SMT. JAYANTHI SEEMAN,,CHENNAI vs. ITO, NCW - 1 (2),, CHENNAI

PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER: These appeals filed by the assessee are directed against the separate orders passed by the learned Commissioner of Income Tax (Appeals) - 2, Chennai, all dated 30.07.2020 for the assessment years 2010-11 to 2013-14.

Assessment Year: 2010-11

2. The ld.CIT (A) has erred in affirming the order of the ld. AO u/s.69 of the Act amounting to Rs.1,01,59,959/- without considering the confirmation letters issued by the landlords, cash deposits out of prior withdrawals, capital contribution and agricultural income.

3. The ld. CIT (A) has further erred in rejecting the interest amount of Rs.7,48,842/-, which is nothing but interest paid on loan availed from M/s GE Capital, wholly and exclusively incurred for the purpose of business which is evident from rate of interest charged.

4.1. Disallowance - Rent Payment: Addition made - Rs.18,00,000/- : During the course of appellate proceedings before the ld.CIT(A), the assessee submitted all the details in respect of rent payment. The ld. CIT(A), in his order in / CIT(A)-2/2017-18 dated 30/07/2020, directed the AO to verify the genuineness of the payment towards rent and allow the same, if the same is genuine. After verifying the rent payment details, the AO considered the same while passing the giving effect order on 07/07/2021.

4.2. Hence, in the aforesaid submission the ld. Counsel has not pressed this ground. 770 to 773/Chny/2020 Therefore, the ground of disallowance of rent payment is dismissed as not pressed.

4.3. Difference in cash flow statement treated as unexplained u/s. 69 of the Act: In support of Cash inflow of Rs.92,29,509/- (Disallowance of Rs.1,01,59,959/- Minus Rs.9,30,450/- agricultural income allowed by the Ld.CIT(A)) the assessee had submitted the following details of source which were not considered by the AO as well as the ld. CIT(A). Aggrieved, the assessee is before us.

(a) Rent advance received back: Rs.41,15,000/-: The ld.AR submitted that during the year under consideration, the assessee received back rent advance of Rs.41,15,000/- from the following landlords in the manner specified below:

Name of Rs. Mode of Remarks the parties Repayment P.Saroja 10,00,000 Cash The Ld.CIT(A) had not considered the confirmation (Refer Page 1 of Paper Book) as the same did not specify the mode of repayment. However, from the perusal of the bank statement in June 2009, (Refer Page 13 to 15 of Paper Book) there is no evidence of a credit for Rs.10 lacs in the month of 770 to 773/Chny/2020

June 2009. Thus, Ld.CIT(A) erred in not considering the same as cash inflow.

R Malathy 15,00,000 Rs.7.50 lacs The Ld.CIT(A) wrongly vide two construed from the cheques confirmation letter Page (Refer 3 of Paper Book) the 957925 for entire amount of Rs.15.00 Rs.5,00,000/- lacs 957926 was received & by way of two cheques. Rs.2,50,000/- Copy of relevant page of ) and the the bank statement is balance enclosed vide Page 15 of Rs.7.50 lacs paper book (highlighted by way of for easy reference) cash as Thus, the CIT(A) ought to clearly have allowed cash mentioned in received to an extent of the Rs.7,50,000/- as cash confirmation inflow. letter. Sathurappan 5,00,000 Rs.8,74,000/- The Ld.CIT(A) erred in vide two not considering the cash Rukmani 5,00,000 cheques viz., portion of rental advance Sathurappan Chg no. received back which has 44959 and been clearly mentioned in 187162 of the confirmation letter Rs.4,37,000/- (Refer Page 5 of Paper each and the Book) balance Rs.1,26,000/- by way of cash as clearly Mentioned in the 770 to 773/Chny/2020 confirmation letter. K.Balaraman 6,11,500/- Cash The assessee had submitted the cancelled rental agreement (Refer Page 7 to 11 of Paper Book) along with date of cancellation being 16.07.2009. However, from the perusal of the bank statement, there is no evidence of a credit for Rs.6,11,500/- in the month of July 2009. The Ld.CIT(A) erred in not considering the same as cash inflow. Total 41,11,500 From the above submissions, the ld.AR humbly prayed that the cash portion of the rent advance received back which works out to Rs.24,87,500/- ought to be considered as cash inflow and to that extent there is no unexplained cash credit as alleged by the AO.

(b)Cash withdrawn from bank by Bharath: _Rs.18,50,000/-: The ld.AR stated that the AO has not considered the withdrawal of Rs.18,50,000/- from bank by assessee's son Mr.Bharath, who is assisting the assessee in managing the hostel activities, from Bank of India a/c.No.80192010002063 standing in the name of Saraswathi Bhavanam, viz, a ladies hostel run by the assessee, in spite of furnishing confirmation letter from Bank of India) for the 770 to 773/Chny/2020 withdrawal of Rs.18,50,000/- by way of bearer cheques on 02/04/09 (Rs.2,50,000); 03/04/09 (Rs.8,00,000); and 08/04/09 (Rs.8,00,000) (Refer Page 21 of Paper book).

The ld.AR further submitted that the amount drawn from the bank a/c. of Saraswathi Bhavanam was through bearer cheques and the amount was used for hostel purpose only. Hence, this cash inflow may kindly be treated as explained source and delete the additions made by the AO.

(c) Cash withdrawal:Rs.28,64,163/-; Further, the Ld.AR submitted that the staff of ‘Saraswathi Bhavanam’ withdrew cash to the tune of Rs.28,64,163/- for making various payments, which was confirmed by Bank of India vide letter dated 02/01/2019. However, the AO did not consider the bearer cheques given by the assessee to their staff for various expenses. These bearer cheques should also be considered as cash withdrawal for the purpose of cashflow, as these amounts are drawn by the staff as per instructions of the assessee. The statement showing cash withdrawals made along with bank statement for the year is enclosed in Page 23 to Page 36 of Paper book.

The withdrawn amount of Rs.28,64,163/- was also not considered into the cash inflow by the AO while recasting the cash flow 770 to 773/Chny/2020 statement and hence the ld.AR prayed for consider the same as source of cash and delete the additions accordingly.

(d) Capital Contribution: Rs.4,00,346/-: The ld.AR for the assessee explained to the AO as well as the ld.CIT(A) the amount received from her husband Mr.P.Seeman who has made drawings from his proprietary concern in the earlier years. In this regard, the assessee has furnished the copies of Inocme tax returns of Mr.P.Seeman for the AY 2001-02, 2002-03 & 2003-04 and 2007-08.

Further, the assessee received pin money from her husband for family maintenance over a period of time and the same was used for the cash outflows mentioned above.

From the above, the ld. AR submitted that no addition on cash deposits can be made u/s.69 once the assessee has duly explained the cash flow statement as discussed by the Tribunal in the case of Smt.Renukaben Umedsinh Parmar, vs. The Income Tax Officer, Ward-3, Navsari, ITAT Surat Bench (ITA No.2493/AHD/2015) dated 08.03.2021.

It is further submitted by the ld.AR that the addition towards the difference in cash flow statement made by the AO is merely on the basis of whims and fancies. The AO has made the additions without 770 to 773/Chny/2020 any justified reasoning and cogent basis. The opinion of the AO is required to be formed objectively with reference to the material on record. The genuineness of the transaction can be decided only on merits not on prejudices. The evidence produced by the assessee cannot be brushed aside in a casual manner.

4.4 Per contra, the ld.DR stated that the difference in Cash Flow Statement treated as unexplained u/s 68 of the Act: Addition made of Rs.1,01,59,959/-:

In the Assessment Order, the Assessing Officer in page 4 & 5 has put forth his discussion as under:

"In the Register maintained for receipt/payment of cash, it was found that Rs.6,000/- was credited on each day during the period from 01.04.2009 to 31.03.2010 with the narration "Cash from R.M". When the assessee was asked to explain the above credits, it was replied that "They are canteen owners they supply eatables to mansions. And they are the cooks of the hotel. As cooks are always unstable, we got a hold by holding their money. They also asked us to keep the amount and return it as lump sum". In the course of business, only the buyers of commodity/service will advance amount to the suppliers/service providers. The assessee's statement that she had retained the money owed to the cooks is not acceptable. No details such as name and address etc. of the cooks were furnished to examine the assessee's contention. There were no debit entries in the name of "R.M" in order to prove that the above credits were repaid in lump sum as claimed by the assessee. Cash deposits into Bank account as per the register maintained by the assessee for receipt/ payment of cash was Rs.97,40,000/- whereas the actual amount deposited in the Bank of India, Usman Road Branch maintained in the name of Saraswathi Bhavanam was only Rs.72,55,156/- . Further in the "Receipt and Payment Abstract" furnished by the assessee, only Rs.46,94,717/- is cash deposit into bank account. When this discrepancy was pointed out to the assessee, the assessee had not furnished any reply. 770 to 773/Chny/2020

The following defects/discrepancies were found in the cash register:

1. 1. On 09.07.2009, actual closing cash balance should be Rs.7,59,974/- whereas the assessee has arrived at a closing balance of Rs.1,59,974/-.

2. On 31.07.2009, actual Opening cash balance should be Rs.82,464/- whereas the assessee has arrived at an opening balance of Rs.94,646/- 3. On 01.08.2009, actual total of credits to Rs.1,11,664/- whereas the total of credits arrived at the by the assessee was in Rs.4,67,664/-.

4. On a number of pages, entries struck down with pencil, only monthly abstract given in ledger account etc. In view of the above facts, the authenticity/correctness of the books of account produced itself is under question…)" Accordingly, the AO has made addition of Rs.1,01,59,959/- towards unexplained cash credit u/s.68 of the Act.

The ld.CIT(A) in his Order dated 30.07.2020 vide para 7.6 has stated that the assessee did not explain the defects pointed out by the Assessing Officer in the Remand Report with supporting evidences. Hence the ld.CIT(A) has rightly rejected the claim of the assessee that the rental advance received back as the source for cash credit and upheld the decision of the AO in making addition in this regard.

(a) Rent advance received back: Rs.41,15,000/-: It is pertinent to mention that in the confirmation letters attached with the paper book for the respective year does not contain vital detail such as Door No. to demonstrate proper address, date of 770 to 773/Chny/2020 issue of letter and place with proof of identity viz. Aadhaar Number/PAN/Voter ID. In the absence of above important details the authenticity and genuineness of the confirmation could not be verified. Hence the rental advance received back amounting to Rs.41,15,000/- cannot be considered as source for cash deposits.

(b) Cash withdrawn from bank by Bharath: Rs.18,50,000/-: The CIT(A) in his Order dated 30.07.2020 vide para 8.5 has rejected the ground stating that the assessee did not bring any material on record to establish the link between the amount withdrawn by Shri. Bharath from Bank and the cash credits and upheld the addition made by the Assessing Officer. Even in the written submission made before the Hon'ble ITAT which is under consideration, the assessee has failed to establish the nexus between the cash withdrawn and deposited in the bank account. The same cannot be considered as source for the cash deposit.

(c) Cash withdrawal : Rs.28,64,163/-: The assessing officer in page 5 of the assessment order has discussed as under:

"The assessee has mentioned in the "Receipt and payment abstract that Rs.28,64,183/- was deposited into bank account out of cash withdrawal. The assessee has not furnished details such as name of the bank, date and amount of withdrawal etc. As per statement of Bank of India, Usman Road and Cumbum Branches, there was no such withdrawals. Hence, the assessee's statement that source for cash deposit of Rs.28,64,183/- was out of earlier withdrawal cannot be accepted." 770 to 773/Chny/2020 The CIT(A) in his Order dated 30.07.2020 vide para 10.5 has dismissed this ground stating that the Assessing Officer in the Remand Report has stated that the cash withdrawal of Rs.28,64,163/- from Bank of India had already been taken into account.

In view of the above the ground of appeal the ld.DR stated that it does not require any specific comments.

(d) Capital Contribution: Rs.4,00,346/-: The ld.CIT(A) in his Order dated 30.07.2020 vide para 11 has discussed as under and upheld the addition made by the assessing officer. "11. Ground No. 7- Capital Contribution 11.1 Assessing Officer asked the assessee to explain the sources for capital of Rs.4,00,436/- introduced during the year in cash. Assessee explained that source was out of earlier drawings. Assessing Officer noticed that there were no withdrawals in earlier years as per the Note Book containing receipt and payment of cash and hence added the same as unexplained cash credit u/s 68. 11.2 In the grounds of appeal the assessee contested that the amount introduced as capital contribution was out of her drawings during previous years and current years. 11.3 During the appeal proceedings the A.R stated that the sources for the capital of Rs.4,00,436/- were earlier drawings and gift from Shri. P. Seeman. 11.4 In the Remand Report the Assessing Officer stated that the Assessee did not furnish any evidence regarding another source of capital contribution of Rs.4,00,436/-. Regarding the gift from Shri P Seeman the A.R filed copies of returns of income of Shri P. Seeman for A. Y.2001-02 to 2003-04 and 2007-08. The returns of income contain the details of drawings made by Shri P.Seeman from his Proprietary concern. The AR 770 to 773/Chny/2020 did not furnish any other evidence to substantiate claim of receipt of gift from P.Seeman. 11.5 In the reply to the Remand Report the A.R stated that it is natural that as per our Indian culture the drawings are given to the wife for savings or investments and hence the explanation of gift of Rs.4,00,436/- from Shri. P. Seeman should have been accepted. 11.6 However the assessee did not furnish any evidence in support of the earlier year’s drawings by Shri P. Seeman and to establish the claim that Shri P. Seeman gave earlier years drawings as gift to the assessee. Hence the addition of unexplained capital contribution u/s.68 is upheld. " The ld.DR submitted that in the paper book, the assessee has not submitted any fresh evidence or new document apart from the details furnished before the AO during the course of assessment proceedings. Hence 'comments' on this ground has not been submitted.

4.5 We have heard the rival contentions perused the material available on record and gone through the orders of lower authorities. It is admitted fact that the assessee is running a ladies' hostel under the name and style "Saraswathi Bhavanam" and is also engaged in agricultural activities. During the assessment proceedings the assessee has furnished the details of income and expenditure along with the cash flow have been submitted. We note that the AO has accepted the income of the assessee from the business of running a ladies hostel. Further, the AO has allowed the expenditure of Rent paid to the tune of Rs.18.00 Lakhs as business expenditure, after the case was remanded by the Ld.CIT(A). We 770 to 773/Chny/2020 have observed that the AO has accepted that the assessee has made a repayment of ‘Caution deposit’ collected from the occupants of the hostel to the tune of Rs.60.00 Lakhs, and thereby sought the source of such cash outflows, which has been confirmed by the Ld.CIT(A). The AO cannot have two different approaches while dealing with receipts and payments separately. Therefore, the plea of the assessee to consider the amounts collected from landlords towards refund of rent advances in cash should be accepted as source, once the repayment of caution deposit to the occupants of the hostel has been accepted. We note that the assessee has given evidence in support of the refunds received both in the form of cash and by crediting to the bank accounts of the assessee. Therefore, we are of the opinion that the assessee has proved the source to the extent of Rs.24,87,500/- on account of refund of rent advances from the following parties in cash:

- P.Saroja Rs.10,00,000/- - R.Malathy Rs. 7,50,000/- - Sathurappan & Rukmani Rs. 1,26,000/- - K.Balaraman Rs. 6,11,500/- TOTAL Rs.24,87,500/- Since, the balance amount of Rs.26,24,000/- has been received through banking channel, the same cannot be treated as inflow for cash used towards application of funds. 770 to 773/Chny/2020 4.6 Further, the assessee has explained that the source to the tune of Rs.18,50,000/- has been drawn by herself from the bank account of the business through the self cheques drawn by his son for regular business expenditure of the hostel. We note that the said amount has been drawn from Bank of India a/c. No.80192010002063 standing in the name of Saraswathi Bhavanam, viz, a ladies hostel run by the assessee and the confirmation from the said bank also has been furnished by the assessee for having drawn the cash. Therefore, we are of the view that the AO and that of ld.CIT(A) has erred in rejecting the evidences for the source of Rs.18,50,000/- and inclined to delete the addition to the extent of Rs.18,50,000/-.

4.7 Further, the assessee has also claimed that the staff of ‘Saraswathi Bhavanam’ withdrew cash of Rs.28,64,163/- for various payments during the impugned assessment year, which was confirmed by Bank of India vide letter dated 02.01.2019. However, the AO did not consider the bearer cheques given by the assessee to their staff for various expenses. We note that these bearer cheques are issued for cash withdrawal and are drawn by the staff based on the instructions of the assessee. The revenue has not brought out any other evidences to show that, these cash withdrawals have been invested otherwise. In the peculiar facts and circumstances of 770 to 773/Chny/2020 the case, we do not countenance the action of AO in rejecting the source to the tune of Rs.28,64,163/-, which has been drawn by the staff from the bank. Thus, we are of the considered view that the assessee has explained the source to the extent of Rs.28,64,163/- and direct the AO to delete the addition.

4.8 Further, the assessee has claimed that Rs.4,00,436/- has been introduced as capital contribution during the year, stating that the same has been given as Gift by her husband Sri.P.Seeman. We note that the assessee has not furnished any cogent evidence for the same. Further, during the assessment proceedings the assessee has claimed the same as her savings of earlier years from Pin money and later the same has been stated as gift from her husband. Therefore, the action of the AO and that of ld.CIT(A) cannot be treated as erroneous and we are of the view that the addition of Rs.4,00,436/- made by the AO is sustained and ground of the assessee on this issue is dismissed.

4.9 As discussed supra, the assessee’s ground in respect of ‘difference in cash flow statement’ treating as unexplained money u/s.69 of the Act is adjudicated as detailed below: i. Addition as per AO’s order Rs.1,01,59,959/- ii. Allowed by Ld.CIT(A) Rs. 9,30,450/- Agrl. Income iii. Allowed in this appeal as discussed (supra) Rs. 72,01,663/- 770 to 773/Chny/2020 Balance additions sustained Rs. 20,27,846/- 4.10 Disallowance of Interest payment: Addition made - Rs.7,48,842/- The ld.AR submitted that during the year 2008, the assessee borrowed a loan for Rs.52.50 lakhs from M/s GE Money Financial Services Ltd and the same has been utilized for the business purposes, i.e., for running hostel (Refer Page 37 to 42 of Paper book) and debited a sum of Rs.7,48,842/- towards interest payment made on the said loan. The ld.AR brought to our attention that the Sanction Letter of the loan, and stated that it is evident that the rate of interest charged by Mis.GE Money Financial Services Limited was at 14.5%, which is the interest rate for a mortgage loan.

Further, the AO and Ld.CIT(A) denied the claim of interest under the pretext that the hostel building was kept vacant as it was in a dilapidated condition and not used for the purpose for business. In this regard, the assessee wishes to reproduce the definition of 'dilapidated’ as per Legal Law Lexion as below:

"State of bad repair, falling into decay. "A wasteful destroying, or letting of Building run w ruin and decay, for want of reparation" (emphasis supplied). 770 to 773/Chny/2020 From the above, it is clear that the building was in need of repair works and the purpose of the loan was to renovate the hostel building.

The ld.AR stated that considering the above facts, it is evident that the loan was utilized for the purpose of business and hence ought to be allowed.

It is worthwhile to mention here that as per the Section 36 of Income Tax Act, 1961,

"if any interest paid for the business purpose, the same has to be allowed as business expenditure " as held in the cases of - The DCIT, Cir. 1(1)(1), Ahmedabad v. Applitech Solution Ltd. (ITAT Ahmedabad B Bench) in pronounced on 19/05/2023; and Vodafone India Ltd. vs. Additional Commissioner of Income Tax, (ITAT Mumbai) in pronounced on 16/03/2023.

Further, the ld.AR also stated that the ld.CIT(A) in his Order dated 30.07.2020 vide para 13 has discussed as under and upheld the addition made by the assessing officer.

"13. Ground No.9 - Interest Paid- Rs.7,48,842/- 13.1 Assessing Officer asked the assessee to explain the nexus between the borrowings and its utility in the business assets. Assessee explained 770 to 773/Chny/2020 that the amount was borrowed for repayment of caution deposit. Assessing Officer concluded that the caution deposit received will be available with the assessee either in cash or in bank and hence there is no need to borrow funds to repay the caution deposit. Assessing Officer concluded that that the interest-bearing borrowed funds were utilized in non-business activities such as investment in properties at Sadullah Street, Dhandapani Street, Burkit Road, agricultural land at Theni etc. and hence disallowed interest u/s.36(1)(iii). 13.2 In the grounds of appeal the assessee stated that the said loan was taken during the year 2004-05 for paying rental advance for hostel premises and was disclosed in the IT return filed for year 31.03.2005. 13.3 In the Remand Report the Assessing Officer stated that the assessee in her letter dated 27.09.2017 admitted that properties at Sadullah Road and Burkit Road, T.Nagar, Chennai were kept vacant to run Saraswathy Bhavanam Women Hostel but due to dilapidated condition of the building, it was kept unused. Building not used for business cannot be treated as business asset and other assets such as Dhandapani Street property and agricultural land also cannot be treated as business asset. Hence the interest claim cannot be allowed. 13.4 In the reply to the Remand Report the A.R stated that the assessee's claim is reasonable which ought to have been allowed by the assessing officer. 13.5 As stated by the Assessing Officer, the caution deposit received will be available with the assessee either in cash or in bank and hence there is no need to borrow funds to repay the caution deposit. Moreover, the assessee did not bring any material on record to establish that the related loan was utilized for payment of rental advance and refund of caution deposit. Hence the disallowance of interest on the same is upheld." Before us, the ld. AR further stated that during the course of assessment proceedings the assessee has explained that the above amount was borrowed for repayment of caution deposit. Hence the assessing officer has concluded that the caution deposit would be available with the assessee either in cash or in bank and as such there is no need to borrow funds to repay the caution deposit. Accordingly, the assessing officer has made addition since the 770 to 773/Chny/2020 interest-bearing borrowed funds were utilized in non-business activities. Later in the grounds of appeal the assessee has stated that the said loan was taken during the year 2004-05 for paying rental advance for hostel premises and was disclosed in the IT return filed for year 31.03.2005. In the written submission under consideration the assessee has provided definition for 'dilapidated' as per Legal Law Lexion as below: "State of bad repair, falling into decay. A wasteful destroying, or letting of Building run to ruin and decay, for want of reparation" (emphasis supplied). From the above, it is clear that the building was in need of repair works and the purpose of the loan was to renovate the hostel building. The ld.AR prayed that considering the above facts, it is evident that the loan was utilized for the purpose of business and hence ought to be allowed.

4.11 Per contra, the ld.DR stated that the assessee has failed to substantiate that the amount borrowed were utilized for the renovation of hostel building with authentic evidence such as bills/vouchers in respect of expenditure incurred in this regard. In view of the above the above ground does not deserve any merit for consideration. 770 to 773/Chny/2020 4.12 We have heard rival contentions and perused the material available on records and gone through the orders of the authorities. The assessee has claimed an expenditure of Rs.7,48,842/- as interest on borrowed fund of Rs.52.50 lakhs from M/s.GE Money Financial Services Ltd and the same has been utilized for the business purposes, i.e., for running hostel (Refer Page 37 to 42 of Paper book). The assessee has furnished a sanction letter to show that the rate of interest charged by Mis.GE Money Financial Services Limited was at 14.5%, which is the interest rate for a mortgage loan. Further, the Ld.AO and Ld.CIT(A) denied the claim of interest under the pretext that the hostel building was kept vacant as it was in a dilapidated condition and not used for the purpose for business.

We note that the building used for business was in need of repair works and the purpose of the loan was to renovate the hostel building, hence considering the above facts, it is evident that the loan was utilized for the purpose of business. In light of the above discussion and by relying on the decisions of the Tribunal(supra), we are of the considered view that the interest expenditure is an allowable expenditure, as the assessee has used loan borrowed for business and direct the AO to allow the interest expenditure to the 770 to 773/Chny/2020 tune of Rs.7,48,842/-. Thus, we allow this ground of appeal of the assessee.

4.13 In the result the appeal of the assessee is partly allowed.

: Assessment Year: 2011-12 5. The assessee filed the following concise Grounds of Appeal

1. The ld. CIT (A) has erred in sustaining the order of the ld. AO as the notice for reassessment was barred by limitation and the reassessment was initiated without any fresh tangible material/evidence available to support the reassessment proceedings.

2. The ld. CIT (A) has erred in affirming the order of the AO u/s.69 of the Act amounting to Rs.44,60,849/- without considering the gift received from spouse, capital contribution and agricultural income.

3. The ld. CIT (A) has further erred in rejecting the interest amount of Rs.6,10,002/-, which is nothing but interest paid on loan availed from M/s GE Capital, wholly and exclusively incurred for the purpose of business which is evident from rate of interest charged.

6. A search was conducted u/s 132 of the Act in the case of Mr.P.Seeman on 23.08.2014 and consequently based on the information received from the Investigation Wing:

"to verify the cash deposits in the Bank of India, T Nagar, Capital Gain on sale of immovable property at T Nagar, Chennai", The assessee's case was reopened for 4 assessment years from A Y 2010-11 to A Y 2013-14. The assessment was completed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961, for the A.Y. 2011-12, wherein the following additions were made by the AO:

Sl.No. Details Amount In Rs. Income admitted in Return of Income 2,45,080/- 770 to 773/Chny/2020

Additions: 1 Unexplained Cash Deposits u/s 68 44,60,849/- 2 Disallowance of interest 6,10,002/- 3 Disallowance of Rent payment 12,39,300/- Assessed Income 65,55,231/-

In support of cash inflow of Rs.39,82,084/-, the assessee submitted the details which were not considered by the AO as well as the ld.CIT(A).

The source for the cash inflow statement for the above items, is explained as under:

7.1 Gift received from Mr.P.Seeman: Rs.25,00,000/- : During the year under consideration, the assessee received cash gifts from her husband Mr.P.Seeman on various occasions and the total amount has been shown as inflow in the statement of cash flow of the assessee. The assessee has furnished a confirmation letter from Mr.P.Seeman to this effect (Refer Page 1 of Paper book). Further, Mr.P.Seeman was having a capital account balance 770 to 773/Chny/2020 of Rs.8.00 Crores during the year, which proves the capacity of Mr.P.Seeman to gift such amount to the assessee.

7.2 Own Source: Rs.14,82,084/- As far as the capital contribution of Rs.14,82,084/- in cash is concerned, the source for the same is out of prior years' drawings. Further, the assessee received pin money from her husband for family maintenance over a period of time and the same was used for the cash outflows mentioned above.

From the above, the ld.AR of the assessee submitted that no addition on cash deposits can be made u/s.69 of the Act once the assessee has duly explained with cash flow statement as discussed in the case of Smt. Renukaben Umedsinh Parmar vs. The Income Tax Officer, Ward-3, Navsari, ITAT Surat Bench (ITA No.2493/AHD/2015) dated 08.03.2021.

Further, ld.AR submitted that the addition towards the difference in cash flow statement made by the AO is merely on the basis of whims and fancies. The AO made the addition without any justified reasoning and cogent basis. The opinion of the AO is required to be formed objectively with reference to the material on record. The genuineness of the transaction can be decided on merits and not on 770 to 773/Chny/2020 prejudices. The evidence produced by the assessee cannot be brushed aside in a casual manner.

In view of the above submission, the ld.AR of the assessee prayed that the addition towards cash flow is not sustainable in law.

7.3 Per contra, the ld.DR stated that the ld.CIT(A) has rightly confirmed the Unexplained Cash Deposits u/s.68 of the Act to the tune of Rs.44,60,849/-. Further, the ld.DR stated that vide earlier report submitted on 04.08.2022, the assessing officer has reported as under:

"From the documents filed, the assessee has proved that, she has earned agricultural income and in respect of A.Ys. 2010-11 & 2011-12, the agricultural income admitted by the assessee appears to be fair and correct and can be considered." Gift received from Mr.P.Seeman: Rs.25,00,000/-: The ld.DR stated that on examination of the documents attached in the paper book it is noticed that the assessee has furnished only a confirmation letter from her husband Shri P.Seeman in respect of receipt of Rs.25,00,000/- as gift on 20.06.2010. But the assessee has failed to substantiate the above claim with authentic evidence of document such as gift deed and copy of capital account for the respective Assessment Year. Hence the claim of the assessee is only an afterthought and does not deserve any merit for consideration. 770 to 773/Chny/2020 Own Source: Rs.14,82,084/-: In respect of the above, the ld. DR stated that the ld.CIT(A) in his Order dated 30.07.2020 vide para 7 has discussed as under and rejected the assessee's ground in respect of source for capital of Rs.39,82,084/-.

"7. Ground No.3- Capital contribution: 7.1 Assessing Officer asked the assessee to explain the sources for capital of Rs.39,82,084/- introduced during the year in cash. Assessee explained that source was out of earlier drawings. Assessing Officer noticed that there were no withdrawals in earlier years as per the Note Book containing receipt and payment of cash and hence the Assessing Officer did not accept the same as source for the unexplained cash credits in the Bank account. 7.3 During the appeal proceedings the A.R stated that the sources for the capital of Rs.39,82,084/- were earlier drawings and gift from Shri.P.Seeman. 7.4 In the Remand Report the Assessing Officer stated that there were no withdrawals in earlier years as per the Note Book containing receipt and payment of cash. Regarding the gift from Shri P. Seeman the A.R filed copies of returns of income of Shri P.Seeman for AY 2001-02 to 2003-04 and 2007-08. The returns of income contain the details of drawings made by Shri.P.Seeman from his proprietary concern. The A.R did not furnish any other evidence to substantiate claim of receipt of gift from Shri.P.Seeman. 7.5 In the reply to the Remand Report the A.R stated that it is natural that as per our Indian culture the drawings are given to the wife for savings or investments and hence the explanation of gift of Rs.25,00,000/- from Shri. P. Seeman should have been accepted. 7.6 However, the assessee did not furnish any evidence in support of the earlier years drawings by Shri.P.Seeman and to establish the claim that Shri.P.Seeman gave earlier years drawings as gift to the assessee. Hence not accepting the addition to capital as source for the cash deposits in the bank is upheld." 770 to 773/Chny/2020 It is worthwhile to mention that in the paper book the assessee has not submitted any fresh evidence or new document apart from the details furnished before the assessing officer during the course of assessment proceedings. Hence 'comments' on this ground has not been submitted.

7.4 We have heard the rival contentions, perused the material available on record and gone through the orders of lower authorities. It is admitted fact that the assessee is running a ladies' hostel under the name and style "Saraswathi Bhavanam" and is also engaged in agricultural activities. During the assessment proceedings the assessee has furnished the details of income and expenditure along with the cash flow have been submitted. We note that the AO has accepted the income of the assessee from the business of running a ladies hostel. The assessee has claimed that an amount of Rs.25.00 Lakhs has been received as Gift from her spouse Sri P.Seeman during the impugned assessment year and has filed confirmation letter to this effect. Further, the assessee stated that her spouse is a regular income tax assessee and having a capital balance of Rs.8.00 crores and having credit worthiness to pay such amount as gift. We note that the assessee’s husband is having income from business of 770 to 773/Chny/2020 coaching centre as well as from agriculture activities and have filed income tax returns with a cumulative capital balance of Rs.8.00 Crores. Hence, the assessee has proved source, identity and credit worthiness of the spouse and also filed a confirmation letter for the same. Hence, the action of AO and that of the ld.CIT(A) in making an addition of the said gift in the hands of assessee cannot be countenanced. Therefore, we are of the considered view that the source to the extent of Rs.25.00 Lakhs, in the form of gift received from her spouse has been explained by the assessee and direct the AO to delete the addition made to that extent.

Further, the assessee has claimed that Rs.14,82,084/- has been introduced as own capital contribution during the year, which has been explained as prior years’ drawings. We note that the assessee has not furnished any cogent evidence for the same. Further, during the assessment proceedings the assessee has claimed the same as her savings of earlier years from Pin money without any documents. Therefore, in the peculiar facts and circumstances of the case the action of the AO and that of ld.CIT(A) cannot be treated as erroneous. However, we cannot deny the source explained by the assessee as savings of pin money and hence in the interest of fair play and justice and we are of the view that the 50% of the addition 770 to 773/Chny/2020 i.e. Rs.7,41,042/- is deleted as explained and sustain the balance amount of Rs.7,41,042/- as unexplained sources.

The assessee’s ground of difference in cash flow statement treating as unexplained u/s.69 of the Act is allowed as given below and directed the AO to delete the additions accordingly.

Gift received from spouse Rs.25,00,000/- Own sources Rs. 7,41,042/- Total Rs.32,41,042/-

"State of bad. repair, falling into decay. "A wasteful destroying, or letting of Building run to ruin and decay, for want of reparation" (emphasis supplied). From the above, it is clear that the building was in need of repair works and the purpose of the loan was to renovate the hostel building.

Considering the above facts, it is evident that the loan was utilized for the purpose of business and hence ought to be allowed.

It is worthwhile to mention here that as per the Section 36 of Income Tax Act, 1961,

“if any interest paid for the business purpose, the same has to be allowed as business expenditure" as held in the cases of - The DCIT, Cir. 1(1(1), Ahmedabad v. Applitech Solution Ltd. (/TAT Ahmedabad B Bench) in pronounced on 19/05/2023; and Vodafone India Ltd. vs. Additional Commissioner of Income Tax, (/TAT Mumbai) in pronounced on 16103/23. 770 to 773/Chny/2020 8.1 Per contra, the ld.DR stated that the ld.CIT(A) in his Order dated 30.07.2020 vide para 9 has discussed as under and rejected the assessee's ground in respect of claim of interest.

In view of the above the ld.DR prayed that the ground does not deserve any merit for consideration.

8.2 We have heard the rival contentions and gone through the orders of the lower authorities and perused the material on record. The assessee has claimed an expenditure of Rs. 6,10,002/- as interest on borrowed fund of Rs.52.50 lakhs from M/s.GE Money Financial Services Ltd and the same has been utilized for the business purposes, i.e., for running hostel (Refer Page 3 to 8 of Paper book). The assessee has furnished a sanction letter to show that the rate of interest charged by Mis.GE Money Financial Services Limited was at 14.5%, which is the interest rate for a mortgage loan.

Further, the Ld.AO and Ld.CIT(A) denied the claim of interest under the pretext that the hostel building was kept vacant as it was in a dilapidated condition and not used for the purpose for business.

We note that the building used for business was in need of repair works and the purpose of the loan was to renovate the hostel building, hence considering the above facts, it is evident that the loan was utilized for the purpose of business. In light of the above 770 to 773/Chny/2020 discussion and by relying on the decisions of the Tribunal(supra), we are of the considered view that the interest expenditure is an allowable expenditure, as the assessee has used loan borrowed for business and direct the AO to allow the interest expenditure to the tune of Rs.6,10,002/-. Thus, we allow this ground of appeal of the assessee.

9. Disallowance of Rent payment: Addition -Rs.12,39,300/- The ld.AR submitted that during the course of appellate proceedings before the ld.CIT(A), the assessee submitted all the details in respect of rent payment. The ld.CIT(A) in his order directed the AO to verify the genuineness of the payment towards rent and allow the same, if the same is genuine, vide his order in 2/2017-18 dated 30/7/2020. Subsequently, the AO has considered the rent payment while passing the giving effect order dated 07/07/2021 (Refer Page 9 to 14 of Paper book). Hence, in the aforesaid submission the ld. Counsel has not pressed this ground.

Therefore, the ground of disallowance of rent payment is dismissed as not pressed.

1. The ld. CIT (A) has erred in sustaining the order of the ld. AO as the notice for reassessment was initiated without any fresh tangible material/evidence available to support the reassessment proceedings.

2. The ld. CIT (A) has erred in affirming the order of the ld. AO, who relying solely on the statement made by assessee's husband, treated the sale value of the property as Rs.5.20 Crores instead of the actual value of Rs.1.20 Crores without any corroborative evidence.

3. The ld. CIT (A) has also erred in confirming the ld. AO's order without considering the fact that the actual sale value of Rs.1.20 Crores accepted by the sub-registrar and had been re-invested as per Section 54 of the Act without attracting any capital gain tax. 4. The ld. CIT (A) has also erred in confirming the ld. AO's order without appreciating absence of any cash flow but based on book entry in the capital account to the extent of Rs.60 lakhs. 5. The ld. CIT (A) has also failed to appreciate that the assessee & her entire family has been into agricultural activities and due to family settlement arrangement, the assessee received a sum of Rs.3.48 Crores generated from agricultural activities over a period of years. Necessary documentary evidences were furnished before the Id. AO in support of the claim, were not considered. 6. The ld. CIT (A) has erred in affirming the order of the ld. AO without considering the fact that the assessee is engaged in running a ladies' hostel and received caution deposits of Rs.59 lakhs from the inmates, which is a genuine cash inflow. 7. The ld. CIT (A) has erred in rejecting the closing cash balance ofRs.1.50 Crores in the Cumbum Branch of the assessee's bank account, instead, recast his own cash flow statement and arrived at the cash balance arbitrarily. 8. The ld. CIT (A) has erred in confirming the order of the ld. AO without appreciating the fact that the fee receipt has been inadvertently included in the fee receipt of both Seeman Entrance Coaching Centre and Saraswathi Bhavanam. The fee receipt of Rs.18.25 lakhs has been duly considered in the Seeman Coaching Centre and hence the same receipt cannot be considered in both hands. 770 to 773/Chny/2020

"to verify the cash deposits in the Bank of India, T.Nagar, Capital Gain on sale of immovable property at T Nagar, Chennai" received from the Investigation Wing, the assessee's case was reopened for 4 assessment years from AY 2010-11 to AY 2013-14. The assessment was completed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961, wherein the following additions were made for the A.Y.2012-13:

Income admitted in Return of Income 2,54,760 Additions: 1 Unexplained cash deposits u/s. 69 3,39,89,953 2 Excess in capital account u/s. 69 60,00,000 3 Unexplained investment u/s. 69 29,06,348 4 Interest Receipt not admitted in ROI 4,31,674 5 Disallowance of Rent payment 12,62,000 6 Unexplained Fee Receipts 18,25,000 7 Income from Long Term Capital Gains 2,21,36,465 Assessed Income 6,88,06,200 770 to 773/Chny/2020

In support of other cash inflows mentioned above, the assessee has submitted the details which were not considered by the AO as well as the ld.CIT(A).

The source for the cash inflow statement for the above is explained as under:

13.1 Caution Deposits: (Rs.59,00,000-Rs.7,60,650): The assessee is running ladies' hostels at different locations in Chennai with as many as 120 to 130 rooms containing single, double, triple or dormitory type rooms and received caution deposits during the year from 412 students for which the assessee has submitted the copies of the receipts and have shown the cash register during the course of assessment and the same was not considered by the AO stating that other details are not available.

However, the details of register for caution deposits and ID/address proof copies of the inmates were lost during the flood in Chennai during the year 2015. This fact has not been considered by the AO. 770 to 773/Chny/2020 Based on the rental income offered, the AO has considered the caution deposit amounting to Rs.7,60,650/- which is nothing but an estimation.

The assessee wishes to rely on the decision in the case of CIT vs. Rawatson Engineers Pvt. Ltd. 51 IPR 67, Kolkata Tribunal, wherein it was held that “Disallowance cannot be made based on the failure to provide evidence due to natural calamity". At this juncture, it is worthwhile to note that, while the cash outflow towards refund of caution deposit of Rs.60,00,000/- claimed by the assessee was accepted by the AO for the AY 2010-11, whereas, for the impugned A.Y. 2012-13, while considering the cash inflow, the AO has considered only Rs.7,60,650/- as against Rs.59,00,000/- claimed by the assessee, which clearly indicates the dual stand taken by AO, which is nothing but based on presumptions and assumptions.

The presumption had to be backed by direct and corroborative evidence that the nothing had materialized into income as held in the case of CIT vs. Devendra Kumar Singhal(2014) 45 taxmann.com 148 (All). 770 to 773/Chny/2020 13.2 Cash Withdrawal: Rs.22,83,000/-: The ld.AR for the assessee submitted that the Assessing Officer failed to note that the assessee had cash inflows from other sources such has hostel receipts, agricultural income etc., The same was deposited either at BOI, Cumbum or BOI, T.Nagar. Further, at times when payment had to be made at Cumbum, the assessee transfers money from T.Nagar account and withdraws the same at Cumbum, and vice versa. In this scenario, there is no question of verifying prior withdrawal in the same bank account. Hence, the AO ought to have considered the deposit and withdrawal of both the banks put together in addition to other inflows. Hence, the cash withdrawn ought to be considered as source of cash inflow.

In ITO Vs Deepali Sehgal, in ITAT Delhi in dated 05.09.2014, it was held that "addition u/s.69 for cash deposits in a bank after the withdrawal is not justified''. Hence, the denial of cash inflow is not sustainable.”

13.3 Agricultural income for previous years Rs.3,39,00,000/- The ld.AR for the assessee stated that the assessee, her husband, his first wife and children from the first marriage were all farmers and were carrying out agricultural activities since 1988. The assessee is the second wife of Mr.P.Seeman and till the year 2010, the first wife of the Mr.P.Seeman looked after the agricultural activities in Cumbum, Theni District. She (first wife) did not deposit 770 to 773/Chny/2020 all the money earned out of agricultural activities in the bank account as this would facilitate her to acquire additional agricultural lands as and when they were available at an attractive price. The first wife along with her sons later shifted to Chennai and the assessee & her husband P.Seeman, moved to Cumbum district. Consequently, the agricultural activities till 2010 managed by the first wife were handed over to the assessee (relocated to Cumbum) and the hostel activities thus far managed by the assessee handed over to the first wife (relocated to Chennai).

The ld.AR further submitted that the assessee's family owns 166 acres of land, consisting of Paddy, Grapes & Veg, Mango Farm, Coconut Farm. These lands were purchased by the family over a period of time. The year wise details of land (including) lease held by the Seeman family is summarized below:

Year Name Measurement Village (in acres) 1988 to Seeman/Jayanthi Vayal land (paddy Cumbum / K 2008 Seeman/ Lakshmi/ cultivation 48.10) K Patti other family members From 1997 Jayanthi Seeman Mango Farm 7.17 Cumbum / K K Patti 2012 Seeman and Jayanthi Coconut Farm Cumbum / K Seeman 9.43 K Patti 2012 Seeman and Jayanthi Thottam 89.71 Cumbum / K Seeman K Patti 2013 Seeman and Jayanthi Cardamom Estate Cumbum / K Seeman 12.00 K Patti 1988 to Total land holdings 166.41 acres Cumbum / 2013 of Seeman family K K Patti 770 to 773/Chny/2020 At this juncture, the ld.AR submitted that her husband Mr.P.Seeman was awarded first prize by TN Agricultural Department for paddy yield of 27,350 kg/hectare for the year 1995-96 on 14/08/1996. Further, the VAO has also issued certificate (Page 1 to Page 7 of Paper book) for estimated production of paddy and the same was submitted to the AO at the time of assessment proceedings.

The ld.AR also stated that the assessee had also furnished a letter dated 17/11/2017 (Page 9 Paper book) showing the consolidated agricultural income of Rs.4,11,86,448/- based on the estimation by the Village Administrative Officer of the Revenue Department. As per that the yield per year for double crop was around 3,06,500 Kg and the total Paddy income was estimated to be Rs 4,11,86,448/- for the years 1995-96 to 2011-12.

The Ld.AR submitted that due to the fallout in the family, the first wife of the assessee's husband handed over the cash of Rs.3,39,00,000/-, out of family arrangement, to the assessee at the time of handing over the agricultural activities and the assessee thereafter deposited the same in her account.

The ld.AR of assessee rely on the decision of the Apex Court in the cases of Kale Vs Deputy Director of Consolidation [1976] 3 SCC 119 wherein it was held that 770 to 773/Chny/2020

"the family arrangement may even be oral".

At this juncture, the ld.AR submitted that the assessee's case was selected for scrutiny to verify the agricultural income for the A.Y. 2017-18 and A.Y.2018-19 and the assessments were completed wherein agricultural income offered by the assessee Rs.1,28,72,944/- and Rs.82,66,504/- respectively, were accepted without making any addition under the head "Income from other sources".

Therefore, in support of the claim of accepting the source of cash flow, the ld.AR relied on the decision in the case of Gopal Das Estates & Housing Pvt. Ltd. vs. DCIT (ITAT Delhi) in dated 04/02/2022, wherein it is held that "the AO cannot disallow expenses on his whims & fancies & needs to follow rule of consistency". The ld.AR stated that from the submission made supra, the assessee & the family predominantly derives income from agricultural activities and only due to the family relocation, the cash deposits were received from the first wife and deposited in the assessee's bank account.

Therefore, the deposit amount in the bank during the year under consideration pertain to collection of caution deposit collected from students of the hostel to the tune of Rs.59,00,000/-, bank 770 to 773/Chny/2020 withdrawals of Rs.22,83,000/- and agricultural income of the earlier years and hence there are no unexplained cash deposits.

Hence, from the above facts, the ld.AR submitted that the addition towards the difference in cash flow statement made by the AO is merely on the basis of whims and fancies. The AO made the addition without any justified reasoning and cogent basis. The opinion of the AO is required to be formed objectively with reference to the material on record. The genuineness of the transaction can be decided on merits not on prejudices. The evidence produced by the assessee cannot be brushed aside in a casual manner.

In view of the above submission with supportive documentary evidence the ld.AR submitted that the assessee prays for deletion of the addition made as unexplained cash deposit.

13.4 Per contra, the ld.DR submitted as detailed below: 13.4.1 Caution Deposits: (Rs.59,00,000-Rs.57,60,650): The assessee has not furnished any details regarding receipt of caution deposit to substantiate her claim that the above caution deposit receipt was the source for cash deposit. Moreover, it is worthwhile to mention that in the paper book the assessee has not submitted any fresh evidence or new document apart from the details furnished before the assessing officer during the course of 770 to 773/Chny/2020 assessment proceedings. Hence 'comments' on this ground has not been submitted.

13.4.2 Cash Withdrawal: Rs.22,83,000/-: In the Assessment Order, the AO has stated that with regard to collection of caution deposits the assessee has mentioned only names in the books/receipts. However, no details such as address of the persons, period of stay were provided for cross verification. The ld.CIT(A) in his Order dated 30.07.2020 vide para 9.3 has rejected the ground stating that entry in the balance sheet needs to be substantiated with support of books of accounts and relevant bills and vouchers. Assessee did not furnish the books of accounts and confirmation letters or addresses of the persons to verify the genuineness of the claim of caution deposits.

The ld.DR stated that even in the written submission made before the Hon'ble ITAT which is under consideration, the assessee has failed to establish the nexus between the amount collected as caution deposits and remitted in the bank account. In view of the above the assessee's contention that the caution deposits received are the source for the cash deposits made in the bank account cannot be considered. 770 to 773/Chny/2020 13.4.3 Agricultural income for previous years Rs.3,39,00,000/-: The ld.DR submitted that in the written submission under consideration the assessee has stated that due to fall out in the family, the first wife of the assessee's husband handed over the cash of Rs.3,39,00,000/- out of family arrangement to the assessee at the time of handing over the agricultural activities and the assessee thereafter deposited the same in her account.

In the assessment order vide page 10 the Assessing Officer has made addition of Rs.3,39,89,953/- as discussed below:

"By going through the contradictory statements made by the assessee and Shri.P.Seeman and in the absence of any evidence for having earned agricultural income of Rs.4,11,86,448/- over the years and particularly Rs.3,48,35,000/- during the previous year relevant to the AY.2012-13, the assessee's contention that the source for the cash deposits were made of the agricultural income earned and handed over by Smt.Lakshmi is not accepted and the cash deposits of Rs.3,39,89,953/- for which no source was explained satisfactorily, is treated as unexplained cash u/s.68 of the I.T.Act and assessed to tax under the head 'income from other sources' chargeable to tax at maximum marginal rate." The ld.CIT(A) in his Order dated 30.07.2020 vide para 8.5 has rejected the assessee's ground in respect of claim of Agricultural Income as source for cash deposits stating that the assessee did not produce any lease agreement for having taken the agricultural lands belonging to her family members on lease. Hence agricultural income from the agricultural lands in the name of family members 770 to 773/Chny/2020 cannot be considered in the hands of the assessee. Further on this ground, the ld.CIT (A) has discussed as under:

"Assessee did not furnish the bills/vouchers, evidence for having cultivated the agricultural lands, bills for fertilizers, pesticides etc., details of the persons to whom the agricultural produce was sold or any other evidence for having received the agricultural income". "Assessee did not furnish any evidence for having earned so much agricultural income in earlier years and for having a accumulated the savings out of agricultural income. Hence the rejection of claim of agricultural income of Rs.3,48,35,000/- as the source for cash deposits totalling to Rs.3,78,88,000/- is upheld." Whereas in the sworn statement given before the Investigation authority during the course of survey proceedings Smt.Lakshmi, first wife of Shri.P.Seeman has stated that she did not hand over any cash to Shri.P.Seeman or Smt.Jayanthi Seeman which was quite contrary to the statement admitted by Smt.Jayanthi Seeman.

The ld.DR further stated that it is pertinent to reproduce the disseminated information reported vide letter dated 13.05.2016 in respect of Shri.P.Seeman by the ADIT, Investigation Unit 1, Madurai.

"4. When specifically questioned about sale of movable and immovable properties, vide his answer to question No.5 of the sworn statement recorded on 25-08-2014 Shri.P.Seeman admitted that he sold the house property at No.17, Sadhullah Street, T.Nagar, Chennai for Rs.5.20 Crore to one SLS from Salem. Regarding application of the sale proceedings, Shri.P.Seeman clearly admitted as under: 1 Renovation of the same house which was sold Rs.82,00,000/- 2 Repayment of Mortgage Loan in HDB Bank Rs.88,00,000/- 770 to 773/Chny/2020

3 Purchase of Grape Garden at K.K.Patti, Theni. Rs.94,00,000/- 4 Construction of residential house at Cumbum. Rs.2,56,00,000/- Total Rs.5,20,00,000/- Vide question No.6 of the Sworn Statement recorded Shri.P.Seeman was required to explain the mode of receipt of sale consideration of the above said house property. In his answer Shri.P.Seeman admitted that he received a sum of Rs.4.40 Crore in cash and Rs.60 lakhs by way of demand draft amounting to Rs.5.20 crore. Summons were also issued to Shri.S.Shanmuganathan and Smt.Seethalakshmi who purchased the property jointly. Both the individuals stated that they have purchased the property at a cost of Rs.1,20,00,000/- only. Though these individuals claim to have purchased the property at a cost of Rs.1,20,00,000/- it is to be noted that Shri.P.Seeman not only admitted receipt of sale proceeds at Rs.5,20,00,000/- but has also admitted the application of the said sale proceeds as given in the table above.”

When questioned about proof/evidence if any regarding her claim of having received Rs.3.39 crore in cash, Smt.Jayanthi Seeman vide her answer to question No.5 of the statement recorded on 05-04-2014 stated that she does not have any evidence to prove the receipt of the said cash from Smt.Lakshmi. Moreover, she also stated that she is not aware of the source for Smt.Lakshmi Seeman to generate the said cash of Rs.3,39,00,000/-. 770 to 773/Chny/2020

13.5 We have heard the rival contentions, perused the material available on record, paper book filed by the assessee and gone through the orders of lower authorities.

13.5.1. First ground raised by the assessee is addition made of Rs.3,39,89,953/-: It is admitted fact that the assessee is running a ladies' hostel under the name and style "Saraswathi Bhavanam" and is also engaged in agricultural activities. During the assessment proceedings the assessee has furnished the details of income and expenditure along with the cash flow have been submitted.

The assessee stated that she has submitted the cash flow statement before the lower authorities to explain the source for addition made of Rs.3,39,89,953/- as detailed below and the same has not been accepted: 770 to 773/Chny/2020

- Caution deposit collected Rs. 59,00,000/- - Cash withdrawal from bank accounts Rs. 22,00,000/- - Agricultural Receipts Rs.3,39,00,000/-

- Caution deposit of Rs.59,00,000/- We note that assessee is running ladies' hostels at different locations in Chennai with as many as 120 to 130 rooms containing single, double, triple or dormitory type rooms and received caution deposits during the year from 412 students for which the assessee has submitted the copies of the receipts and have shown the cash register during the course of assessment and the AO has accepted Rs.7,60,650/- as explained based on the rental income offered by the assessee. It is pertinent to note that the assessee has lost further evidence / documents during natural calamity of heavy floods at Chennai as submitted before the AO and that of the ld.CIT(A). Further, in support of her claim to accept the source in the absence of documents due loss of documents in natural calamity, the assessee relied on the decision in the case of CIT vs. Rawatson Engineers Pvt. Ltd. 51 IPR 67, Kolkata Tribunal, wherein it was held that “Disallowance cannot be made based on the failure to provide evidence due to natural calamity". Further, on perusal of preceding assessment orders, we have observed that the AO has accepted the cash outflow toward refund 770 to 773/Chny/2020 of caution deposit of Rs.60,00,000/- claimed by the assessee for the A.Y.2010-11 for the transactions in relation to running of ladies’ hostel, whereas for the impugned A.Y.2012-13 rejected the cash inflow of Rs.59,00,000/- claimed by the assessee. The AO cannot have two different approaches while dealing in receipts and payments separately. Therefore, we cannot countenance the action of the AO taking dual stand for considering the cash outflow and inflow as per his convenience.

In the present facts and peculiar circumstances, relying the decision of the Kolkata Tribunal (Supra), we are of the considered view that the assessee has explained the source of Rs.59.00 Lakhs with supporting evidences and hence we direct the AO to accept the receipts of caution deposit of Rs.59,00,000/- as explained source for cash by setting aside the order of the ld.CIT(A) on this issue.

13.5.2. Cash withdrawn from bank accounts of Rs.22,83,000/- Further, the assessee has explained that the source to the tune of Rs.22,83,000/- has been drawn by herself from the bank account of the business. We note that the said amount has been drawn from Cumbum and T.Nagar branches of the bank account. In this scenario, we are of the view that the AO and that of ld.CIT(A) has erred in rejecting the source of Rs.22,83,000/-. Therefore, in the 770 to 773/Chny/2020 facts and circumstances of the case and relying the decision in the case of ITO Vs Deepali Sehgal, in ITAT Delhi in dated 05.09.2014, wherein it was held that "addition u/s.69 for cash deposits in a bank after the withdrawal is not justified'', we are of the view that the cash withdrawn from the bank accounts by the assessee has to be considered as explained source for cash and hence we set aside the order of the ld.CIT(A) and accordingly we direct the AO to accept the amount of cash withdrawn from the bank as explained source of cash to the tune of Rs.22,83,000/-.

13.5.3. Agricultural receipts - Rs.3,39,00,000/- It is admitted fact that the assessee, her husband, his first wife and children from the first marriage were all farmers and were carrying out agricultural activities since 1988. As stated by the assessee, she is the second wife of Mr.P.Seeman and till the year 2010, the first wife of the Mr.P.Seeman looked after the agricultural activities in Cumbum, Theni District. She (first wife) did not deposit all the money earned out of agricultural activities in the bank account as this would facilitate her to acquire additional agricultural lands as and when they were available at an attractive price. The first wife along with her sons later shifted to Chennai and the assessee & her husband P.Seeman, moved to Cumbum district. Consequently, the 770 to 773/Chny/2020 agricultural activities till 2010 managed by the first wife were handed over to the assessee (relocated to Cumbum) and the hostel activities thus far managed by the assessee handed over to the first wife (relocated to Chennai).

We note that the assessee's family owns 166 acres of land, consisting of Paddy, Grapes & Veg, Mango Farm, Coconut Farm. These lands were purchased by the family over a period of time. The year wise details of land (including lease hold) held by the Seeman family is summarized below:

Year Name Measurement Village (in acres) 1988 to Seeman/Jayanthi Vayal land (paddy Cumbum / K 2008 Seeman/ Lakshmi/ cultivation 48.10) K Patti other family members From 1997 Jayanthi Seeman Mango Farm 7.17 Cumbum / K K Patti 2012 Seeman and Jayanthi Coconut Farm Cumbum / K Seeman 9.43 K Patti 2012 Seeman and Jayanthi Thottam 89.71 Cumbum / K Seeman K Patti 2013 Seeman and Jayanthi Cardamom Estate Cumbum / K Seeman 12.00 K Patti 1988 to Total land holdings 166.41 acres Cumbum / 2013 of Seeman family K K Patti Further, it is pertinent to note that the assessee’s husband Mr.P.Seeman was awarded first prize by TN Agricultural Department for paddy yield of 27,350 kg/hectare for the year 1995-96 on 14/08/1996. Further, the VAO has also issued certificate (Page 1 to 770 to 773/Chny/2020 Page 7 of Paper book) for estimated production of paddy and the same was submitted to the AO at the time of assessment proceedings.

On perusal of records, the assessee had also furnished a letter dated 17/11/2017 (Page 9 Paper book) showing the consolidated agricultural income of Rs.4,11,86,448/- based on the estimation by the Village Administrative Officer of the Revenue Department. As per that the yield per year for double crop was around 3,06,500 Kg and the total Paddy income was estimated to be Rs.4,11,86,448/- for the years 1995-96 to 2011-12.

In this regard, it is gainful to refer the following decision of the Hon’ble Punjab and Haryana High Court in the case of Smt. Kusum Sharma v. Commissioner of Income Tax and another [2008]303 ITR 389 (P&H), wherein their lord ship held as below:

“We have perused the findings recorded by the Tribunal, the gist of which has been referred to above. Learned Counsel for the assessee submits that non-deduction of expenses from the income could be a ground for making a deduction of expenses and recomputation of income but could not be a ground for rejecting the claim of the assessee regarding agricultural income. We are unable to accept this submission. Once the assessee was found to be putting forward her claim which was found to be not genuine, there is no reason why the claim of the assessee should not be rejected. It is a case where the genuine claim in terms of entries in the revenue record was estimated and relief to that extent was granted. The excessive claim made by the assessee was rejected. The view taken by the Tribunal thus cannot be faulted with.” 770 to 773/Chny/2020 The assessee has stated that due to the fallout in the family, the first wife of the assessee's husband handed over the cash of Rs.3,39,00,000/-, out of family arrangement, to the assessee at the time of handing over the agricultural activities and the assessee thereafter deposited the same in her account.

In support of the same, the assessee relied on the decision of the Apex Court in the cases of Kale Vs Deputy Director of Consolidation [1976] 3 SCC 119 wherein it was held that "the family arrangement may even be oral".

At this juncture, we also note that the assessee's case was selected for scrutiny to verify the agricultural income for the A.Y. 2017-18 and A.Y.2018-19 and the assessments were completed wherein agricultural income offered by the assessee of Rs.1,28,72,944/- and Rs.82,66,504/- respectively, were accepted by passing orders u/s.143(3) of the Act, without making any addition under the head "Income from other sources" by rejecting the claim of agricultural income.

Therefore, in the peculiar facts and circumstances of the case, we concur with the reliance of the assessee on the decision of Gopal Das Estates & Housing Pvt. Ltd. vs. DCIT (ITAT Delhi) in dated 04/02/2022, wherein it is held that 770 to 773/Chny/2020

"the AO cannot disallow expenses on his whims & fancies & needs to follow rule of consistency". It is clear from the above, the assessee & the family predominantly derives income from agricultural activities and only due to the family relocation, the cash deposits were received from the first wife and deposited in the assessee's bank account.

13.5.4. Therefore, the deposit amount in the bank during the year under consideration pertain to collection of caution deposit collected from students of the hostel to the tune of Rs.59,00,000/-(supra), bank withdrawals of Rs.22,83,000/- (supra) and agricultural income of the earlier years and hence there are no unexplained cash deposits.

13.5.5. Therefore, in the peculiar facts and circumstances of the case and relying the decision of Smt.Kusum Sharma(Supra), in our considered view, the assessee has established the genuineness of agriculture income earned by furnishing the details of huge land holding of 166 acres and also certificate for estimated yield per acre issued by the VAO. Thus, in our considered view the assessee has established the genuineness of cash deposit with supportive documentary evidences and hence we set aside the order of the ld.CIT(A) and direct the AO to delete the addition of Rs.3,39,89,953/-. 770 to 773/Chny/2020

14.2 Per contra, the ld.DR mentioned that in the paper book the assessee has not submitted any fresh evidence or new document apart from the details furnished before the assessing officer during the course of assessment proceedings. Hence 'comments' on this ground has not been submitted.

14.3 We have gone through the orders of the AO as well as the order of the ld.CIT(A) along with the submissions of the ld.AR. The present addition has been made by the AO is based on the transaction of sale of immovable property. Admittedly the assessee 770 to 773/Chny/2020 is a 50% owner of the property and hence the 50% sale proceeds has been accounted after reducing book value of Rs.300.00 lakhs i.e. Rs.2.40 Crores to the capital account of the assessee. Therefore, we are of the considered view that there is no error in the entries recorded in the capital account and hence, we delete the addition made by the AO by setting aside the order of the ld.CIT(A) and direct the AO to recompute the total income accordingly.

15.2 Per contra, the ld.DR stated that the ld.CIT(A) in his Order dated 30.07.2020 vide para 14.5 has rejected the assessee's ground as discussed below:

"Assessing Officer added only unexplained cash deposits in the bank account and not the cheque deposits and explained cash deposits. Hence the argument of the assessee that because the cash deposits in the bank accounts were already added, the difference in the closing balance cannot be added is not valid. Hence the addition of Rs.29,06,348/- is upheld." 770 to 773/Chny/2020 In view of the above, the above ground does not deserve any merit for consideration.

15.3 We have gone through the details and observed that the assessee’s cash flow has been accepted as explained sources of cash deposit by deleting the addition of unexplained cash deposit and therefore, the unexplained investment of Rs.29,06,348/- added by the AO and confirmed by the ld.CIT(A) needs to be telescoped. Hence, we direct the AO to verify and allow the telescoped amount as explained and recompute the addition accordingly.

16.2 Per contra, the ld.DR stated that the assessee herself has admitted that inadvertently she had omitted to include the interest of Rs.4,31,674/- from Bank of India in the Return of Income. Hence Comments on this ground is not required. Moreover, the assessee has also not pressed the same. 770 to 773/Chny/2020 16.3 We have heard both parties. Since, the assessee has accepted that the interest received from bank has been inadvertently omitted to offer for tax and has not pressed, this ground of the assessee is dismissed.

17.2 The ld.DR submitted that the relief has been given by the ld.CIT(A) in the order dated 30.07.2020, in the giving effect order passed on 07.07.2021 this addition was deleted. Hence Comments on this ground is not required. Moreover, the assessee has also not pressed the same. 770 to 773/Chny/2020 17.3 We have heard both parties. Since, the ld.CIT(A) has given relief and hence the assessee has not pressed this ground, this ground of the assessee is dismissed.

18.2 Per contra, the ld.DR stated that the ld.CIT(A) in his Order dated 30.07.2020 vide para 13.5 has rejected the assessee's ground as discussed below:

“Assessing Officer did not reject the books of accounts but rejected the cash flow statement furnished by the assessee. Hence the argument of the assessee that the addition cannot be made on entries in rejected books of accounts, is rejected.” 770 to 773/Chny/2020 The assessee did not dispute the findings of the assessing officer that the ledger folios were separately maintained 'Saraswathi Bhavanam' and 'Seeman Tutorials'. Hence the additions towards the difference in receipts is upheld.

In view of the above, the above ground does not deserve any merit for consideration.

18.3 We have heard the rival contentions and gone through the material available on record. It is admitted fact that the assessee has been running a ladies’ hostel and offered income from business during the assessment year. We observed that the income from business shown for the impugned assessment year was shown in the profit and loss account for the year ending 31.03.2012 was Rs.2,00,700/- arrived from the business receipts in the form of hostel fees received Rs.18,25,000/- and Seeman coaching center fees of Rs.2,16,500/- after claiming the corresponding expenditure. Therefore, we are of the view that a separate addition of Rs.18,25,000/- (gross collection) made by the AO would lead to double taxation, since the net income from the same has already been offered and accepted by the AO and hence we are setting aside the order of the ld.CIT(A) and direct the AO to delete the addition of Rs.18,25,000/-. 770 to 773/Chny/2020

Whereas, the AO based on the sworn statement recorded from Mr.P.Seeman dated 25/08/2014 adopted sale consideration as Rs.5,20,00,000/- and computed capital gains as under:

Sale Rs.5,20,00,000/- Less: Cost of property + stamp duty Rs.44,00,000 yyyyy (07.02.03) Indexed cost of property (785/447 * Rs.77,27,06/- Long Term Capital Gain Rs.4,42,72,931/- 50% thereof relating to the assessee Rs.2,21,36,465/- However, Mr.P.Seeman has retracted the statement immediately and the same was not considered by the AO. The AO made the addition merely based on the statement recorded by Mr.P.Seeman 770 to 773/Chny/2020 u/s.132(4) without any corroborating evidence. It is to be noted that the statement made by Mr.P.Seeman is not binding on the assessee.

Without prejudice to the above, though a statement recorded u/s.132(4) can be treated as evidence for making an addition, however, without corroborative evidence, addition cannot be made on a standalone basis on the statement of the assessee. In this regard, the following cases are relied upon by the assessee:

- DCIT v. Sudhir Kumar Agarwal (ITAT Indore), in dated 18/5/2023 - Pullangode Rubber Produce Co Ltd Vs. State of Kerala (1973) 91 ITR 18 (SC) - Nagubhai Ammal Vs.B.Shayama Rao (AIR 1956 SC 593) - Sarwan Singh Ratan Singh v. State of Punjab (MANU/SC/0038/1957) (AIR 1957 SC 637) Further, ITAT Chennai in Vijay M Pai Vs. DCIT (ITA No. 3064/Chny/2019) dated 21/09/2022, has held that “undisclosed income allegation is unsustainable as during search no incriminating material was found in respect of on-money receipt and AO also failed to establish the receipt of the same”. The ld.AR further submitted that it is wrong on the part of ld.DR to compare the market value of a property situated in one of the main roads of T.Nagar with the a property situated in a small lane in T.Nagar viz., Sadhullah Street. The Assessee submits that the value determined by SRO at Rs.1,20,00,000/- reflects the real value of the property in the said locality and by no stretch of imagination 770 to 773/Chny/2020 that can be challenged. In this regard the assessee wishes to place reliance on the following cases:

"No addition can be made on the basis of market value of the property without any positive material to prove that the consideration was higher than the documentary value" - as held in Vishnu Prasad Maharwal Vs. DCIT (2014) 50 taxman.com 9. "No addition on the basis of statement of seller admitting receipt of on money when they were not cross examined when other evidence not forthcoming in support of on money" - as held in the case of PCIT Vs. Kanubhai Patel (2017) 79 taxmann.com 257. (Guj). The Ld.AO failed to grant exemption u/s.54 under the pretext that the construction expenses were made from Mr.P.Seeman's bank account. However, in this regard the assessee wishes to submit that the Mr.P.Seeman purchased the land and the assessee had incurred construction expenses for superstructure. Details of payments made towards construction is given in Page 25 to Page 32 of paper book along with bank statement to evidence the payments made. It should be noted that out of the total expenses incurred, wages were paid to labourers on a weekly basis and were incurred in cash as they were mostly temporary labourers.

Hence, the assessee had rightfully claimed exemption u/s.54 at the time of filing the return of income.

In view of the foregoing submission and the case laws relied upon by the assessee, the ld.AR prayed for deleting the additions. 770 to 773/Chny/2020 19.2 Per contra, the ld.DR asserting the action of the ld.CIT(A) stated that the ld.CIT(A) in his Order dated 30.07.2020 vide para 11.5 has rejected the assessee's ground for the reason that the sources stated by the assessee for cash deposit were proved as wrong which in turn proved that the reason based on which Shri.P.Seeman retracted the statement, is wrong. Hence the retraction is not valid by relying the case law in [2011] 14 taxmann.com 108 (Ahmedabad) Kantilal C Shah vs ACIT, Ahmedabad.

Where the assessee has retracted from his earlier statement without demonstrating any evidence to establish that statement recorded earlier was incorrect. Therefore, addition made on statement recorded u/s.132(4) has to be upheld.

The ld.DR stated that in the present appeal the basis given for retraction was proved as wrong. Hence, respectfully following the above stated case law the computation of Capital Gains taking the sale consideration as Rs.5.20 Crores is upheld.

As observed by the Assessing Officer (i) As per Municipal approval (ii) valuation report the building belongs to Shri.Seeman and (iii) payments for construction expenses were made from 770 to 773/Chny/2020 Shri.P.Seeman's Bank Account. Hence the ld.DR prayed for confirming the rejection of the deduction claimed u/s.54.

In view of the above and the title of the new asset is not in the name of the assessee, the above ground does not deserve any merit for consideration.

19.3 We have heard the rival contentions, perused the material available on record and gone through the orders of the lower authorities below. It is admitted fact that the assessee is 50% of the property sold and has offered capital gain by claiming the deduction u/s.54 of the Act. The assessee has shown a sale consideration of Rs.60.00 Lakhs (50%) and deducted corresponding cost of acquisition increased by cost inflation index and also claimed deduction u/s.54 of the Act. The AO has brought to tax Rs.2,21,36,465/- being 50% thereof relating to the assessee, based on the sworn statement of the assessee’s husband shri.Seeman (which has been later retracted by Shri.Seeman) treating the sale consideration as Rs.5.20 Crores. We note that the AO has not found any incriminating material or cogent evidence to confirm the sale consideration of Rs.5.20 Crores against the sale value recorded in the registered sale deed of the immovable property jointly sold by Shri.Seeman along with the assessee. Therefore, in our view the 770 to 773/Chny/2020 ld.CIT(A) has erred in confirming the addition of revised computation of capital gain treating the sale consideration as Rs.5.20 Crores.

We concur with the assessee’s claim which is supported by the following decisions of the Hon’ble Supreme court and other court:

- Pullangode Rubber Produce Co Ltd Vs. State of Kerala (1973) 91 ITR 18 (SC) - DCIT v. Sudhir Kumar Agarwal (ITAT Indore), in dated 18/5/2023 - Nagubhai Ammal Vs.B.Shayama Rao (AIR 1956 SC 593) - Sarwan Singh Ratan Singh v. State of Punjab (MANU/SC/0038/1957) (AIR 1957 SC 637) Further, the coordinate bench of ITAT Chennai in Vijay M Pai Vs. DCIT (ITA No. 3064/Chny/2019) dated 21/09/2022, has held that “undisclosed income allegation is unsustainable as during search no incriminating material was found in respect of on-money receipt and AO also failed to establish the receipt of the same”. In the peculiar facts and circumstances of the case and respectfully following the decisions precedents(supra), we are of the considered view that the revised computation of capital gain is unsustainable as there is no incriminating material for considering the sale consideration as Rs.5.20 crores and hence we direct the AO to consider the sale consideration as Rs.60.00 Lakhs (50% of Rs.1.20 crores) as claimed by the assessee in her return of income. 770 to 773/Chny/2020 In respect of the deduction claimed by the assessee u/s.54 of the Act, since the assessee has filed details of payments made towards construction of new property along with the bank statement evidencing the said payments, we deem it appropriate to remit this issue back to the file of the AO. We direct the AO to verify the payments and allow the deduction u/s.54 in accordance with law.

: Assessment Year: 2013-14 21. The assessee filed the following concise Grounds of Appeal

1. The ld. CIT (A) has erred in sustaining the order of the ld. AO as the notice for reassessment was initiated without any fresh tangible material/evidence available to support the reassessment proceedings.

2. The ld. CIT (A) has erred in confirming the order of ld. AO without accepting the opening cash balance of Rs.1,50,90,760/- at Cumbum, instead, mentioned the opening balance as Rs.10,58,799/- based on the premise that when the closing balance for AY 2012-13 was not proved, opening balance cannot be accepted.

3. The ld. CIT (A) has also erred in affirming the order of the ld. AO in rejecting the claim of agricultural income of Rs.46,07,813/- duly accounted and complied with the provisions of Section 2(a) of the IT Act. The Id. CIT (A) failed to note that the assessee & her entire family has been doing agricultural activities over several years in Cumbum, Theni District, owning nearly 166 acres of land.

Sl.No Details Amount Rs. Income admitted in return of income 2,57,140 Additions: 1 Unexplained cash deposits u/s. 69 1,60,46,854 2 Interest income omitted to be admitted 2,12,413 3 Disallowance of rent payment 16,03,120 Assessed Income 1,81,19,527 23. Unexplained cash deposits u/s. 69 : Rs.1,60,46,854/- During the course of assessment proceedings, the assessee filed cash flow statement which was not accepted by the ld.AO and the same was recast as given below: 23.1 Net Agricultural Income: Rs. 46,07,813/-: During the year, the assessee earned a net agricultural income of Rs.46,07,813/- (being Agricultural Income of Rs.67,46,617/- minus Agricultural expenses of Rs.21,38,804/-). 770 to 773/Chny/2020 At the outset, the AO considered Rs.3,00,000/- Agricultural Income during the course of assessment and a further sum of Rs.12,00,000/- was considered while submitting the report (AO report dated 04/08/2022). Thus, it is evident that the AO only allowed an adhoc value of Rs.15,00,000/- as agricultural income.

The ld.AR stated that the assessee had submitted bills and vouchers relating to the same at the time of assessment proceedings. Copy of bills for major portion of agricultural income is given in Page 51 to Page 100 of Paper book. From this it is clear that the assessee earned agricultural income to an extent of Rs.67.00 lacs and thereby substantiated the cash outflows.

It is further submitted by the ld.AR that the assessee's family owns 77 acres of land consist of paddy and mango. These lands were purchased by the family in various years from 1988. Further, the assessee purchased additional 89 acres of land (thottam lands) during the year 2012-13.

The ld.AR stated that the assessee and her husband are having lands in Cumbum valley which is one of the most fertile regions of Tamil Nadu which contributes nearly 85% of grapes production in the State apart from that the crops like paddy, coconut, ground nuts and various kinds of fruits and vegetables are being cultivated in the 770 to 773/Chny/2020 area. Supply of paddy and purchase of land and cardamom estate are adequate proof of agricultural income.

The ld.AR submitted that while disallowing the claim of agricultural income, the AO has to verify the details by making necessary inquiry about the correctness of the claim of the assessee. Hence without conducting inquiry, addition was made on the basis of conjectures and surmises. The AO has not brought on any material on records to rebut the claim of the assessee. In view of the above, the ld.AR submitted that the agricultural income admitted may kindly be accepted. In this regard, the assessee relies on decision held in the case of Kuldeep Katiyar vs ACIT ITAT Delhi dated 17/05/2022, wherein it was held that "the addition was made purely on the basis of conjectures and surmises. Such action is not permissible under law". The year-wise details of land (including lease) held by the Seeman family is summarized below:

Year Name Measurement Village (in acres) 1988 to Seeman/Jayanthi Vayal land (paddy Cumbum / K 2008 Seeman/ Lakshmi/ cultivation 48.10) K Patti other family members From 1997 Jayanthi Seeman Mango Farm 7.17 Cumbum / K K Patti 2012 Seeman and Jayanthi Coconut Farm Cumbum / K Seeman 9.43 K Patti 2012 Seeman and Jayanthi Thottam 89.71 Cumbum / K Seeman K Patti 2013 Seeman and Jayanthi Cardamom Estate Cumbum / K 770 to 773/Chny/2020

Seeman 12.00 K Patti 1988 to Total land holdings 166.41 acres Cumbum / 2013 of Seeman family K K Patti Further, the ld.AR submitted that the assessee's husband Mr. P Seeman was awarded first prize by TN Agricultural Department (Refer Page 101 of Paper Book) for paddy yield of 27,350 kg/hec for the year 1995-96 on 14/08/1996. Further, the VAO has also issued certificate (Refer Page 103 to Page 108 of Paper Book) for estimated production of paddy and the same was submitted to the AO at the time of assessment proceedings.

It is further submitted that the assessee had purchased 89 acres of agricultural lands in her name and in the name of her spouse and son during the year 2011-12.

The assessee has also furnished copies of chitta and adangal based on Revenue records. The AO has adopted a meagre amount of Rs.15,00,000/- for the year, whereas, for the purpose of outflow, he has considered Rs.21.00 lakhs as agricultural expenses, which is contradictory. It is clear that the AO has recasted the cash flow statement according to his own whims and fancies.

The ld.AR stated that the assessee's case was selected for scrutiny to verify the agricultural income for the A.Y.2017-18 and A.Y.2018- 19 and the assessments were completed wherein agricultural 770 to 773/Chny/2020 income offered by the assessee Rs.1,28,72,944/- and Rs.82,66,504/- respectively, were accepted without making any addition under the head income from other sources by accepting the above said agricultural income declared by the assessee in her return of income. (Refer Page 109 to Page 122 to Paper book).

Hence, from the above facts, it is noted that the AO made the addition purely on the basis of whims and fancies, which is not sustainable in law as held in the following decisions:

"AO cannot disallow expenses on his whims & fancies & needs to follow rule of consistency"- Gopal Das Estates & Housing Pvt Ltd vs. DCIT (ITAT Delhi) in dated 04/02/2022. "No addition on cash deposits can be made u/s 69 once duly explained with cash flow statement" - Smt. Renukaben Umedsinh Parmar, vs. The Income Tax Officer, Ward-3, Navsari, /TAT Surat Bench (LT.A No.2493/AHD/2015) pronounced on 08.03.2021. "If the assessee has explained the source of deposit in bank based on the cash book, addition cannot be made u/s 69 of the IT Act" -A CIT v. Dr. Anil Kumar Verma (ITAT Agra) in /TA no.274/Agra/2013 dated 4/9/2019. "No addition u/s 69A when income source adequately explained- Ram Kishan vs. ITO (ITAT Delhi) in dated 22/05/202 3. "Addition of unexplained investment u/s 69 untenable as source of investment duly explained"- DCIT vs. Sukhbir Shokeen (/TAT Delhi) in ITA no.1477/Del/2020 dated 23/05/2023. In light of the above arguments the Ld.AR prayed for deleting the addition in interest of justice. 770 to 773/Chny/2020 23.2 Per Contra, the ld.DR submitted that the assessing officer has made addition without considering the assessee's the claim of agricultural income with the following discussion:

"The assessee did not produce any books of accounts, vouchers, the details of crop planted, the extent of each crop cultivated etc. The assessee has submitted vide letter dated 19.12.2017 that she is not maintaining any separate books of accounts for agricultural activities and it is not known how the assessee could have calculate the agricultural income. Since the assessee has not produced any books of accounts/vouchers regarding agricultural operations carried out by the assessee, the agricultural income of the assessee for the previous year relevant to the A.Y.2013-14 is estimated at Rs.3,00,000/- based on the Chitta/Adangal which reveals the extent of land cultivated and the nature of crop cultivated. Hence, agricultural income of Rs.3,00,000/- is taken as a source for cash deposits into bank account during the previous year relevant to the A.Y.2012-13. A sum of Rs.60,00,000/- has been shown under inflow of cash with the narration "Transferred to Agri.Loan(Cumbam). The assessee has not furnished any details regarding this transaction. It is not clear as to how an amount transferred to Agri.Loan (an outgoing amount) can be shown under inflow of cash. In the absence of any details, this sum of Rs.60,00,000/- is not taken into account in computing the inflow of cash for the FY.2012-13 In the cash flow statement, a sum of Rs.1,15,80,221/- is said to have been transferred from Cumbam A/c. It is not clear what is Cumbam A/c. Merely stating "Amount transferred from Cumbam" is a vague explanation and hence the same is not accepted as an inflow of cash in the absence of any details. Entries regarding agricultural expenses, amount transferred to Chennai. Closing cash balance (Cumbum) etc. are not found in the register produced by the assessee relating to the A.Y.201314. It is not clear as to how the assessee is admitting closing cash balance of Rs.62,97,271/- when there no separate books of accounts were produced for Cumbam. Since no entries are found in respect of these transactions in the Register maintained for receipt/payment of cash and produced by the assessee, the same are not taken into consideration and genuineness/correctness of these payments have not been determined." 770 to 773/Chny/2020 The ld.CIT(A) in his Order dated 30.07.2020 vide para 7 has rejected the assessee's ground as discussed below:

"7.1 The assessee admitted agricultural income of Rs.46,07,813/- but did not furnished the details regarding the crops cultivated, extent of land cultivated, income and expenditure a/c with supporting vouchers etc. Hence the Assessing Officer estimated the agricultural income of the assessee for A. Y.2013-14 at Rs.3,00,000/- based on the Chitta/ Adangal. 7.2 In the grounds of appeal the assessee contested that the Agricultural Income of Rs.46,07,813/represents Income from existing lands of 56 acres, 108 acres purchased during the year 2011-12 and the cardamom estate purchased during the year. 7.3 In the Remand Report the Assessing Officer stated- "On verification of the Chitta Adangal filed by the assessee it is seen that most of the land is in the name of Shri. P. Seeman and most of the land held by the assesssee was only vacant and barren land. Assessee did not produce any bills/ vouchers regarding agricultural income earned during the previous year relevant to the A.Y.2013-14 and hence there is no change in the agricultural income estimated at Rs.3,00,000/- " 7.4 In the reply to the Remand Report the A.R. stated that the A.O. had not called for the bills/vouchers. 7.5 Assessee did not produce any lease agreement for having taken the agricultural land belonging to Shri. Seeman on lease. Hence agricultural income from the agricultural lands in the name of Shri Seeman cannot be considered in the hands of the assessee. Assessee did not furnish the bills/vouchers, evidences for having cultivated the agricultural lands, bills for fertilizers, pesticides etc, details of the persons to whom the agricultural produce was sold or any other evidence for having received the agricultural income. Hence the estimation of agricultural income at Rs.3,00,000/- is upheld." In the earlier report submitted on 04.08.2022, the then assessing officer has stated that, "considering the agricultural income admitted by the assessee for the earlier assessment years, it is reasonable to 770 to 773/Chny/2020 consider the agricultural income at Rs.15,00,000/- in respect of A.Y.2013-14, In the written submission filed before the ITAT, 'A' Bench, Chennai the Assessee has stated that, "While disallowing the claim of agricultural income, the AO has to verify the details by making necessary inquiry about the correctness of the claim of the assessee. Hence without conducting inquiry, addition was made on the basis of conjectures and surmises. The AO has not brought on any material on records to rebut the claim of the assessee. In view of the above, the agricultural income admitted may kindly be accepted."

The ld.DR submitted that the assessee’s contention is not acceptable since the documents attached in the paper book are "self- made vouchers" without complete address and details regarding mode of receipt. In other words, in most of the above self-made vouchers mode of receipt has not been specifically mentioned to establish that the amounts were received in cash. Apart from the above it is pertinent to mention that all the above self-made vouchers were in the name of Shri. Seeman and not in the name of the assessee. Further the certificate issued by the VAO relates to A.Y.2015-16 770 to 773/Chny/2020 which was also issued in the name of Shri. Seeman and not in the name of Assessee.

Considering the discrepancy stated above and based on the documents and materials furnished, the Assessing Officer vide report that 04.08.2022 has given relief in respect of agricultural income as source for cash deposits during the year 2012-13 relevant to the A.Y.2013-14 to the extent of Rs.15,00,000/- as against to Rs.3,00,000/- considered in the scrutiny Assessment and hence ld.DR prayed for dismissing the grounds of appeal of the assessee.

23.3 Since, the facts and issues are identical in the appeal filed by the assessee for the A.Y.2012-13 vide appeal to the facts and issues of the appeal of the assessee for the A.Y. 2013-14, the findings and decision given in para No 13.5.5 (supra) thereon applicable mutatis mutandis to this issue in and hence the grounds of appeal of the assessee are allowed.

24. Interest income omitted to be admitted: Addition made - Rs.2,12,413/-: The assessee has received an interest of Rs.2,12,413/- from Bank of India, T Nagar branch, Chennai. However, by inadvertence, the 770 to 773/Chny/2020 interest was not included in the return of income. Hence this ground is not pressed.

The assessee has not pressed this ground of appeal and hence this ground is dismissed as not pressed.

25. Disallowance of rent payment: Addition made - Rs.16,03,120/-: During the course of appellate proceedings before the ld. CIT (A), the assessee submitted all the details in respect of rent payment. The ld. CIT(A), in his order in (A)-2/2017-18 dated 30/7/2020, directed the AO to verify the genuineness of the payment towards rent and allow the same, if the same is genuine. After verifying the rent payment details, the Id. AO has considered the same while passing the giving effect order on 07/07/2021. (Refer Page 225 to Page 230 of Paper book). Hence, this ground is not pressed.

The assessee has not pressed this ground of appeal and hence this ground is dismissed as not pressed.