAUSE the order appealed against, is contrary to facts, law and principles of natural justice. 3.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the assessee had total 60 bighas of ancestral agricultural land, the details of which were furnished before the lower authorities. It was further submitted that on the said land, assessee had planted Mango trees and the mango crops were sold to the local villagers at the pre agreed rate. It was further submitted that when the Mango starts ripening, they pluck the mangoes from the tree and make the payment to the assessee in

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cash as per the pre agreed rate. The Ld. A.R. submitted that the copy of the agreement and the details of payment, in this regard, were furnished before the authorities below. The Ld. A.R. further submitted that the addition of Rs.12.15 lakhs on account of cash deposits was unjustified, particularly because agricultural income has already been duly accepted in the computation of income after assessment. The Ld. A.R. further contended that documentary evidence in support of the claim was duly furnished before the Ld. First Appellate Authority, which is clearly evident from page 16 of the order of the Ld. First Appellate Authority.

4.0 Per contra, the Ld. Senior Departmental Representative (Ld. Sr. D.R.) contended that the assessee had failed to furnish adequate documentary evidence to support the claim of agricultural income, apart from a mere receipt. The Ld. Sr. D.R. argued that the source of the cash deposits remained inadequately explained and he placed strong reliance on paragraphs 5.14, 5.15, and 5.16 of the order passed by the Ld. First Appellate Authority.

5.0 I have heard the rival submissions and have also perused the material on record. The primary dispute relates to the addition of Rs.12.15 lakhs made on account of cash deposits, which the assessee claims to have originated from agricultural

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operations involving the sale of mango produce from 60 bighas of ancestral agricultural land. The assessee has placed on record the relevant agreements, details of cash payments received from local purchasers upon plucking the mango crops, and corroborative documentary evidence, which were also duly placed before the Ld. First Appellate Authority as noted on page 16 of the impugned appellate order. The most crucial and uncontroverted aspect of the case is that the Department itself, while computing the income after assessment, has explicitly accepted the assessee’s agricultural income of Rs.12.15 lakhs. Once the Department has accepted the existence and receipt of the agricultural income to the extent of approximately Rs.12.15 lakhs in the computation of income, it is not permissible for the Revenue to turn around and treat the very same cash realization as unexplained cash deposits. Sustaining such an addition would effectively amount to double addition/taxation of the same funds, which is impermissible under law. In view of the accepted agricultural income in the assessment computation, the explanation tendered by the assessee regarding the source of the cash deposits stands duly established and substantiated. Therefore, the findings recorded by the Ld. First Appellate Authority in paragraphs 5.14 to 5.16 cannot be sustained. Consequently, the addition of Rs.12.15 lakhs made by the AO

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and sustained by the Ld. First Appellate Authority is directed to be deleted, and, accordingly, the appeal of the assessee on this ground is allowed.

6.0 In the final result, the appeal of the assessee stands allowed.

Order pronounced in the open Court on 21/08/2026.

Sd/- [SUDHANSHU SRIVASTAVA] JUDICIAL MEMBER DATED:21/08/2026 JJ: Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order

Assistant Registrar/DDO