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Facts
The assessee, an agriculturist with retail trading income, advanced a loan to a relative which was repaid in cash and subsequently deposited in the assessee's bank account. Another deposit was explained by the sale of agricultural produce.
Held
The Tribunal held that the cash deposit from the loan repayment was sufficiently explained given the affidavit from the lender and the availability for cross-examination, and the deposit from sale of produce was supported by documentary evidence.
Key Issues
Whether the cash deposits in the bank account were adequately explained by the assessee, and if the affidavit evidence was sufficient without cross-examination.
Sections Cited
250, 143(3), 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. MANOJ KUMAR AGGARWAL & SH. UDAYAN DASGUPTA
This appeal is filed by the assessee against the order of the ld. Addl./JCIT (A)- 10, Mumbai dated 28.10.2024 passed u/s 250 of the Income Tax Act, 1961 (henceforth the Act) which has emanated from the order of the ITO, Ward-1, Tarn Taran dated 27.12.2017 passed u/s 143(3)/147 of the Income Tax Act, 1961. main grievance of the assessee is against the addition sustained amounting to Rs. 6 (six) lacs on account of cash deposits in bank account.
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.
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.
Assessment Year: 2010-11 5. 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).
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.
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 and the deposits being made at the very next day on 25.09.2009 and there is no material which is brought on record to disprove the said certificate. As such, this particular addition is deleted.
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.
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)
“36. Therefore, affidavits in the light of the aforesaid discussion are not considered to be evidence, within the meaning of Section 3 of the Evidence Act. However, in a case where the deponent is available for cross-examination, and opportunity is given to the other side to cross-examine him, the same can be relied upon. Such view, stands fully affirmed particularly, in view of the amended provisions of Order XVIII, Rules 4 & 5 CPC. In certain other circumstances, in order to avoid technicalities of procedure, the legislature, or a court/tribunal, can even lay down a procedure to meet the requirement of compliance with the principles of natural justice, and thus, the case will be examined in the light of those statutory rules etc. as framed by the aforementioned authorities.”
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 13. 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. allowed.
Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 as on 12.03.2026