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Facts
The assessee, an agriculturist aged 77, filed a return declaring Nil income but admitting agricultural income. The AO made an addition of Rs. 71,00,000/- on account of unexplained cash deposits during demonetization. The assessee failed to substantiate the source of these deposits.
Held
The Tribunal condoned the delay in filing the appeal due to the assessee's medical reasons and allowed the appeal for statistical purposes. The matter was remitted back to the AO for de novo assessment.
Key Issues
Whether the cash deposits made by the agriculturist assessee during demonetization period were sufficiently substantiated? Whether the AO was justified in treating the cash deposits as unexplained money?
Sections Cited
147, 143(3), 271AAC(1), 69A
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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K
PER SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi on 09/10/2023 in DIN No.ITBA/NFAC/S/250/2023-24/1056912889(1) for the assessment year 2017-18 on the following grounds:
“1) The Order passed by the Learned Assessing Officer & confirmed by the First Appellate Authority is bad in law. 2) The order of the learned AO in so far as it is against the appellant is opposed to law, equity. weight of evidence, probabilities, facts and circumstances of the case. 3) The Learned Assessing Officer is not justified in making an arbitrary addition of. Rs.71,00.000/- as substantial cash deposits in bank account during the year. 4) The Learned Assessing Officer has erred in not considering the RTC copies, sales bills and related documents submitted for the subject year and erred in stating that the assesse has failed to prove the genuineness of agricultural income. 5) The learned AO has erred in initiating penalty proceedings u/s 271 AAC(1) of the Income Tax Act, 1961. For the above and other grounds that may be urged at the time of bearing of the appeal. appellant humbly prays before the honourable Commissioner of the Income Tax Appeals to grant relief by deleting the additions made to the income. 5) The Appellant craves permission to add. alter, amend, and to modify, substitute, delete and to rescind all or any of the Grounds of Appeal, on or before the Hearing, if necessary, so arises.”
The brief facts of the case are that the assessee has filed its return of income for asst. year 2017-18 on 28/1/2018 decaling gross total income of Nil. In the return of income, the assessee admitted net agricultural income of Rs.49,12,893/-. The case was selected for scrutiny and statutory notices were issued to the assessee. It was also noted during the demonetization period that the assessee deposited cash. During the demobilization period, the assessee deposited large value of cash and showing large value of agricultural income therefore, the assessee was asked to file further details in respect of source of cash deposited and agricultural income
The assessee field return and submitted along with other details vide letter dated 12/09/2019 and on examination of the same, it was observed that the assessee has 46 acres and 11 guntas of land during the financial year 2016-17 and furnished RTC copies in support of its claim. The assessee has also furnished copies of sale bill for sale of agricultural produces. From the details filed by the assessee, the AO was not satisfied and entire cash deposit of Rs.71 lakhs. From the statements filed by the assessee, it was noted that there is sale of COFFEE for Rs.78,92,837/- and sale of pepper for Rs.61,44,000/-. The total cash deposited in the bank account No.64139438951is rs. 71,00,0000 maintained with State Bank of India and Rs.80,000/- was deposited in the bank during demonetization period vide account No.13560100107786 maintained with federal Bank Ltd. From the bank statements, it was also observed that the assessee has deposited cash of Rs.71 lakhs on 13/11/2016 for the payment of outstanding loan of Rs.52,24,004/- and further utilized excess amount of closure/payment of car loan, gold loan, term loans and other loans. The AO noted that the assessee is unable to substantiate the cash deposit of Rs.71 lakhs, therefore, the entire 71 laksh was treated as unexplained money u/s 69A of the Income-tax Act.
Against this, the assessee filed appeal before NFAC Delhi on 24/01/2020. The NFAC issued notices on 29/01/2021, 5/8/2023, 21/8/2021 and 11/9/2023 but all the notices were remained not served.
Accordingly, the NFAC Delhi passed order on 9/10/2023 on the basis of materials available before him and dismissed appeal of the assessee.
Aggrieved from the above order, the assessee filed appeal before the ITAT with delay of 341 days. In this regard, the assessee has filed an Affidavit dated 3/12/2024 stating the reason in filing the appeal, which is placed on record. But on going through the Affidavit and documents, it is noted that the assessee had medical reason for not proceeding the matter.
Considering the above reasons, we are condoning the delay of 341 days filed before the ITAT.
The ld. Counsel submitted that the assessee is an agriculturist and 77 years old and he is not aware of the Income-tax proceedings and he had also medical reasons for not responding the notices issued by the NFAC, Delhi and requested and promised that if a chance is given to the assessee, he will comply to all the notices.
On the other hand, the ld. DR relied on the order of the AO and submitted that the NFAC, Delhi provided various opportunities to the assessee and assessee was not bothered and disregarded the entire notices issued andobjected for giving further chances to the assessee.
Considering the rival submissions, we note that the assessee is an agriculturist and he has deposited cash during demonetization period in his bank accounts and during the course of asst. Proceedings, he was unable to substantiate with credible evidences of the source of cash deposited during demonetization period and before NFAC, Delhi, the assessee has not responded to any of the notices.
Considering the prayer of the ld. coundel for the assesseee and in the interest of justice, we remit this issue back to the file of the AO for denovo assessment and decide the issue as per the law and, further direct to give reasonable opportunity to the assessee to comply the entire notices issued by the AO and the assessee is directed not to seek unnecessary adjournment for early disposal of the case, if case of failure from the assessee side the assessee will not get second leniency.
In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in court on 24th day of March, 2025 as per the Income Tax Appellate Tribunal Rule 34.