BISMILLAH KHAIRUNNISSA,CHENNAI vs. ITO, NCW-20(3), CHENNAI

ITA 1385/CHNY/2025Status: DisposedITAT Chennai24 July 2025AY 2017-184 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had adequately explained the source of Rs. 5 lakhs through the sale of agricultural land in March 2016, which was not disputed. The Tribunal disagreed with the CIT(A)'s finding that the land measured only 3280 sq. ft. and that the claim of receiving Rs. 10 lakhs from agricultural lease was exaggerated. Furthermore, the Tribunal found no issue with a senior citizen keeping sale proceeds in cash at home for nine months to meet emergency situations. Accordingly, the Tribunal set aside the orders of both the AO and the CIT(A) and deleted the addition of Rs. 5 lakhs. The ratio decidendi is that sale proceeds from agricultural land, even if kept in cash for a reasonable period by a senior citizen, can be a valid source for subsequent deposits, provided the sale itself is not disputed and the explanation is plausible.

What were the facts?

The assessee, Bismillah Khairunnissa, a pensioner, filed her return of income for Assessment Year 2017-18 declaring a total income of Rs. 4,32,710/-. During assessment proceedings, the Assessing Officer (AO) noted cash deposits of Rs. 2 Lakhs on 01.12.2016 and Rs. 3 Lakhs on 05.12.2016, totaling Rs. 5 Lakhs, made during the demonetization period. The assessee explained the source as the sale of agriculture land in March 2016 and agriculture lease payments from earlier years. The AO rejected this explanation, disbelieving that cash could be kept at home for nine months. The assessee appealed to the Learned Commissioner of Income Tax (Appeals) [CIT(A)], who dismissed the appeal. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the addition of Rs. 5 lakhs on account of cash deposits made during the demonetization period is justified, considering the assessee's explanation of the source of funds. Assessee's contentions: The assessee argued that she is a senior citizen and spinster residing with her sister. The source of the cash deposit was the sale of agricultural land inherited from her father in March 2016. The cash was retained to meet any emergency exigencies, and the source had been duly explained. Revenue's contentions: The Departmental Representative relied on the orders of the authorities below, implying that the explanation provided by the assessee was not accepted by the AO and CIT(A).

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI MANU KUMAR GIRI & SHRI JAGADISH

Hearing: 16.07.2025Pronounced: 24.07.2025

आदेश / O R D E R

PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2017-18 arises out of the order of Learned Commissioner of Income Tax, Addl./JCIT(A)-1, Gurugram [hereinafter “Addl. CIT(A)”] dated 27.03.2025 in the matter of assessment framed by the Assessing Officer [AO] u/s. 143(3) of the Income-tax Act,1961 (hereinafter “the Act”) on 06.08.2019.

06.12.2017 declaring total income of Rs. 4,32,710/-. During the assessment proceedings, the A.O has noticed that the assessee along with her sister has deposited cash of Rs. 2 Lakhs on 01.12.2016 and Rs. 3 Lakhs on 05.12.2016 during demonetization period. The assessee has explained the source of cash deposit as sale of agriculture land in March, 2016 and agriculture lease payments of earlier years. However, the A.O rejected the explanation, disbelieving the claim that cash was kept at home for nine months at home.

Aggrieved by the assessment order, the assessee preferred an appeal before Ld. CIT(A). However, the Ld. CIT(A) has dismissed the appeal.

The Ld. Authorized Representative has submitted that the assessee is a senior citizen and a spinster residing with her sister. He reiterated that the source of the cash deposit was the sale of agricultural land inherited from her father in March 2016. It was also submitted that the cash was retained to meet any emergency exigencies, and the source had been duly explained.

The Ld. Departmental Representative has relied on the orders of the authorities below.

Bismillah Khairunnissa :- 3 -: 5. We have heard the rival submissions, and perused the materials available on record. The A.O made an addition of Rs. 5 lakhs on account of cash deposits made during the demonetization period. The assessee is a senior citizen and spinster living with her sister. The assessee has explained the source of cash deposit as the sale of agricultural land inherited from her father in March 2016. The Ld. CIT(A), however, did not accept the explanation, citing that the land measured only 3280 sq. ft. and that the claim of receiving Rs. 10 lakhs from agricultural lease was exaggerated. We do not agree with the findings of the Ld. CIT(A), as the assessee has adequately explained the source of Rs. 5 lakhs through the sale of agricultural land in March 2016, which has not been disputed. We also do not agree that sale proceeds in cash cannot be kept for nine months at home for a senior citizen for meeting emergency situation. Accordingly, we set aside the orders of both the A.O and the Ld. CIT(A) and delete the addition.

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