MARAM SURENDER REDDY,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(1), HYDERABAD

There is a delay of 3 days in filing of this appeal by the assessee for which the assessee has filed a condonation application along with an affidavit explaining the reasons for the delay which is on account of medical problem in the immediate family. After considering the contents of the condonation application and after hearing the learned DR, the delay in filing of this appeal is condoned and the appeal is admitted for adjudication.

Facts of the case, in brief, are that the assessee is an individual and Director in Analogies Technologies India Ltd. He derives income from salary, house property, other sources and capital gains. He filed his return of income on 28.7.2011 declaring taxable income of Rs.41,86,317/-. During the course of assessment proceedings the Assessing Officer noted from the Bank A/c filed by the assessee that an amount of Rs.12 lakhs was deposited in cash on various dates. He therefore asked the assessee to explain the source of such deposits. It was submitted by the assessee that he had withdrawn cash of Rs.3,50,000/- on 8.4.2010, Rs.1,00,000/- on 12.4.2010 and Rs.1,00,000/- on 23.4.2010 which were deposited on 13.5.2010 (Rs.3.00 lakhs) 14.5.2010 (Rs.2.00 lakhs). Similarly, the amount of Rs.5.00 lakhs deposited on 18.3.2010 and Rs.2.00 lakhs on 29.3.2011 are out of the agricultural income earned during the year. It was submitted that the assessee intended to purchase gold and jewellery for which the money was withdrawn in the month of April. However, he deferred his idea of buying gold, since the gold prices were expected to come down in the near future. He, therefore did not purchase the gold and the amounts were deposited in the Bank A/c. In the absence of any satisfactory explanation, the Assessing Officer made addition of Rs.12.00 lakhs to the total income of the assessee.

So far as the agricultural income of Rs.5.50 lakhs declared in the return of income is concerned, the assessee explained that he got 19 acres of mango plantation at Papireddy Guda Village, Keshampet Mandal, Mahaboobnagar distt. The assessee filed a copy of the sale deed and patta passbook holding the land. However, no proof regarding existence of mango plantation was filed. The Assessing Officer noted from the pass book that the land is shown as dryland which was categorised in Col.3 of the Patta Pass Book. There was no mention of any mango plantation which should have been entered in Patta Pass Book as well as Col.9 of the Patta Pass Book. Therefore, in absence of any concrete proof regarding the agricultural income, the Assessing Officer disallowed the same and treated the income as income from other sources. Thus the Assessing Officer made an addition of Rs.17.50 lakhs to the total income of the assessee.

Before the CIT (A), the assessee reiterated the same arguments as made before the Assessing Officer. So far as the addition of Rs.12.00 lakhs is concerned, it was submitted that after withdrawing the money from the Bank for purchase of gold, he deferred the idea of buying gold since the gold prices were expected to come down. Therefore, assessee redeposited the amount of Rs.3.00 lakhs on 13.5.2010 and Rs.2.00 lakhs on 14.5.2010. It was further submitted that the time gap between the date of withdrawal and date of deposit is around one month.

So far as the agricultural income of Rs.5.50 lakhs declared in the return of income is concerned, it was submitted that he was doing agricultural activity in the land of 19 acres and the assessee was declaring agricultural income in the earlier A.Ys also. It was submitted that he sells the agricultural produce in the mid of March every year because the mango fruits harvesting and sales will commence from first week of April onwards. Accordingly the assessee received Rs.5.50 lakhs as income from agricultural activities which was deposited in his savings bank a/c.

However, the learned CIT (A) was not satisfied with the arguments advanced by the assessee. So far as the addition of Rs.12.00 lakhs made by the Assessing Officer is concerned, he upheld the action of the Assessing Officer by observing as under: “6.3 The contention of the appellant is not supported by any evidence. The appellant has submitted that for purchase of gold he has withdrawn some money to be paid immediately to the jewellers, as jewellers are not receiving cheques/bank cards. Appellant has not given the name of the jewellery shop were sales have been made with non-banking transactions. Nor the appellant has given an explanation regarding why the purchase of gold was differed and why it took a month to differ. It may be pertinent to say that as per the bank account submitted by the appellant, he has received cash payment : a) 13.05.2011 cash deposit of 1<5.3 lakhs by Sri C.H.Dharrnendra b) 14.05.2011 cash deposit of R5.2 lakhs by Self c) 28.05.2011 cash deposit of R5.5 lakhs by Self d) 29.03.2012 cash deposit of I<s.2 lakhs by Self This shows that appellant has not deposited back any amount which was previously withdrawn by him and in possession with him. The deposits have also been made by others (13.05.2011). 6.4 In light of the above, cash deposits of Rs.12 lakhs remain unexplained. In this scenario, I uphold the addition made by the Assessing Officer. -Ground Dismissed”.

So far as the addition of Rs.5.50 lakhs made by the Assessing Officer by disregarding the agricultural income is concerned, the same was also upheld by the CIT (A) by observing as under: “7.3 The appellant submitted a copy of purchase deed, pattapass book issued by the Mandal Revenue Officer, Keshampet, Shadnagar saying that the appellant owns 16 acres and 10 Cents of agricultural land. No reference has been made regarding doing of agriculture. Appellant also submitted a Xerox copy of evaluation of Income by Some Horticulture Officer, Shadnagar. The Certificate does not have the name of the Officer who has certified nor it, does not have any date on it and is not on an official stationery. The authenticity of this is doubted, also cannot be accepted as the evaluation is made on arithmetic presumptions of average method. It has been calculated on basis of per income per acre yield, not according to actual yield or on number of trees. As we know, Horticultural produce differ every year and cannot be calculated on basis of area/land. The appellant has also not submitted any details regarding number of trees/plantations, input purchases like pesticides, fertilizers, water and labour. Appellant also not mentioned to whom these agricultural produce were sold to. Appellant also submitted that the sales are made during mid-march every year. As seen from the bank statement, no agricultural receipt has been deposited in the Bank (excluding two entries which appellant has submitted as re-deposits of withdrawal)”.

Aggrieved with such order of the learned CIT (A), the assessee is in appeal before the Tribunal by raising the following grounds: “

The learned Counsel for the assessee reiterated the same arguments as made before the Assessing Officer and the CIT (A). He submitted that there is no dispute regarding the amount of Rs.5.50 lakhs withdrawn from the Bank on 8.4.2010(Rs.3.50 lakhs), 12.4.2010(Rs.1.00 lakhs) and 23.4.2010(Rs.1.00 lakhs). These were deposited by the assessee on 13.5.2010 (Rs.3.00 lakhs on 13.5.2010 & Rs.2.00 lakhs on 14.5.2010). The time gap between the cash withdrawn from the Bank and subsequent deposit made in the Bank is hardly about a month. Therefore, the amount of Rs.5.00 lakhs deposited on 13th & 14th May, 2010 should not have been disbelieved. Similarly, the deposit of Rs.5.00 lakhs on 18.3.2011 and Rs.2.00 lakhs on 29.3.2011 are out of the agricultural income of Rs.7,25,000/-. He accordingly submitted that the lower authorities without appreciating the facts properly have made the addition which is not justified. Similarly, the addition of Rs.5.50 lakhs made by the Assessing Officer and upheld by the CIT (A) by disregarding the agricultural income is also not justified especially when the assessee is deriving the agricultural income from the mango plantation in 19 acres of land held by him.

Referring to the order of the learned CIT (A), the learned Counsel for the assessee submitted that the learned CIT (A) disregarded the certificate obtained from the Horticultural Officer, Shadnagar merely on the ground that the name of the Officer who certified does not have any date on it and is not on official stationery. He submitted that when the assessee is holding 19 acres of land on which mango plantation has been done, the CIT (A) should not have disbelieved the agricultural income declared by the assessee.

The learned DR, on the other hand, heavily relied on the order of the learned CIT (A). He submitted that the assessee could not substantiate with concrete evidence regarding the source of deposit made in the Bank A/c. He submitted that when the assessee has opening balance of Rs.1,39,000/- on 1.4.2010, he withdrew an amount of Rs.3.50 lakhs on 08.4.2010. If the money was left with him, the assessee would not have withdrawn another Rs.1.00 lakhs on 12.4.2010. Similarly, on 23.4.2010 again the assessee has withdrawn Rs.1.00 lakhs and the money was not deposited on the very same day when the assessee decided not to buy gold/jewellery anticipating that the price may fall. Since the deposits and withdrawals are within the exclusive knowledge of the assessee therefore, without giving any proper evidence, the assessee cannot say that the money earlier withdrawn from the Bank A/c was deposited. Further, the learned CIT (A) has given a finding that the cash deposit of Rs.3.00 lakhs on 13.5.2011 was by Shri C.H. Dharmendra as reflected in the Bank A/c and therefore, the assessee is not telling the truth. He accordingly submitted that the order of the learned CIT (A) on this issue be upheld.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT (A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs.12.00 lakhs being cash deposited by the assessee on various dates in the bank account maintained by him on the ground that the assessee could not substantiate with evidence to his satisfaction regarding the source of such cash deposit. Similarly he also made addition of Rs.5.50 lakhs declared by the assessee as agricultural income on the ground that the assessee could not substantiate the agricultural activities carried out by him. We find the learned CIT (A) sustained both the additions made by the Assessing Officer, the reasons of which have already been reproduced in the preceding pragraphs. It is the submission of the learned Counsel for the assessee that the amount of Rs.12.00 lakhs made in the Bank A/c is partly from withdrawal from the Bank in the month of April on various dates which were for the purpose of buying some gold/jewellery. However, since the assessee changed his mind and did not go for the purchase on the ground that the price may fall and accordingly the same was redeposited in the Bank A/c. Further, an amount of Rs.7.00 lakhs was deposited out of the agricultural income being the income from mango plantation on 19 acres of land held by him.

In the result, appeal filed by the assessee is dismissed. Order pronounced in the Open Court on 14th June, 2022.