SHASHI YADAV,GURGAON vs. ITO,WARD 4(2),GURGAON, GURGAON

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as 'the CIT(A)') dated 27.02.2024, for assessment year 2011-12.

The solitary issue in appeal is addition of Rs.32,07,320/- made on account of unexplained cash deposits in the bank account of the assessee.

Shri M.R. Sahu, appearing on behalf of the assessee submits that the assessee had deposited Rs.32,57,000/- in her bank account with Corporation Bank. The assessee explained before the authorities below that the source of cash (AY 2011-12) deposits were from earlier withdrawals and sale of agricultural land. The asseseee had furnished copies of the registered sale deeds before the CIT(A). However, the CIT(A) disbelieved the same and rejected assessee submissions solely on the ground that the assessee had sold the land immediately after purchase on the same date. The assessee had also furnished bank statements to show that the amount deposited in the bank account matches with the sale considered as recorded in the sale deeds.

Per contra, Shri Sanjay Kumar representing the department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. The ld. DR reiterating findings of the CIT(A) stated that it is highly improbable that a person would sell the land immediately after the purchase on same date.

Both sides heard, orders of the authorities below examined. The Assessing Officer (AO) made addition of Rs.32,70,320/- in respect of cash deposits in the bank account of the assessee and Rs.13,320/- on account of undisclosed interest income. Since, the assessee failed to respond to the notices issued by the AO, the AO completed assessment u/s. 144 of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’). In First Appellate proceedings, the assessee furnished copies of sale deeds (five) all dated 27.10.2010 to substantiate purchase of agricultural land and sale of same land to four different parties on same date vide four separate registered sale deeds. A perusal of sale deed at page no. 8 to 15 of the paper book reveals that the assessee had purchased 13 Kanal, 10 Marlas of agricultural land for a total consideration of Rs.55,69,000/-. The assessee had paid said consideration by way of cheque no. 461398 amounting to Rs.50,00,000/- drawn on Corporation Bank, Maruti Kunj, Bhondsi Branch, Gurgaon and Rs.5,69,000/- was paid in cash. On the same very date the assessee sold part of aforesaid land to four different (AY 2011-12) persons vide registered sale deeds of even date i.e. 27.10.2010 The assessee had received sale consideration for sale of land as under:- Registered sale deed no. Area of land sold Consideration(Received in cash) 2926 1 Kanal, 15 Marla Rs.7,22,000/- 2925 3 Kanal, 10 Marla Rs.14,44,000/- 2928 1 Kanal, 15 Marla Rs.7,22,000/- 2927 1 Kanal, 15 Marla Rs.7,22,000/- Total 8 Kanal, 15 Marla Rs.36,10,000/- 6. The amount received by assessee on aforesaid sale of land was allegedly deposited by the assessee in her bank account with Corporation Bank. The assessee has filed cash flow statement for the Financial Year 2010-11 at page no. 40A of the paper book. A perusal of the cash flow statement reveals, the source of receipts and the deposits in the bank account/withdrawals. After examining the documents placed on record I am satisfied with the explanation furnished by the assessee regarding source of cash deposits. The assessee has been able to substantiate nexus between cash sales consideration received on sale of land and cash deposits in the bank. Thus, addition of Rs.32,57,000/- is directed to be deleted.