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Facts
The assessee declared agricultural income of Rs. 17,75,635 for AY 2017-18. The AO treated Rs. 4,75,635 as unexplained income, while the CIT(A) upheld this addition. The assessee's appeal challenges this confirmation.
Held
The Tribunal held that the agricultural income of Rs. 4,75,635 was recorded in the assessee's books of accounts and bank statements. Both the AO and CIT(A) erred in taxing this amount as unexplained income.
Key Issues
Whether agricultural income recorded in the books of accounts can be treated as unexplained income under Section 69A of the Income Tax Act.
Sections Cited
69A, 115BBE, 143(1), 143(2), 143(3)
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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI S.R.RAGHUNATHA
आदेश /O R D E R
PER S. R. RAGHUNATHA, AM :
This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18, vide order dated 03.01.2024.
At the outset, we find that there is a delay of 341 days in appeal filed by the assessee, for which the assessee has filed affidavit stating the reasons for delay, wherein, it is submitted that the assessee is 73 years old, did not well versed with operating of digital facilities and was unaware of the notices issued and receipt of the order of the ld.CIT(A) on 03.01.2024. Only when he was aware of the order of the ld.CIT(A) approached a CA on 03.03.2025 and immediately initiated for filing of appeal.
:-2-: ITA. No:702/Chny/2025 After considering the Affidavit filed by the assessee and also hearing both the parties, we find that there is a reasonable cause for the assessee in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeal and admit the appeal filed by the assessee for adjudication.
The grounds raised by the assessee are as follows: 1) The impugned order of the Commissioner of Income Tax (Appeals) is wrong, illegal, opposed to law, facts judicial interpretation, principles, submissions made, details available on record, conventions and is hence liable to be cancelled.
2) CIT(A) HAS ERRED IN INVOKING / MAKING ADDITON U/S.69A (a) In facts, law and circumstances, the ld.CIT(Appeals) has erred in invoking / making additions u/s.69A of Income Tax Act. (b) The ld. CIT(A) has erred to uphold the addition made by AO, of Rs.4,75,365/-, towards agriculture income which was credited in bank account and duly reflected in books of account. 3) PRAYER: The appellant craves leave to file additional grounds of appeal
/ Additional evidences, if any at the time of hearing and it is prayed that the contested addition be deleted, tax demand, be cancelled.
4. Brief facts of the case are that the assessee is an individual, filed his return of income for the AY 2017-18 on 30.10.2017 admitting a total income of Rs.5,60,110/-. The same was processed u/s.143(1) of the Act. The assessee’s case was selected for ‘Complete Scrutiny’ under CASS and notice was issued u/s.143(2) of the Act on 30.08.2018.
5. During the assessment proceedings AO found that the assessee had derived house property income, business income and income from other sources. Apart from that, he had earned income from agricultural operations also. During the A.Y.2017-18 the assessee deposited SBNs to the tune of Rs.14,87,000/- in his bank accounts maintained with Canara Bank during the demonetization period from 09.11.2016 to 31.12.2016. In addition, the AO verified the cash book of the assessee it is found that the total agricultural receipt during the year was Rs.13,00,000/-. In the capital account
:-3-: ITA. No:702/Chny/2025 of the assessee, an amount of Rs.17,75,635/- was credited as agricultural income. hence the AO treated excess amount of Rs.4,75,635/- as unexplained money made an addition of Rs.14,87,000/- and Rs.4,75,635/- as unexplained money u/s.69A r.w.s.115BBE of the Act, passed an order u/s.143(3) of the Act on 24.12.2019.
Aggrieved by the order of AO, the assessee preferred an appeal before the ld.CIT(A), NFAC, Delhi. During the course of appellate proceedings, the assessee specifically contended that the amount of Rs.14,87,000/- and amount of Rs.4,75,365/- towards agricultural income deposited during demonetization period i.e., AY 2017-18. On perusal of submissions made by the assessee, the ld.CIT(A) deleted the addition of Rs.14,87,000/- and allowed the grounds 1 & 2 raised by the assessee. However, the ld.CIT(A) upheld the addition of Rs.4,75,365/- due to the absence of specific details provided by the assessee and passed an order dated 03.01.2024. Aggrieved by the order of ld.CIT(A), the assessee preferred an appeal before us.
The ld. AR for the assessee submitted that the assessee specifically contended that the amount of Rs.4,75,365/- towards agricultural income deposited during demonetization period i.e., AY 2017-18, has been recorded in the books of accounts of the assessee, which was deposited to his SB account No.0985101030505 held at Canara bank, Rasipuram Branch. The ld.AR drew our attention to the bank statement and financial statements in page No.2 to 21 of the paper book filed before us, wherein the assessee had deposited an amount of Rs.4,75,365/- in his SB Account out of agricultural income shown of Rs.17,75,635/-, which has been credited to his capital account in his Balance sheet as on 31.03.2017 (page No.18 of the paper book). Further, the ld.AR furnished the ledger account of the agricultural income & Canara bank account for the F.Y. 2016-17 shown to us to demonstrate that an amount of Rs.4,75,365/- also recorded in the books of accounts on account of agricultural income. In view of the above arguments the ld.AR submitted that both the AO and also the :-4-: ITA. No:702/Chny/2025 ld.CIT(A) have erred in brining it tax the agricultural income which has been recorded in the books of accounts. Hence, prayed for deleting the same by setting aside the order of the ld.CIT(A).
Per contra, the ld.DR relied on the orders of the lower authorities.
We have heard the rival parties and perused the material available on record and gone through the orders of the lower authorities along with the paper book filed. The assessee has filed his return of income for the A.Y. 2017-18 by disclosing the income from Salary on account of Pension of MLA, House property, Business, other sources along with the Agricultural income of Rs.17,75,635/-. The case was selected for complete scrutiny, and the Assessing Officer has passed order by treating cash deposit made during the demonetisation of Rs.14,87,000/- and an agricultural income of Rs.4,75,635/- as unexplained money u/s.69A of the Act. On appeal the ld.CIT(A) deleted the cash deposit of Rs.14.87 lakhs and confirmed the agricultural income as unexplained money u/s.69A of the Act.
On perusal of the submission made by the ld.AR, we note that the assessee has declared an agricultural income of Rs.17,75,635/- in his return of income. Further, it is also shown in his cash book that the said agricultural receipts have been received in cash to the tune of Rs.13.00 Lakhs and the balance amount of Rs.4,75,635/- received through banking channel to his Canara Bank Savings Bank account. Further we note that the total amount of Rs.17,75,635/- has been credited to his capital account in the Balance sheet as on 31.03.2017, apart from showing the same amount as agricultural income in the computation of total income for the A.Y. 2017-18. We find that the receipt of entire agricultural income has been recorded in the books of accounts (i.e. Cash book and bank book, bank statements) for the F.Y. 2016-17. Therefore, we are of the :-5-: ITA. No:702/Chny/2025 considered view that both the AO as well as ld.CIT(A) have erred in taxing the agricultural income of Rs.4,75,635/- declared by the assessee.
In view of the above, we are setting aside the order of ld.CIT(A) and direct the AO to recompute the total income by deleting the addition made on account of agricultural income.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the court on 13th August, 2025 at Chennai.