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Facts
The assessee, an individual agriculturist, declared agricultural income and income from other sources. The Assessing Officer (AO) made an addition for unexplained cash deposits of Rs. 11.00 lakh under Section 68 of the Income Tax Act, 1961. The CIT(A) confirmed this addition.
Held
The Tribunal held that while the proof of agricultural income was in the name of the assessee's brother, the genuineness of the agricultural income earned by the assessee was not disputed. Considering the agricultural income as a potential source, the Tribunal granted a partial relief.
Key Issues
Whether cash deposits in bank accounts can be treated as unexplained under Section 68 when the assessee has agricultural income, even if proof is in a third party's name?
Sections Cited
147, 144B, 68, 148, 69
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Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertaining to A.Y. 2013-14 is directed against the order dated 19.02.2025 of National Faceless Appeal Centre, Delhi arising out of Assessment Order dated 16.09.2021 passed u/s.147 r.w.s.144B of the Income Tax Act, 1961 ( in short ‘the Act’).
Assessee has raised following grounds of appeal :
“1. On the facts and circumstances of the case and in law the CIT(A), NFAC erred in confirming the addition made by the AO of Rs.11,00,000/- representing cash deposits in his bank account under section 68 as alleged unexplained cash credits. The appellant submits as under: a. The bank statements not being books of accounts, the provisions of Section 68 are not applicable and hence the addition is not warranted. b. The source of the cash deposit being out of his agricultural income and crop loans no addition is called for in respect of such cash deposits of Rs. 11,00,000/-. The appellant prays that the ITO be directed appropriately in the matter. 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 holds agricultural land and has declared income of Rs.3,450/- as ‘Income from Other Sources” along with agricultural income of Rs.4,63,809/- in the return of income for A.Y. 2013-14 furnished on 08.03.2021. Based on the information about large amount of cash deposited in the saving bank accounts and also entering into contracts in commodity exchange, assessee’s case was selected for scrutiny by issuance of notice u/s.148 of the Act. After validly serving statutory notices, the scrutiny proceedings were carried out. Ld. Assessing Officer (AO) after considering the submissions of the assessee concluded the assessment making two additions, firstly for unexplained cash deposit of Rs.11.00 lakh u/s.68 of the Act and secondly income of unexplained investment u/s.69 at Rs.13.71 crore.
Assessee filed appeal before ld.CIT(A) and succeeded on the ground regarding addition for unexplained investment from Commodity exchange transaction at Rs.13.71 crore. However, for the addition made for unexplained cash deposit of Rs.11.00 lakh assessee failed to succeed as no source of cash deposit was explained before ld.CIT(A). Now the assessee is in appeal before this Tribunal challenging the addition of Rs.11.00 lakh.
Ld. Counsel for the assessee submitted that the assessee is an Agriculturist and has been regularly earning agricultural income. For the year under consideration also, ld. AO has not disputed the agricultural income shown by the assessee in the income tax return at Rs.4,63,809/-. Ld.CIT(A) has not accepted the contention because the proof of agricultural income was in the name of Mr. Vishal Dempure who is assessee’s brother. He therefore prayed that atleast for amount of agricultural income earned during the year, assessee deserves relief from the total addition made for unexplained cash deposit.
On the other hand, ld. Departmental Representative supported the order of ld.CIT(A) and stated that the proof of agricultural income is not in the name of assessee and therefore ld.CIT(A) has rightly sustained the addition made by the AO at Rs.11.00 lakh.
We have heard the rival contentions and perused the record placed before us. Ld. AO has made addition for the unexplained cash deposit of Rs.11.00 lakh made by the assessee in the bank accounts maintained with Bank of Baroda and Adinath Cooperative Bank Ltd. The fact that the assessee has earned agricultural income from the agricultural land owned by him is not in dispute and even the ld. AO has accepted the assessee’s claim of having earning agricultural income at Rs.4,63,809/-. Though the documents showing the proof of agricultural income are in the name of Mr. Vishal Demapure but he is the assessee’s brother and the genuineness of agricultural income earned by the assessee cannot be disputed. It has also been contended that the assessee has earned net agricultural income and the gross receipts are much higher which assessee used to deposit in the bank accounts from time to time. Taking these facts into consideration and that the assessee had source of income from Agricultural and presuming that said income must have been applied by way of depositing the cash in the bank accounts, we in order to end the litigation and being fair to both the parties give relief of Rs.5.00 lakh to the assessee towards explained source for part of cash deposited during the year. Accordingly, against addition of Rs.11.00 lakh sustained by ld.CIT(A) we give relief of Rs.5.00 lakh to the assessee and confirm the addition of Rs.6.00 lakh. Grounds of appeal raised by the assessee are partly allowed.
In the result, appeal of the assessee is partly allowed.
Order pronounced on this 05th day of June, 2025.