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Income Tax Appellate Tribunal, “SMC” “A’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by the assessee is directed against the order of CIT(A) dated 3.11.2021 for the assessment year 2017-18. The assessee’s grievance in this appeal is with regard to the sustaining of addition of Rs.11.5 lakhs as unexplained cash deposit in the bank account u/s 69 of the Act during the demonetization time.
The facts of the case are that the assessee is an individual and derived income from other sources. Return of income for AY 2017- 18 was filed on 31/03/2018 declaring total income of Rs.
Sri Govindappa, Raichur Page 2 of 7 3,08,730/-. On selection of the case for scrutiny under CASS, various statutory notices u/s 143(2)/142(1) along with detailed questionnaire were issued calling for information. During the assessment proceedings, it was noticed by the AO that the assessee had made cash deposits of Rs. 11,50,000/- in his savings bank account maintained with Canara Bank (A/c no. 4210108000254) and Axis Bank (A/c no. 91601005666016) during the year under consideration. The assessee submitted before the AO that his main source of income was from agricultural activities and other sources such as income earned as a middleman for arranging agricultural equipments, providing labour for agricultural purposes. The assessee further submitted before the AO that the cash deposits made by him during the demonetization period constituted from the previously held agricultural receipts. However, the AO highlighted certain points in his order such as the appellant had opened his bank account only during the demonetization period i.e. on 13/11/2016, had not filed any return for AY 2016-17, no agricultural income has been shown by the assessee in the ITR filed for the year under consideration etc. On the basis of the aforesaid findings, the AO treated the entire amount of cash deposits amounting to Rs. 11,50,000/- as unexplained money u/s 69A of the Act and brought the same under taxation.
Aggrieved, assessee went in appeal before Ld. CIT(A) who confirmed the addition since the assessee has not placed necessary
Sri Govindappa, Raichur Page 3 of 7 evidences explaining the source of deposit which is during the period of demonetization. Before us, the assessee submitted as follows:- Assessee’s submissions: “4.2. The Assessees income is mainly from Agriculture. Apart from Agriculture has has got income from other sources which he has declared in his return of income filed . Upto the Assessment year 2017-18, his income was below the taxable limit. 4.3. As his income was above the taxable limit for the assessment year 2017-18, he has filed his return of income for that assessment year. 4.4. While filing the return of income for the assessment year 2017-18, assessee has submitted the Capital account and Balance sheet as on 31st March 2016 as well as for the financial year 2016-17 also. 4.5. The total asset as on 31st March 2016 was Rs. 11,64,209=00 out of which Rs. 6,17,760=00 was the cash in hand as on 31st March 2016. 4.6. Assessee has been doing agriculture for 2 decades in his Agricultural land holding of 14 Acres in his village. My total savings over a period of 20 years from agriculture was Rs. 11,50,000=00 as on 8th November 2016 which was too meager, actual and true cash held by him as on that date. 4.7. As on the date of demonetization I had Rs. 11,50,000=00 in my hand for which I had already submitted detailed cash statement along with cash book for the whole year ie from 1.4.2016 to 31.3.2017. 4.8. At the time of scrutiny proceedings on different dates I had submitted following documents, explanations and details before the learned Assessing Officer:- 1)Statement of Accounts like Capital account and Balance sheet as on 31.3.2016 and 31.3.2017. 2) Computation of income along with ITR filed acknowledgement for the assessment year 2017-18. 3) Explanation and note on activities and source of income 4) Submission of Copies of ROR ( Phani) for owning and cultivating Agricultural income 5) Submission of Copies of available sale pattis as a proof for having derived agricultural income 6) Agricultural land holding and Crop grown certificate from Village Accountant 7) Statement of account of all bank accounts held for the financial year 2015-16 and 2016-17. 8) Statement showing Monthwise sales/Receipts/cash received and deposited into bank for the period from 1.4.2016 to 31.12.2016.
Sri Govindappa, Raichur Page 4 of 7 9) Cash book for the whole year of financial year 2016-17 10) Cash flow statement for the period of Demonitisation 11) Detailed Explanation dt 11.9.2019 12) Detailed Explanation dt 16.12.2019 13) Reply to Show cause notice dt 22.12.2019” Further the assessee relied on the following judgements:-
3.1 In CIT & Anr Vs Smt Sadhana Jain (2014) 56 (1) ITCL 162 (All-HC) it was held that the provisions of section 69A are explicit and come into play when in a particular assessment year the assessee is found to be the owner of any money, bullion, jewellery, or other valuable article and such money bullion, jewellery and other article is not recorded in the books of accounts and the assessee is unable to give any explanation about the nature and source of acquisition of the money, bullion, jewellary or other valuable articles.
3.2 In case of CIT vs Deepak Kukreja (2010) 34(1) ITCL 387 (Bom- HC) 2010-190 it was held that "Cases where the source of the money deposited were explained transaction are not genuine.
3.3 In case of Smt Rajabai B Kadam Vs Asst. CIT (2002) 83 ITD 229 (Pune) it was held that "Provisions of section 69 A , are not mandatory in an much as the legislature has used the word "May"in section 69 A. Therefore, considering the circumstantial
Sri Govindappa, Raichur Page 5 of 7 evidences of each case, the assessing officer must exercise the discretion in a judicious manner before invoking section 69 A.
3.4 The assessee explained that he has been cultivating 14 Acres of Agricultural land for last 20 years and he accumulated money out of his agriculture for 20 years. Considering his land holding of 14 Acres of land, regular agricultural income, not having any asset, hold cash of Rs; 11,50,000=00 is reasonable, true and correct.
3.5 Hence, the Ld. A.R. for the assessee prayed that the above transaction be appreciated and appropriate relief may be granted for the advancement of substantial cause of justice and equity. In view of the overall submissions assessee prayed to delete the additions made by the learned Assessing Officer amounting to Rs. 11,50,000/- for the advancement of substantial cause of justice.
The Ld. D.R. relied on the orders of the lower authorities and also order of the Tribunal in dt.20.9.21 in the case of Kanduri Maruthi Shetty in which the Tribunal has held as under:-
“I have heard rival submissions and perused the material on record. The assessee has raised a ground stating that the order of assessment is bad in law, since notice u/s 143(2) of the I.T.Act was issued by the wrong Assessing Officer. However, during the course of hearing, no contention with regard to the above said issue was raised, hence, the ground relating to the technical issue that no notice u/s 143(2) was issued by the correct Assessing Officer is rejected.
8.1 As regards the issue on merits, it is not disputed that the only source of income for assessee is salary income. It is also a fact that there was no unexplained asset
Sri Govindappa, Raichur Page 6 of 7 or investment unearthed by the department. The assessee had filed cash flow statement and also cash book for the period 01.04.2013 to 13.11.2016 before the A.O. It is an admitted fact that the Shri Kanduri Maruthi Shetty. assessee's grandmother is suffering from cancer. Evidence for the cancer treatment for assessee's grandmother is placed on record. I am of the view that in all probabilities, some amount of cash would have been kept by the assessee to meet the medical emergencies. In facts of the case, the credit of Rs.1,50,000 given by the CIT(A) is insufficient. I direct the Assessing Officer to grant a further credit for a sum of Rs.3.5 lakh being cash deposit out of past withdrawals. In other words, the A.O. is directed to tax u/s 69A r.w.s. 115BBE of the I.T.Act, a sum of Rs.4 lakh. Therefore, the sum of Rs.5 lakh is treated as explained being cash deposit out of withdrawals made in the past. It is ordered accordingly.”
We have heard the rival submissions, perused the record and gone through the orders of the authorities below. In this case, the main plea of the assessee is that the assessee is having sufficient cash to deposit in the bank account which is earned from agriculture since 2 decades and the total area of land is more than 14 acres and there cannot be any doubt for the source of deposit into bank account. However, these facts are not verified by the AO as the assessee has not produced relevant records. Accordingly, in the interest of justice, we remit entire issue to the file of AO with the direction to the assessee to produce necessary material evidence to support his case. The AO has to examine the details to be filed by the assessee and decide the issue in accordance with law.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 12th May, 2022