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Facts
The assessee, Vyankatesh Narayan Kulkarni, appealed against the CIT(A)'s order for AY 2017-18, which upheld additions of Rs. 23,00,000 as unexplained cash deposit and Rs. 13,67,404 as agricultural income. The assessee claimed the cash deposit was from earlier withdrawals for land purchase, and the agricultural income was from his own activities and an AOP. Lower authorities disallowed these claims due to lack of documentary evidence.
Held
The Tribunal held that the cash deposit of Rs. 23,00,000 was sufficiently explained as withdrawals made before demonetization for land purchase, which was reflected in the bank statement. The Tribunal also accepted the agricultural income of Rs. 9,35,860 from the assessee's own activities, supported by land records, but upheld the addition of Rs. 4,31,544 from the AOP as rental income due to insufficient evidence.
Key Issues
Whether cash deposits made during the demonetization period, allegedly from prior withdrawals, are sufficiently explained and whether agricultural income is proven with adequate documentary evidence.
Sections Cited
69A, 115BBE
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PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by assessee is directed against the order of Ld. CIT(A)/NFAC dated 08.01.2025 for assessment year (AY) 2017-18. The assessee has raised following grounds of appeal:
“1. On the facts and circumstances of the case and in law, the Learned CIT (A) erred in upholding the additions of Rs. 23,00,000 u/s 69A in respect of cash deposited in bank by the appellant.
2. On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in not appreciating the fact that the said amount of cash deposited in the bank is out of the funds withdrawn by him from his bank account earlier during the year, the evidences of which were filed before the AO as well as the CIT (A), and therefore does not constitute income in the hands of the appellant.
3. On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in upholding the additions of Rs. 13,67,404 being agricultural income on the grounds that the appellant did not file the submissions before the AO which is contrary to the facts as the relevant details were duly furnished before the AO during the assessment proceedings.
4. On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in not appreciating that the said agricultural income is exempt from tax.
The appellant craves leave to add, amend, alter and/or vary any of the grounds of appeal before or at the time of hearing.”
Brief facts of the case are that assessee is individual, filed his return of income for assessment year (A.Y.) 2017-18 on 31.03.2018 declaring income of Rs. 6,98,320/-. Case was selected for scrutiny. During the assessment, the assessing officer noted that assessee in its computation of income has shown income from salary as a director of Manas Vyapar Pvt. Ltd., consultancy services, income from other sources and agriculture income. The assessee has shown agriculture income of Rs. 13,67,404/-. The Assessing Officer issued show cause notice to the assessee to furnish documentary evidence of ownership of agriculture land, details of crops grown and expenses incurred.
The details of cultivation and agriculture product. The assessee filed his reply dated 04.09.2025. Copy of reply is scanned Assessing Officer on page 2 of assessment order. In the reply, the assessee submitted that he has filing return of income from last 25 years and showing agriculture income. The assessee has shown agriculture income of Rs. 9,35,860/- from his own agriculture activity of Rs. 4,31,544/- from association of persons (AOP) bearing assessee one of the member. On receipt of such reply, the assessing officer further issued show cause notice to provide the details of agriculture products, other relevant details including of copy of 7/12 extract (land ownership document from revenue department) and details of payment received against product. The assessee again filed reply vide reply dated 23.12.2019, copy of which is scanned on page no. 4 & 5 of assessment order.
In the reply, the assessee again reiterated his earlier contention and explained that in agriculture product, he primarily grown rice and grass which is usually traded in cash. The assessee also furnished copy of ITR of Manas Krushi Farm (AOP) where the assessee along with other persons pooled land for agriculture activities. The submission of assessee was not accepted by assessing officer. The assessing officer took his view that assessee has not furnished any evidence in the form of bill or voucher and also not furnished any evidence of agriculture activities and nor any rent agreement or other document to substantiate the claim if filed. In absence of supporting evidence of agriculture activities, the claim of assessee was not allowed. It was also held that nature of crops is not mentioned on 7/12 extract. Thus, the assessing officer disallowed entire agriculture receipt and treated the same from other sources.
The assessing officer further noted that assessee has deposited Rs. 23.00 lakhs in his bank account with Kotak Mahindra Bank. In response to show cause, the assessee submitted that such deposits are from earlier withdrawal made for purchase of land. To substantiate such fact, no evidence was furnished. The assessing officer recorded that a further show cause notice dated 23.12.2019 was served but no reply was furnished by assessee. The assessing officer added such cash deposit under section 69A as unexplained money and taxed the same under section 115BBE.
Aggrieved by the action of assessing officer, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed statement of fact as well as written submission. On the addition of cash deposit, the assessee submitted that he has withdrawn cash just before the demonetization period for purchase of land. The assessee made withdrawal of Rs. 23.00 lakhs on 31.08.2016, Rs. 2.00 lakhs on 03.09.2016, Rs. 1.00 lakhs on 09.09.2016, Rs. 1.50 lakhs on 14.09.2016 and Rs. 1.00 lakhs on 17.09.2016. Thus, the assessee made withdrawal of aggregate amount of Rs. 25.50 lakhs. Out of the said amount, the assessee deposited Rs. 23.00 lakhs on 12 & 17/11/2016 as big currency note was banned. On the addition of agriculture income, the assessee reiterated his earlier stand as taken before assessing officer. In addition to the assessee also filed that he was given Krishi Bhushan award for excellent agriculture activities by State Government.
5. The ld. CIT(A) on considering the submission of assessee recorded that various notices were issued to the assessee and in response to which the assessee filed his retention of submission. The submission of assessee was also summarised on page 4 of impugned order. The ld. CIT(A) not accepted the submission of assessee and held that assessee failed to prove as to why past cash withdrawal was kept for long duration. The assessee claimed that such withdrawal was made for purchase of land but no evidence was furnished. The assessee has not furnished cash book to demonstrate the trail of cash and on the basis of such observation upheld the addition of Rs. 23 lakhs. On the treatment of agriculture income as income from other sources, the ld. CIT(A) held that there is no denial that assessee would be engaged in agriculture activities but it required documentary evidence to prove such fact.
The assessee has not furnished any evidence in the form of lease rental and merely furnished ledger extract and no other evidence to prove such claim is filed. Since agriculture income is not proved with documentary evidence, thus, claim cannot be accepted. On such observation upheld the action of assessing officer. Further, aggrieved the assesse has filed present appeal before Tribunal.
I have heard the submissions of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue. Ground no. 1 relates to addition under section 69A in respect of cash deposit. The ld. AR of the assessee submits that during the relevant financial year, the assessee has made cash withdrawal. The assessee made cash withdrawal with the intention to purchase agriculture land. However, the negotiation of land was not materialised and the money was kept idle with the assessee. In the meantime, the Central Government declared the demonetization of 500 and 1000 currency notes. As the amount of withdrawal was in the form of big currency note, thus, the assessee has no option except to deposit the said amount with bank. The ld. AR of the assessee by referring the bank statement, copy of which is at page no. 8 & 9 of paper book would submit that all such cash withdrawal is duly reflected in the bank statement.
The ld. AR of the assessee explained cash withdrawal of Rs. 20.00 lakhs on 31.08.2016, Rs. 1.50 lakhs each on 17.09.2016 and again on 14.09.2016 and Rs. 1.00 on two occasions, total Rs. 25.50 lacs. The ld. AR further explained that assessee also made other withdrawal. Out of total withdrawal of more than Rs.25.00 lakhs, Rs. 15.00 lakhs were deposited on 12.11.2016 and Rs. 8.00 lakhs on 17.11.2016. The lower authorities have not appreciated the fact about such cash withdrawal. Since the planning of purchase of agriculture of land was not materialised hence there was no such evidence except oral negotiation so there is no documentary evidence. The ld. AR prayed for deleting the entire addition. To support his submission, ld. AR relied upon the following decisions: Ajit BapuSatam vs DCIT (147 taxmann.com 222) (Mumbai – Trib),, Sudhirbhai Pravinkant Thaker vs ITO (44 ITR (T) 135) (Ahmedabad -Trib), ACIT vs Mukesh Shah (171 taxmann.com 304) (Jodhpur – Trib), ACIT vs Baldev Raj Charla and Ors. (121 TTJ 366) (Delhi – Trib) 7. On the other hand, ld. Senior Departmental Representative (ld. Sr. DR) for the revenue supported the order of lower authorities.
I have considered the rival contentions of both the parties and gone through the orders of lower authorities. I find that right from the beginning, the stand of assessee is that cash deposit during demonetization period was from the cash withdrawn made soon before the demonetization period that is from August to September, 2016. On perusal of bank statement, I find that there is cash withdrawal of more than Rs. 25.00 lakhs, the cash was withdrawn and deposited in the same bank account. There is no investigation of fact by lower authorities that such cash available with the assessee was utilised or investigated for any other purpose. Therefore, I do not find justification for raising objection for keeping the cash amount for third party of 3-4 months.
Thus, the addition made by assessing officer and confirmed by ld. CIT(A) is deleted. In the result, ground no. 1 of appeal of assessee is allowed.
Ground no. 2 relates to treating the agriculture income as income from other sources. The ld. AR of the assessee submits that lower authorities have not disputed the agriculture activities and ownership of land. The agriculture income was treated as income from ‘other sources’ for the want of documentary evidence. The assessee has filed evidence of agriculture holding at page no. 33 to 45. The assessee has more than 8.39 hector land in his own name. 7/12 extract of all the agriculture holding is placed on record. The assessee is actually involved in the agriculture activities and agriculture income has been consistently shown in the return of income. In preceding assessment year, the assessee has shown net agriculture income of Rs. 15,76,834/- and in subsequent assessment year, the assessee has shown agriculture income of Rs. 14,04,804/- and in subsequent year, the assessee has shown similar agriculture income. Such agriculture income is not doubted in earlier year or in subsequent assessment year. Apart from own agriculture activities, the assessee has also pooled certain agriculture land to AOP from which AOP Manas Krushi Farm. The assessee has also placed on record computation of income of Manas Krushi Farm at page no. 12 of paper book along with its profit and loss account. The assessee has also filed copy of memorandum of association of Manas Krushi Farm. The assessee was awarded Krishi Bhushan Price by the State Government.
On the other hand, ld. Senior Departmental Representative (ld. Sr. DR) for the revenue submits that assessee has not filed of such documentary evidence as claimed before this Tribunal. There is categorical finding of lower authorities that no such evidence was furnished either during assessment or before ld. CIT(A).
I have considered the rival contentions of both the parties and gone through the orders of lower authorities. I find that in the computation of income, the assessee has claimed agriculture income of Rs. 13,67,404/- out of which the assessee has shown rent against his land pooled in AOP of Rs. 44,31,544/- and remaining of Rs. 9,35,860/- was from agriculture produce. The assessing officer treated the entire receipt as income from other sources for the want of proper evidence. Before ld. CIT(A), the assessee furnished certain details of agriculture activities and income and expenditure of agriculture activities. The assessee also claimed that he is into organic farming, hence no expenditure incurred on fertilizers and pesticides were very minimum. Maintaining of details in agriculture activities is difficult. The assessee furnished details of AOP. The ld. CIT(A) accepted the fact that assessee is engaged in agriculture activities but the same is not proved by documentary evidence. Before Tribunal, the assessee has filed computation of income of Manas Krushi Farm (AOP), financial statement of Manas Krushi Farm along with memorandum of association and its ITR for A.Y. 2017-18. The assessee has certified that all such evidences were furnished before lower authorities. However, the extract of agriculture land is filed for the first time before Tribunal and the assessee has fairly accepted on index of paper book that such extracts were not furnished before lower authorities. The extract of 7/12 is record of agriculture holding is maintained by State Government. The assessee has furnished copy of certified copy of such evidence. The assessee has shown agriculture holding of village Sazivali Taluka, Sahapur District Thane wherein the assessee owned 8.39 hector of land. I find that agriculture holding on activities is not disputed by ld. CIT(A). No doubt that all such documents were not furnished before lower authorities still I find that such evidence cannot be disputed as has been maintained by State Government, thus, keeping in view the size and location of the agriculture land in Taluka Sahapur District Thane, therefore, the agriculture receipt of Rs. 9,35,860/- is not abnormal and is acceptable. So far as other receipt of Rs. 4,31,544/- received from Manas Krushi Farm is concerned, I find that there is no sufficient evidence to convince me about the rental income received from such AOP as neither the memorandum of AOP was furnished nor other evidence to substantiate such fact was filed before lower authorities. Therefore, action of assessing officer for treatment of Rs. 4,31,544/- in treating as income from other sources is upheld and remaining addition of Rs. 9,35,860/- is deleted. In the result, this ground of appeal is partly allowed.
In the result, the appeal of the assessee is partly allowed.