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Facts
The assessee did not file a return of income for AY 2012-13. The AO reopened the assessment u/s 147 based on information of cash deposits of Rs.31.50 lakhs and other bank credits of Rs.20.63 lakhs. The assessee contended that the cash deposits were from agricultural income and a Rs.20 lakh credit was an unsecured loan, but failed to provide satisfactory evidence.
Held
The Tribunal partly allowed the appeal. It accepted Rs.11 lakhs of the cash deposits as explained agricultural income, considering past assessments. However, the Rs.20 lakhs claimed as an unsecured loan was upheld as unexplained due to the assessee's failure to establish the identity, genuineness, and creditworthiness of the transaction.
Key Issues
Whether cash deposits in the bank account represented agricultural income, and whether a credit entry of Rs.20 lakhs was a genuine unsecured loan.
Sections Cited
144, 147, 148, 119(2)(b)
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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH, AHMEDABAD
Before: SHRI T.R. SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA
O R D E R PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of the National Faceless Appeal Centre, Delhi (in short “the CIT(A)”) dated 23.12.2024 for the Assessment Year (A.Y.) 2012-13 in the proceeding under section 144 r.w.s.147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
The brief facts of the case are that no return of income for AY 2012- -13 was filed by the assessee. The AO had received an information that the assessee had made cash deposit of Rs.31,50,000/- in his savings bank account with Dena Bank, Sanand branch, Ahmedabad during the F.Y. 2011-12. On the basis of this information the case of the assessee was reopened u/s 147 of the Act after recording the reason and following (Assessment Year: 2012-13) Ashokbhai Muljibhai Vaniya vs. ITO Page 2 of 7 the due process. In response to notice u/s 148 of the Act, no return of income was filed. However, the assessee had filed a return u/s 119(2)(b) of the Act 26.08.2019 declaring income of Rs.40,014/-. In the course of assessment proceeding the assessee could not satisfactorily explain the source of cash deposits. It was contended that the cash deposits were out of agricultural income of the assessee as well as the family members but no evidence in support thereof was filed. Therefore, the AO had treated the entire cash deposit of Rs.31,50,000/- as unexplained income of the assessee. In addition to the cash deposits there were other credits of Rs.20,63,714/- in the bank account of the assessee, the source of which was also not explained. Therefore, addition of Rs.20,63,714/- was also made on account of unexplained credits in the bank account. The assessment was completed u/s 144 r.w.s.147 of the Act on 25.11.2019 at total income of Rs.52,13,710/-.
Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was partly allowed. Now, the assessee is in second appeal before us. The following grounds have been taken in this appeal: -
1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming initiation of re-assessment proceedings.
2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming addition of Rs.45,07,603/- on account of cash deposit and credit entries in the bank account.
3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming addition of Rs.24,43,889/- on account of cash deposit without considering that these deposits represent cash receipts from agricultural income.
4. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming addition of Rs.20,00,000/- on (Assessment Year: 2012-13) Ashokbhai Muljibhai Vaniya vs. ITO Page 3 of 7 account of credit entry in bank account without considering that the same were in form of unsecured loan.
On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming action of Assessing Officer regarding non-acceptance of return filed u/s 148 of the Act.
6. It is therefore prayed that the above addition/disallowance made by the assessing officer may please be deleted 7. Appellant craves leave to add, alter or delete any ground(s) before or in the course of hearing of the appeal.
The first ground taken by the assessee was not pressed by the Ld. AR in the course of hearing. Hence, the same is dismissed.
5. The ground no. 2 to 4 pertain to addition of Rs.45,07,603/- in respect of addition for cash deposits and credit entries in the bank account of the assessee, as confirmed by the ld. CIT(A). Shri Hardik Vora, ld. AR of the assessee submitted that the ld. CIT(A) had allowed relief of Rs.7,06,111/- in respect of cash withdrawals which were subsequently re-deposited in the bank account and he had confirmed the balance addition of Rs. 24,43,889/- in respect of unexplained cash deposits in the bank account. The ld. AR explained that the assessee’s family was owning agricultural land, out of which agricultural income was being regularly derived. An affidavit of the mother of the assessee in this regard was also filed explaining that the entire cash deposit of Rs.31,50,000/- in the bank account of the assessee was derived from the family’s farming income and old savings. The ld. AR submitted that the evidence for land holding was also brought on record before the ld. CIT(A) which was not considered. He further submitted that the Department in the assessment order of the assessee for AY 2011-12 had accepted agriculture income of Rs.10 lakh. Thus, it was duly established that the assessee and his family derived agriculture income which was deposited as cash in the bank account.
(Assessment Year: 2012-13) Ashokbhai Muljibhai Vaniya vs. ITO Page 4 of 7 5.1 As regarding credit entry of Rs.20,00,000/- the ld. AR explained that the same was received from one Sh. Piyushbhai Narsinhbhai Rathore and an affidavit of the said person was also brought on record. This amount represented loan taken by the assessee. The ld. AR explained that the assessee was unable to obtain the bank statement to corroborate this transaction as the matter was very old and the bank was unable to provide the required details. A copy of the letter from the bank in this respect was also filed in the paper-book. The ld. AR submitted that considering the evidence brought on record, the addition of credit entry should be deleted to the extent of loan of Rs.20,00,000/- taken by the assessee.
Per contra, Sh. Hargovind Singh, Ld. Sr. DR submitted that the assessee had submitted before the ld. CIT(A) that only 2/3rd of net cash deposit of Rs.24,43,889/- was on account of agricultural income and had agreed to the addition of balance amount of Rs.8,14,000/-. He further submitted that the ld. CIT(A) had rightly rejected this contention of the assessee in the absence of any evidence for agricultural income derived by the assessee or his family. As regards credit entry of Rs.20,00,000/- the ld. Sr. DR submitted that the affidavit of Sri Piyushbhai Narsinhbhai Rathore was a self-serving document which was not backed by any independent evidence. He further submitted that the assessee was unable to establish that the sum of Rs.20,00,000/- was received from the said person. He, therefore, strongly supported the order of ld. CIT(A) on this issue.
We have carefully considered the rival submissions. Out of total cash deposit of Rs.31,50,000/- in the bank account of the assessee, the ld. CIT(A) had already allowed relief to the extent of Rs.7,06,111/- on account of cash withdrawals from the bank account. As regards balance (Assessment Year: 2012-13) Ashokbhai Muljibhai Vaniya vs. ITO Page 5 of 7 cash deposit of Rs.24,43,889/-, the explanation of the assessee before the ld. CIT(A) was that 2/3rd of the same i.e., Rs.16,29,000/- represented agricultural income of the family. The ld. CIT(A) had declined to allow any relief in respect of agricultural income in the absence of proof of ownership of land, sale bill etc. The issue of agriculture income derived by the assessee/his family is no longer res integra. This issue was examined by the AO in the course of assessment proceeding of the assessee for the A.Y.2011-12. A copy of the assessment order for A.Y. 2011-12 has been brought on record in the paper book filed by the assessee. It is found therefrom that the case of the assessee for A.Y. 2011-12 was taken up for scrutiny to examine the cash deposit of Rs.15,18,700/- in the bank account of the assessee. In that year the AO had allowed relief to the assessee to the extent of Rs.10,00,000/- on account of agriculture income for the year as well as past savings from agricultural income. Thus, the Department had acknowledged the agriculture income derived by the assessee/his family and allowed credit for same in respect of cash deposits in the bank account of the assessee. In the current year as well, the cash deposits in the bank account of the assessee has been partly explained as deposit of agriculture income of the family. Considering the fact that the Department had accepted agriculture income of Rs.10 lakh in the A.Y.2011-12, it will be reasonable to consider the agricultural income of the assessee/his family in the current year at Rs.11 lakhs. Therefore, the cash deposit of Rs.11,00,000/- in the bank account of the assessee is treated as explained on account of agriculture income of the assess/his family. Accordingly, the addition as confirmed by the ld. CIT(A) is reduced by Rs.11,00,000/- and the balance addition of Rs.13,43,889/- or account of unexplained cash deposit in the bank account of the assessee is upheld.
(Assessment Year: 2012-13) Ashokbhai Muljibhai Vaniya vs. ITO Page 6 of 7 8. As regards addition of Rs.20,63,714/- in respect of credit entries in the bank account, the assessee has contested addition to the extent of Rs.20,00,000/- only. The contention of the assessee is that the sum of Rs.20,00,000 credited in the bank account represented loan received from Shri Piyushbhai Narsinhbhai Rathore. The assessee has filed an affidavit dated 24.04.2024 of Sri Rathore confirming the loan transaction of Rs.20,00,000/-. However, the assessee was unable to bring on record any evidence to establish that the credit of Rs.10,00,000 each by transfer entry of 08.08.2011 and 12.10.2011 was received from Shri Piyushbhai Narsinhbhai Rathore. The assessee has also not explained the purpose for obtaining this loan, whether any interest was paid on this loan and, if so, whether any TDS was deducted thereon. Further, the present status of the loan, as to whether it was still outstanding or was repaid, was also not explained. The assessee has also failed to bring on record any evidence to establish that the loan of Rs. 20 lakh was disclosed in the books of accounts / balance sheet of Shri Piyushbhai Narsinhbhai Rathore. In view of these facts the ld. CIT(A) had rightly held that the identity, genuineness and creditworthiness of the loan transaction was not established. We don’t find any reason to interfere with the findings of the ld. CIT(A) on this issue. Since the creditworthiness & genuineness of the loan transaction was not established, the decision of the ld. CIT(A) in treating the credit entry in the bank account of the assessee as unexplained is upheld and the ground taken by the assessee in this regard is dismissed.
The ground no.-5 taken by the assessee was not pressed by the ld. AR, hence, the same is dismissed. The other grounds being general in nature are also dismissed.
Order pronounced in the open Court on this 30th June, 2025.