JAYESH PAVASKAR,THANE vs. ITO, WARD 1(4), THANE, THANE

During the assessment proceedings, the assessee explained that he derived agricultural income from the sale of cashew nuts, mangoes, rice, vegetables and other agricultural produce grown at Natal, Kankavli, Maharashtra. In support thereof, the assessee furnished copies of 7/12 extracts evidencing landholding, sale bills, a report concerning agricultural productivity published by Dr. Balasaheb Sawant Konkan Krishi Vidyapeeth, Dapoli, Maharashtra, and photographs depicting cultivation activities.

The Assessing Officer noted that, against the aggregate sale proceeds of agricultural produce claimed at Rs.47,86,186/-, sale bills had been furnished only to the extent of Rs.43,35,470/-. According to the Assessing Officer, sale bills for the balance amount of Rs.4,50,716/- were not produced despite requisitions dated 22.11.2019 and 09.12.2019. He, therefore, declined to accept the agricultural character of the said amount and brought Rs.4,50,716/- to tax under the head “Income from other sources”. He also initiated penalty proceedings under section 270A of the Act in respect of this addition.

The Assessing Officer further noticed cash deposits aggregating to Rs.42,37,000/- in three bank accounts during the demonetization period from 09.11.2016 to 31.12.2016. These comprised deposits of Rs.36,26,000/- in Allahabad Bank and deposits of Rs.2,00,000/- and Rs.4,11,000/- in two accounts maintained with Cosmos Co-operative Bank. The assessee was called upon to explain the nature and source of these deposits with supporting evidence. As recorded in the assessment order, the assessee explained that the cash deposits represented amounts received from customers towards booking of flats in the project “Ashiyana 21” situated at Titwala.

The Assessing Officer held that the explanation was not substantiated by customer-wise particulars, PAN details or a cash book. He accordingly 3

Aggrieved, the assessee preferred an appeal before the learned CIT(A). In the statement of facts and submissions recorded in the appellate order, the assessee disputed both additions. As regards the agricultural receipts, the assessee maintained that the relevant sale bills and particulars had been furnished during the assessment proceedings. In respect of the cash deposits, the assessee explained that the deposits in the Allahabad Bank account represented agricultural sale proceeds, the deposit in the Cosmos Co-operative Bank business account represented business receipts, and the deposit in the personal savings account represented redeposit out of earlier cash withdrawals. In relation to the last-mentioned account, the assessee referred to a cash withdrawal of Rs.5,25,000/- on 07.11.2016.

During the first appellate proceedings, the assessee sought admission of additional evidence under rule 46A of the Income-tax Rules, 1962. The learned CIT(A) described the proposed evidence as complete books of account including the cash book, customer-wise particulars and bank statements, and declined to admit it. The assessee disputes both that description of the application and the reasons for its rejection.

The learned CIT(A) declined to admit the additional evidence. He observed that several opportunities had been afforded during the assessment proceedings and that the Assessing Officer had specifically called for supporting evidence concerning the agricultural receipts and cash deposits. According to the learned CIT(A), the assessee had not established sufficient cause for the failure to produce the relevant material before the Assessing 4

On the addition of Rs.4,50,716/-, the learned CIT(A) held that contemporaneous sale bills or other cogent corroborative evidence establishing the agricultural nature of the disputed receipts had not been produced. He accordingly confirmed the treatment of the said amount as income from other sources. As regards the cash deposits of Rs.42,37,000/-, he held that the explanations concerning agricultural receipts, advances from customers and redeposit of earlier withdrawals were not supported by reliable contemporaneous books, cash flow statements or party-wise evidence reconciling the deposits with their stated sources. He, therefore, confirmed the addition under section 69A read with section 115BBE of the Act and dismissed the appeal.

Being aggrieved by the aforesaid order, the assessee is in appeal before us.

During the course of hearing before us, the learned AR submitted that the learned CIT(A)’s repeated observation that no written submission had been filed in support of the grounds was contrary to the record. According to him, written submissions and supporting documents had been uploaded during the first appellate proceedings. He pointed out that paragraph 5 of the impugned order itself records receipt of a detailed written submission and documents.

In relation to ground No.2, the learned AR submitted that the application under rule 46A was confined to the cash book summary and the customers’ flat-booking forms. The bank statements, according to him, had already been furnished to the Assessing Officer with the letter dated 12.12.2019 and were not tendered as additional evidence. He submitted that the learned CIT(A) proceeded on an incorrect description of the documents

As regards ground No.3, the learned AR submitted that sale bills covering the entire agricultural sales had been furnished to the Assessing Officer with the submission dated 12.12.2019. He contended that the finding concerning the absence of bills for Rs.4,50,716/- was factually incorrect. He further submitted that the learned CIT(A) confirmed the addition without considering the written submissions uploaded during the appellate proceedings. He accordingly sought deletion of the amount assessed under the head “Income from other sources”.

Addressing ground No.4, the learned AR submitted that the Assessing Officer had treated the entire cash deposits of Rs.42,37,000/- as receipts from flat bookings and had rejected that explanation without considering the distinct source claimed for each deposit. He set out the explanation as follows: Bank account Cash Source claimed by the assessee deposited Allahabad Bank, J.P. Agro Rs.36,26,000/- Agricultural sale proceeds Products Cosmos Co-operative Bank, Rs.2,00,000/- Advances received from J.P. Infra customers against flat bookings Cosmos Co-operative Bank, Rs.4,11,000/- Redeposit out of earlier cash personal savings account withdrawals

The learned AR submitted that the agricultural sales and supporting material, including 7/12 extracts, a farmer’s certificate, a break-up of agricultural receipts and sale bills, were placed at pages 9 to 98 of the paper book. He contended that agricultural receipts accepted in the assessment could not again be treated as unexplained money merely because the cash was deposited in a bank account. In respect of Rs.2,00,000/-, he relied on booking forms of four customers stated to be at pages 111 to 114 of the paper 6

Per contra, the learned Departmental Representative (DR) submitted that the documents tendered by the assessee as additional evidence had neither been admitted nor verified by the learned CIT(A). He accordingly submitted that the matter be restored to the file of the Assessing Officer for examination and verification of those documents.

We have considered the rival submissions and perused the material placed on record. The controversy concerns the addition of Rs.4,50,716/- as income from other sources and the addition of Rs.42,37,000/- as unexplained money under section 69A read with section 115BBE of the Act. The assessee disputes the adequacy of consideration of the material furnished during the assessment and first appellate proceedings and also challenges the refusal to admit additional evidence.

We notice that, in paragraph 5 of the impugned order, the learned CIT(A) has acknowledged the filing of detailed written submissions and supporting documents. However, while dealing with the individual grounds, he has repeatedly recorded that no written submissions were filed in support thereof. Although the impugned order discusses certain explanations advanced by the assessee, these inconsistent observations leave uncertainty regarding the extent to which the submissions and supporting material were considered. Further, the learned AR has specifically disputed the description of the additional evidence in the impugned order. According to him, the request was confined to the cash book summary and customers’ booking forms, whereas the bank statements had already been furnished during the

In relation to the addition of Rs.4,50,716/-, the Assessing Officer proceeded on the basis that sale bills for the disputed agricultural receipts had not been furnished. The assessee, however, maintains that bills covering the entire agricultural sales accompanied the submission dated 12.12.2019. Thus, the dispute requires examination of the bills actually furnished and their reconciliation with the agricultural receipts disclosed by the assessee. In the absence of such verification, it would be premature to express a conclusive view on the agricultural character of the disputed amount.

As regards the cash deposits of Rs.42,37,000/-, the assessee has offered separate explanations for the deposits in the three bank accounts. The deposit of Rs.36,26,000/- is attributed to agricultural sale proceeds, Rs.2,00,000/- to advances received against flat bookings and Rs.4,11,000/- to redeposit out of earlier cash withdrawals. These explanations require examination with reference to the relevant bank statements, cash records, agricultural sale bills and customers’ booking forms. The claim concerning agricultural receipts also overlaps with the issue considered in the preceding paragraph. Accordingly, both additions warrant examination together to determine whether, and to what extent, the deposits are supported by the sources claimed.

The cash book summary and booking forms sought to be produced have a direct bearing on the explanation of the deposits. Their evidentiary value can be determined only upon verification. The learned DR has also submitted that the documents not admitted and verified by the learned CIT(A) may be examined by the Assessing Officer. Having regard to the nature of the factual disputes and the relevance of the supporting material, we consider it appropriate to afford the assessee an opportunity to substantiate the explanations before the Assessing Officer. We accordingly 8

Consequently, we set aside the impugned order insofar as it sustains the additions of Rs.4,50,716/- and Rs.42,37,000/- and restore both issues to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall verify the material already furnished during the earlier proceedings together with the additional evidence and supporting reconciliations produced by the assessee. In particular, he shall examine the disputed agricultural sale bills and reconcile the cash deposits in each bank account with the respective sources claimed, including the availability of cash from earlier withdrawals. He shall also examine whether any receipts accepted as agricultural receipts are included in the deposits under consideration, so that the same explained receipt is not subjected to an overlapping addition. This restoration is confined to the aforesaid two additions and the evidence relevant thereto.

The Assessing Officer shall provide the assessee a reasonable opportunity of being heard and of explaining any discrepancy or adverse material proposed to be relied upon, and shall thereafter pass a reasoned order in accordance with law. The assessee shall furnish the relevant documents and reconciliations and cooperate in the proceedings. All contentions concerning the merits of the two additions are left open. Grounds Nos.1 to 4 are accordingly allowed for statistical purposes. Ground No.5 is general and requires no separate adjudication.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 16-10-2026.