JAGJIWAN SINGH,KHABBE DOGRAN TARN TARAN vs. INCOME TAX OFFICER , WARD TARN TARAN

There are five grounds of appeal taken by the assessee in Form No. 36 and the main grievance of the assessee is against the addition sustained amounting to Rs. 6 (six) lacs on account of cash deposits in bank account. 3. Brief facts of the case are that the assessee is an agriculturist holding 320 kanals of agricultural land (as co-owner with his brothers) and has income from retail trading business. The assessee has advanced an amount of Rs. 8,10,000/- as loan to one Mr. Avtar Singh who is a close relative of the assessee and the said loan has been advanced through bearer cheque on 25.04.2009 from his Axis Bank A/c No. xxxxxx23898, and the same has been refunded by Sh. Avtar Singh on 16th May, 2009 in cash, out of which an amount of Rs. 5 (five) lacs have been deposited in the same bank, by the assessee on 16.05.2009, itself. 4. The said refund of loan in cash has been confirmed by an affidavit submitted by Sh. Avtar Singh stating to be an agriculturist and also explaining the reasons of taking the loan for use in his agricultural activity and thereafter the said loan has been refunded out of sale proceeds of agricultural produce. It was further stated that no interest has been paid on such loans as the loan lender (the assessee in this case) and the loanee are cousins, and this was just a temporary accommodation for the purpose of temporary financials needs.

Regarding an addition of Rs. 1 (one) lakh on account of cash deposit in bank account on 25.09.2009, it has been explained by the assessee that he has sold agricultural crops to one M/s Mohan Singh Sukhdev Pal & Co. (commission agent) against which he has received an amount of Rs.1,26,492/- on account of sales of agricultural produce on 24.04.2009 in support of which the assesseee has submitted J- Form and the said amount has been deposited on 25.09.2009 in the same Axis Bank (i.e. the very next day). 6. The ld. AR submits, in course of hearing that since both the deposits are properly explained, there is no reason for non-acceptance of the same and the ld. CIT(A) has sustained the addition made by the AO simply on presumptions and suspicion, ignoring documentary evidences submitted and he prayed for adequate relief. 7. The ld. DR relied on the order of the ld. CIT(A) but did not bring any materials to the contrary to prove the incorrectness of the documentary evidences that has been produced.

We have considered the rival submissions and we find that the deposits of Rs. 1 lac is very much supported by documentary evidences in Form-J and by the commission certificate issued by M/s Mohan Singh

Regarding the addition of Rs. 5 lacs sustained by the ld. CIT(A), we are of the view that the loan taken by Mr. Avtar Singh from the assessee on 24.04.2009 is not disputed. It is only the refund of the said loan and the deposit of the same in cash by the assessee is disputed even though the same is supported by affidavit by both the parties.

The contents of the affidavit cannot be brushed aside without cross- examination of the parties concerned and in the instant case, there is no evidence either in the assessment order nor in the order of the appellate authority whether the parties have been examined before rejecting the contents of the affidavit.

As such relying on the Hon’ble Apex Court judgment in the case of Ayaaubkhan Noorkhan Pathan vs State of Maharashtra & Ors on 8 November, 2012: AIR 2013 SUPREME COURT 58, CIVIL APPEAL NO. 7728 OF 2012, it has been held by the Hon’ble court in paragraph – 36 as follows: (only relevant para reproduced)

In the instant case both the deponents were available for cross-examination but no such exercise has been done.

As such, we are of the opinion that “preponderous of human probabilities” are in favour of the assessee and, we are also of the opinion that the source of cash deposited by the assessee in his bank account on 16.05.2009 are explained and as such we delete the addition in this case.

In the result, both the additions are deleted and the appeal of the assessee is allowed.