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Facts
The assessee, an individual engaged in agricultural activities, did not file an income tax return for AY 2017-18. The Assessing Officer (AO) initiated reassessment proceedings under Section 147, making additions for unexplained cash deposits and commission income. The CIT(A) confirmed these additions.
Held
The Tribunal held that the cash deposits were explained as sale proceeds from agricultural activities, duly recorded in the books of accounts and accepted by revenue authorities in prior assessments. However, the addition for commission income was confirmed due to lack of evidence showing it was part of agricultural income.
Key Issues
Whether cash deposits in a bank account are unexplained money under Section 69A, and whether estimated commission income is part of agricultural income.
Sections Cited
250, 147, 144B, 148, 69A, 143(3)
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Income Tax Appellate Tribunal, B BENCH,
Before: DR. MANISH BORAD & SHRI VINAY BHAMORE
Year: 2017-18 Vikas Maruti Nalawade, ITO, Ward-1, Sangli Vikas Hitech Nursary, Sangli Islampur Road, Near Sootgirni Vs. Tung, Sangli-416301 Maharashtra PAN-ALPPN6432M अपीलेंर्थी / Appellant प्रत्यर्थी / Respondent Assessee by: Shri Pramod S Shingte Department by: Shri Amit Bobde-CIT Date of hearing: 09-12-2025 Date of Pronouncement: 16-12-2025 आदीश /ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER :- This appeal at the instance of assessee is directed against the order of Ld. CIT(A) NFAC, Delhi passed u/s 250 of the Income-tax Act, 1961 dated 05.03.2025 which is arising out of assessment order passed u/s 147 r.w.s. 144B of the Act dated 29.03.2022.
Assessee has raised following grounds of appeal:-
1. On the facts and circumstances of the case and in law, the assessment order, having being passed without following the principles of natural justice, as narrated in the statement of facts, the same is bad in law and hence needs to be quashed.
The appellant prays that it be held accordingly.
2. On the facts and circumstances of the case and in law the CIT(A), NFAC erred in confirming the addition made by the Assessing Officer, NaFAC, Delhi (hereinafter referred to as the 'AO) u/s 69A of Rs.1,55,73,900/- representing cash deposits in various bank accounts other than current account of the appellant, ignoring the submissions of the appellant in this respect.
The appellant prays that the AO be directed to delete the addition.
3. On the facts and circumstances of the case and in law the CIT(A), NFAC erred in confirming the action the AO of making estimated addition of Rs. 10,445 being 8% of the gross contracting receipts of Rs. 1,30,551 even though the same formed part of agricultural income of the appellant.
The appellant prays that the AO be directed to delete the addition.
The appellant craves leave to add to, amend, alter, delete or modify all or any of the above ground of appeal or raise a new ground of appeal before or at the time of hearing.
Brief facts of the case are that the assessee is an individual and did not file return of income for A.Y. 2017-18. Ld. Assessing Officer (AO) based on the data available in AIMS on observing certain financial transactions regarding cash deposit in current bank account/saving bank account/purchase of motor vehicle/payment to Contractor and cash withdrawal from current account, issued notice u/s 148 of the Act for carrying out the reassessment proceedings u/s 147 of the Act. The assessee furnished return in compliance to the notice u/s 148 of the Act declaring total taxable income at Rs. 7,960/- and Agricultural income at Rs. 1,54,54,912/- In the course of the reassessment proceedings various details called for by the Ld. AO were furnished based on which Ld. AO was satisfied with regard to the submissions made except was not convinced that even when the assessee is having the Current Bank Account why the assessee has deposited cash of Rs. 1,55,73,900/- in the saving Bank Account. Ld. AO concluded the assessment proceedings making addition u/s 69A of the Act for unexplained money of Rs. 1,55,73,900/- and also addition of 10,445/- on account of undisclosed commission income. Income assessed at Rs. 1,55,92,305/- Aggrieved assessee preferred appeal before Ld. CIT(A) and filed the submissions on 23.01.2025 and 08.02.2025. However Ld. CIT(A) though considering these submissions has dismissed the assessee’s appeal observing as follows:-
2. The grounds of appeal object to addition of Rs.1,55,73,900/- being cash deposits in various bank a/c of the appellant. On examination of details available on record, it is noticed that during the F.Y.2016-17 relevant to A.Y.2017-18 the assessee had made cash deposits to the tune of Rs. 1,55,73,900/- in his account other than current bank accounts. During the course of assessment proceedings, the assessee was asked furnish the explanation of the sources of said cash deposits along with corroborative supporting documents. The assessee failed to furnish any details despite providing sufficient opportunities. In the absence of any concrete evidence and details of sources of cash deposits with supporting documents, the sources of cash deposits to the tune deposits cash of Rs. 1,55,73,900/- remained unexplained. The assessee is found o be the owner of the money appearing in bank account but has not offered any acceptable and cogent explanation regarding the source of such money found in his bank account. The scheme of Section 69A of the Income-tax Act, 1961, would show that in cases where the nature and source of acquisition of money, bullion, etc., owned by the assessee is not explained at all, or not satisfactorily explained, then, the value of such investments and money or value of articles not recorded in the books of accounts may be deemed to be the income of such assessee. The provisions of section 69A of the Act treat unexplained money, bullion etc., as deemed income where the nature and source of investment, acquisition as the case may be have not been explained or satisfactorily explained. Therefore, in these cases, the source of which is not known; Section 69A of the Act in view of the scheme of those provisions. In the light of above points, cash deposit of Rs. 1,55,73,900/- should be treated as unexplained Money u/s. 69A of the Income tax Act 1961 added to the total income and the same is confirmed.
3. The assessee received commission receipt of Rs. 1,30,551/- and the same is not disclosed in his return of income. During the assessment proceeding the assessee was asked to furnish details of commission receipts. But the assessee has not replied. Therefore, 10,445/- i.e. (8% of the total contract receipt of Rs. 1,30,551/-) is added to the total income of the assessee. The addition of Rs. 10,445/- is confirmed.
4. The appeal filed by the assessee is dismissed.
Aggrieved assessee is now in appeal before this Tribunal.
Ld. Counsel for the assessee made detailed submissions referring to the Paper Book running into 485 pages and submitted that the assessee is mainly engaged in Agricultural Activities of growing plants/flowers/shed nets and Play Houses. Assessee owns approximately 30 acres of agricultural land and has also taken 14 acres of agricultural land on lease. He submitted that proper Books of accounts are maintained. Income from agricultural activities is shown in the Profit and Loss account filed on Paper Book page 378 and 379 which shows that the assessee has earned agricultural income of Rs. 1,54,54,912/- Ld. Assessing Officer (AO) has also accepted the agricultural income declared by the assessee in its income tax return. Gross turnover of the assessee is 13.01 crores. The alleged cash deposit in the saving Bank account is part of the gross sale proceeds. Reference made to the cash book placed on record i.e. the cash deposit entries in the saving bank account. Reference also made to the certificate of the CA certifying that the alleged cash deposits in the saving bank account are part of the sale proceeds. He also submitted that under similar set of facts and the nature of transactions, the assessment 143(3) of the Act have been passed for A.Y. 2018-19 accepting the agricultural income declared by the assessee. He also referred to the submissions made before the Ld. AO as well as Ld. CITA). However Ld. CIT(A) has not taken them into consideration and also submitted that the addition of Rs. 10,445/- made by the AO for assuming commission income is also declared and the same forms part of agricultural income.
On the other hand Ld. Departmental Representative (DR) supported the order of the Ld. AO and submitted that Ld. CIT(A) has not referred to any details filed by the assessee. Secondly he stated that when the assessee was having Current Account why the cash was deposited in saving Bank account.
We have heard rival contentions and perused the record placed before us. Assessee is aggrieved with the finding of Ld. CIT(A) confirming the addition of Rs. 1,55,73,900/- made by AO invoking section 69A of the Act for the alleged unexplained cash deposit in the saving bank account by the assessee. Secondly the AO made addition of Rs. 10,445/- for undisputable commission income. Apropos to ground No. 2 regarding addition u/s 69A of the Act of Rs. 1,55,73,900/-, we observe that the assessee is mainly engaged in the agricultural activities and earns income there from. Gross agricultural produce sales turnover from sale of various agricultural produce is declared at approx. 13.01 crores. Details of the expenditure incurred for earning agricultural income are duly recorded by the assessee in the books of accounts regularly maintained. Ld. AO has also not doubted the genuineness of agricultural income declared by the assessee. The impugned addition has been made by the Ld. AO for doubting the source of alleged cash deposit in the saving bank account.
During the course of hearing Ld. Counsel for the assessee has submitted that the assessee is a well known Agriculturalist and has been awarded by various organizations for growing plants/flowers by tissue culture procedures and following modern technology for growing plants and is sent to various Villages and for the ease of business. Business is carried out by assessee under the sole proprietorship concern M/s Vikas Hi-Tech Nursery. The assessee has carried out the business transaction for earning the agricultural income from various bank accounts run by him including the current account, Co-operative bank Account, Term Loan Account and saving bank account held with various banks including Ashta People Co-operative Bank.
During the course of hearing, Ld. Counsel for the assessee has referred to the cash book as well as the Bank Statement and has successfully demonstrated that the cash deposit in the alleged saving bank account are duly recorded in the books of account M/s Vikas Hi-Tech Nursery. Reference has been also made to the certificate issued by the CA Shri Khire Khandekar and Kirloskar dated 28.03.2022 who has been certified that the alleged cash sum of Rs. 1,55,73,900/- has been deposited out of sale proceeds of the nursery. For reference the certificate is reproduced below:-
10. On going through the above Certificate and also on test checking of cash deposit entries in the saving bank account with the contra entries reflecting in the cash book, we find that the source of alleged cash deposit is from the cash available in the cash book regularly maintained by the assessee and the source of such cash is from the sale proceeds of the agricultural produce effected during the year. The contentions for Ld. Counsel for the assessee also deserves to be accepted because the Ld. Assessing Officer (AO) in the subsequent assessment year has passed the assessment order u/s 143(3) of the Act, wherein also similar type of transactions took place through the Current account, Saving Bank Account and Loan Account and agricultural income has been accepted.
Since we have examined the facts of the case and also observed that the assessee had made all the required submission before Ld. CIT(A) through online mode and the details of the same are available in the Paper Book at page No. 257 to 362 alongwith the attachments, we do not find it necessary to burden the assessee and department with one more round of appellate proceeding. Under these given facts and circumstances we find that the impugned addition of Rs. 1,55,73,900/- u/s 69A of the Act is uncalled for as the source of alleged cash deposit is from the sale proceeds of agricultural activities getting carried out and duly recorded in books of accounts accepted by the Revenue authority and the genuineness of agricultural income also stands accepted by the revenue authorities. Finding of Ld. CIT(A) on this issue is set aside and ground No. 2 raised by the assessee is allowed.
12. So far as ground No. 3 regarding addition of Rs. 10,455/- is concerned Ld. AO based on the information appearing in Form 26AS has observed that the assessee has received amount of Rs. 1,30,551/- and has estimated the income @ 8% thereby making addition of Rs. 10,455/- In the grounds of appeal assessee has only submitted that the gross contracting receipts of Rs. 1,30,551/- is part of the agricultural income. We however on perusal of the Profit and Loss account find that no commission income for sale of agricultural produce is shown. Therefore in absence of any creditable evidence demonstrating that the commission income is included in the gross turnover, we fail to find any infirmity in the finding of Ld. CIT(A) confirming the addition of Rs. 10,445/- Ground No. 3 raised by the assessee is dismissed. Remaining grounds are general and consequential in nature and needs no adjudication.
In the result, appeal of the assessee is partly allowed.
Order pronounced on this 16th day of December, 2025.