PARIJATA MALIPEDDI,HYDERABAD vs. ITO., WARD-4(3), HYDERABAD

The brief facts of the case are that, the assessee is an individual and has filed return of income for the assessment year under consideration declaring total income of Rs. 8,49,390/-. The case was selected for limited scrutiny under CASS for the purpose of verifying cash deposits made during the demonetisation period. Notices under Sections 143(2) and 142(1) of the Income-tax Act, 1961 were issued and served on the assessee. During the course of assessment proceedings, on verification of information available on record, the A.O. noticed that the assessee had made cash deposits aggregating to Rs. 14,42,000/- in various bank accounts during the demonetisation period (as detailed on page 2 of the assessment order). The A.O. called upon the assessee to furnish details and explanation regarding the nature and source of such deposits. In response, the assessee submitted that the deposits were out of agricultural income relating to joint family property and also cited personal circumstances such as old age and medical issues. However, no documentary evidence was furnished to substantiate the claim of agricultural income.

The A.O., after considering the submissions of the assessee, observed that there were no sufficient withdrawals prior to the deposits and further, on verification of return of income, it was noticed that the assessee had not disclosed any agricultural income in the current or preceding years. In the absence of supporting evidence and satisfactory explanation, the A.O. treated the cash deposits of Rs. 14,42,000/- as unexplained money under Section 69A of the Act. Accordingly, the said amount was added to the total income of the assessee. Thus, the A.O. completed the assessment under Section 143(3) of the Act, by determining total income at Rs. 22,91,390/- as against returned income of Rs. 8,49,390/-.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee was provided with several opportunities to present her case and furnish necessary details and evidences in support of the grounds of appeal. The assessee filed certain submissions reiterating that the cash deposits were out of agricultural income and personal savings; however, no supporting documentary evidence was furnished to substantiate the claim.

The Ld. CIT(A), after considering the submissions of the assessee and perusing the material available on record, observed that, the assessee failed to establish the source of cash deposits with credible evidence. It was further noted that no agricultural income was declared in the return of income for the relevant year or in earlier years. In the absence of any satisfactory explanation or supporting documents, the Ld. CIT(A) held that the A.O. was justified in treating the cash deposits as unexplained money under Section 69A of the Act, and accordingly upheld the addition. Thus, the appeal filed by the assessee was dismissed.

Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal.

The learned counsel for the assessee, Shri A. Srinivas, C.A. submitted that the Ld. CIT(A) erred in confirming the addition made by the A.O. without properly appreciating the facts of the case. The learned counsel further submitted that although the assessee had filed certain explanations during the assessment proceedings stating that the cash deposits were out of agricultural income and past savings, the same could not be substantiated with supporting evidences due to circumstances beyond the control of the assessee, including lack of proper professional assistance. It was further submitted that the assessee is now in a position to furnish complete details such as bank statements, cash flow statements, and particulars of agricultural income along with supporting evidences, which could not be produced before the lower authorities. Therefore, the learned counsel pleaded that in the interest of justice, the assessee may be provided one more opportunity to substantiate her claim and the matter may be restored to the file of the A.O. for fresh adjudication.

The learned Senior A.R. for the Revenue, Ms. Helen Ruby Jesindha, on the other hand, strongly supported the orders of the lower authorities and submitted that the assessee has failed to furnish satisfactory explanation or supporting evidences either during the assessment proceedings or before the Ld. CIT(A) to explain the source of cash deposits made during the demonetisation period. It was further submitted that, in the absence of any credible evidence, the A.O. has rightly treated the cash deposits as unexplained money under Section 69A of the Act, and the Ld. CIT(A) was justified in upholding the addition.

I have heard both parties, perused the material available on record and had gone through the orders of the authorities below. The A.O. made an addition of Rs. 14,42,000/- towards cash deposits into various bank accounts on the ground that the assessee has failed to explain the source for the said cash deposits with known sources of income. It was the explanation of the assessee before the A.O. that the source for the cash deposits was out of previous cash withdrawals from the very same bank account and also agricultural income derived from land allegedly held by her son, who is residing in the USA. However, the assessee could not file the relevant details of bank accounts, along with cash withdrawals and the corresponding cash deposits, including details of agricultural land held by her son and nature of agricultural activities carried out during the relevant period, and the income earned therefrom. Even before the Ld. CIT(A), the assessee explained that the source of cash deposits was out of cash withdrawals and agricultural income; however, she could not file the relevant supporting details. The learned counsel for the assessee filed a paper book along with the details of cash deposits, cash withdrawals, and certain documents in respect of agricultural land held by the son of the assessee, who claims to be a resident of the USA. Since the assessee has furnished certain additional evidences which were not before the A.O. or the Ld. CIT(A), in my considered view, the issue needs to be set aside to the file of the A.O. for reconsideration. Thus, I set aside the order of the Ld. CIT(A) and restore the issue back to the file of the A.O. with a direction to verify the claim of the assessee in light of the evidences that may be filed to justify the sources for the cash deposits.

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