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Facts
The assessee, a HUF, filed its return and declared agricultural income. The Assessing Officer (AO) treated cash deposits as unexplained income under Section 68 of the Income Tax Act, 1961, and charged tax under Section 115BBE, as the land records did not clearly name the HUF. The CIT(A) confirmed 50% of the addition.
Held
The Tribunal held that the lower authorities failed to consider the assessee's consistent filing of returns with agricultural income. The agricultural records, though mentioning the family name, referred to ancestral properties of the assessee. Thus, the additions made were liable to be deleted.
Key Issues
Whether cash deposits can be treated as unexplained income under Section 68 when the assessee consistently declares agricultural income and provides land records?
Sections Cited
143(3), 68, 115BBE, 271AAC, 272A(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Smt. Annapurna Gupta & Shri T.R. Senthil Kumar
Assessment Year. 2017-18 Bhimjibhai Govindbhai Income Tax Officer Italiya (HUF) Ward-1(10), At Post Umrala, Vs Bhavnagar Tal Umarala, Bhavnagar-364240 Gujarat PAN: AAIHB5394N (Appellant) (Respondent) Assessee Represented: Shri P.M. Jagasheth, A.R. Revenue Represented: Shri Ravindra, Sr. D.R. Date of hearing : 06-05-2025 Date of pronouncement : 08-05-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
This appeal is filed by the Assessee as against the appellate order dated 14.11.2024 passed by the Additional Commissioner of Income Tax-2, Mumbai arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18.
A.Y. 2017-18 Page No 2 Bhimjibhai Govindbhai Italiya (HUF) vs. ITO
Brief facts of the case is that the assessee is the Karta of HUF regularly filing Return of Income and assessed to tax. For the Asst. Year 2017-18, the assessee filed its Return of Income on 04-03- 2018. The return was taken for scrutiny assessment and a show cause notice was issued to explain cash deposits of Rs. 13,75,000/- made in various bank accounts. In reply, the assessee filed details of land holdings by furnishing copy of 7/12 and 8/A records of all the agricultural lands in the name of the assessee and family members, as well as the balance sheet where cash balance is more than Rs. 12,25,000/- during the year with gross agricultural income of Rs.5,64,863/- and net agricultural income of Rs. 3,50,113/- and thereby total cash balance of Rs. 15.75 lakhs. The above explanation was not accepted by the Assessing Officer on the ground that the land records carried the name of Shri Manjibhai Govindbhai and Bhimjibhai Govindbhai instead of the assessee Bhimjibhai Govindbhai Italiya HUF. Hence the A.O. treated the cash deposits as unexplained income u/s. 68 of the Act and charged to tax u/s. 115BBE of the Act and demanded tax thereon.
Aggrieved against the assessment order, assessee filed an appeal before Ld. CIT(A) who considered the explanation offered by the assessee and held that 50% cash deposit is treated as explained and the remaining 50% cash deposit as unexplained and confirmed the addition.
Aggrieved against the appellate order, the assessee is in appeal before us raising the following Grounds of Appeal:
A.Y. 2017-18 Page No 3 Bhimjibhai Govindbhai Italiya (HUF) vs. ITO
On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer ought to have taken into consideration the facts, legal position and representation made by the appellant during the course of assessment.
2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Assessing Officer ought to have accepted the return filed by the appellant in to.
3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.6,13,000/- on account of alleged cash deposited in bank account treated as alleged unexplained cash deposits. 4. On the facts and in the circumstances of the case as well as the law on the subject, the learned A.O. has wrongly recommended and/or initiated penalty proceeding 271AAC r.w. 272A(1)(c) of the 1.T. Act, 1961. 5. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal. . 5. Ld. Counsel Shri P.M. Jagaseth appearing for the assessee submitted before us copy of the Income Tax Returns filed by the assessee from Asst. Years 2015-16 to 2019-20 as follows: Asst. Years Income Returned Agricultural Income Filed on (Rs.) (Rs.) 2015-16 33646 6,28,309 31-10-2015 2016-17 2519 350113 27-04-2017 2017-18 2934 908103 04-03-2018 2018-19 2450 892010 31-08-2018 2019-20 2015 987232 23-01-2020 5.1. Ld. Counsel also relied upon various Case Laws in support of its claim.
A.Y. 2017-18 Page No 4 Bhimjibhai Govindbhai Italiya (HUF) vs. ITO
Ld. Sr. D.R. Shri Ravindra appearing for the Revenue supported the order passed by the Lower Authorities.
We have given our thoughtful consideration and perused the materials available on record. It is seen from record, the assessee is been filing the Return of Income declaring agricultural income consistently. This was not considered by the Lower Authorities while making the additions u/s. 68 of the Act. The Ld. CIT(A) is also not justified in accepting 50% of the cash deposit as unexplained. The assessee is being showing agricultural income of Rs.8,92,010/- and Rs.9,87,232/- for the subsequent Asst. Years 2018-19 and 2019-20. Further the agricultural records namely 7/12 and 8/A mentions the family name of the assessee rather the Karta of HUF. It is undisputed fact, the above agricultural lands are ancestral properties of the assessee. Thus the addition made by the Lower Authorities are liable to be deleted.
In the result, the appeal filed by the Assessee is allowed.