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Facts
The assessee deposited Rs. 17,38,500/- in cash into bank accounts, claiming it as agricultural income. The Assessing Officer added the entire amount as unexplained. The CIT(A) partly allowed the appeal, reducing the addition to Rs. 14,10,500/-, by allowing Rs. 3,28,000/- as sourced from agricultural income.
Held
The Tribunal held that the CIT(A) erred by not considering the entire land holding of the assessee (including jointly owned land) and the crop loans taken for agricultural activities. The Tribunal attributed approximately Rs. 14 lakhs to agricultural income and confirmed the remaining addition.
Key Issues
Whether the entire cash deposits in bank accounts can be treated as unexplained income, or if a greater portion should be allowed as agricultural income based on landholding and crop loans?
Sections Cited
143(3), 69A, 115BBE, 250
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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Ms. Annapurna Gupta
Date of hearing : 16-04-2025 Date of pronouncement : 23-04-2025 आदेश/ORDER The present appeal has been filed by the Assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)’] dated 19.06.2024 arising out of the assessment order passed u/s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Year 2017-18.
The grounds raised are as under:-
“1.1 The order passed by U/s.250 passed on 19.06.2024 by NFAC, [CIT(A)], Delhi (for short CIT(A)" upholding the addition of Rs. 17,38,500/- towards cash deposits in various bank accounts as unexplained money u/s 69A rws 115BBE is wholly illegal, unlawful and against the principles of natural justice.
2.1 The Id. CIT(A) has grievously erred in law and or on facts in upholding that the addition of Rs.17,38,500/- towards cash deposits in various bank accounts as unexplained money u/s 69A rws 115BBE. 2.2 That the in the facts and circumstances of the ld. CIT(A), ought not to have upheld the addition of Rs.17,38,500/- towards cash deposits in various bank accounts as unexplained money u/s 69A rws 115BBE. It is, therefore, prayed that the addition of Rs. 17,38,500/- upheld by the CIT(A) may kindly be deleted.”
3. The solitary issue in the present appeal relates to addition made to the income of the assessee on account of cash deposited in his bank account, the source of which allegedly remained unexplained. The amount of cash deposited in the bank account of the assessee as finds mention in the order of the authorities below is to the tune of Rs. 17,38,500/-. The Assessing Officer had added the entire amount to the income of the assessee on account of source of the same remaining unexplained. The ld. CIT(A), however, reduced the addition to Rs. 14,10,500/- treating the balance amount of Rs. 3,28,000/- to have been sourced from the agricultural income earned by the assessee. Before us, the assessee is agitating the addition confirmed by the ld. CIT(A) of Rs. 14,10,500/-
4. I have gone through the order of the authorities below. Admittedly and undisputedly the explanation of the assessee regarding the source of such cash deposited in the bank account was his agricultural income and the addition was made and partly confirmed by the ld. CIT(A) on account of non- substantiation of the same to the satisfaction of the revenue authorities .At para 5.2 of the order of the CIT(A), he notes the fact of the assessee having evidenced the fact of the cash being from his agricultural activities by demonstrating ownership of 2 agricultural land which is noted to be 1.64 vigha in his name and 3.50 vigha jointly owned with his family members, thus in all 5.15 vigha of land. The Ld.CIT(A) also notes the fact of the assessee having taken crop loan from the Oriental Bank of Commerce for conducting his agricultural activities amounting to Rs. 3,66,000/- and Rs. 12,10,000/-. Copy of the loan account was also submitted as evidence to the CIT(A), as also the fact of the loan being repaid regularly in all the previous years from the income generated through sale of agricultural produce. Copies of the loan sanction letter as well as loan repayment details from the bank were submitted.
5. Having noted so, we find that the ld. CIT(A) did not find the assessee’s explanation completely explaining cash deposit in the bank account of Rs. 17,38,000/- for the reasons which finds mention at para 5.4 passed by the CIT(A) as under:-
“5.4 The above submission of the appellant has been considered. It is noticed that the appellant has deposited cash in various banks during the year to the tune of Rs.17,38,500/-. The source of the same was explained as agricultural income earned during the year. The said explanation is not appears to be satisfactory due to the following reasons.
The appellant did not submit the details of crop cultivated as per the revenue records in the above stated land.
2. It is further noticed that the actual land holding of the appellant in his own name was only 1.64 vigha. But, the appellant is contending that the land jointly owned with the family to the extent of Rs.5.15 vigha also cultivated by him. The said claim is not acceptable without any agreement entered by the appellant for the said purpose (or) confirmation letters from the family members in this regard. Hence, deposits of cash as stated by the appellant as sale of agricultural produce form his land is not acceptable.
The appellant did not submit the detail of crop cultivated, agricultural produces sold, parties to whom it was sold and confirmation from the said parties for the purchase of those items.
The appellant did not submit the cash flow statements and cash on hand as on 31.03.2016.
The appellant could not explain why similar cash deposits were not made in the earlier years, if the activity of the appellant is same in those years also.
The appellant could not explain the reason for the receipt by way of cash even though there is a branch of nationalized bank in the place of his residence.”
6. It is evident from the above that the Ld.CIT(A) has given cognizance to the evidences submitted by the assessee. However at para 5.5 I note that he has considered the same and after consideration has found that agricultural income to the tune of Rs. 2 lakh per vigha may be allowed to the assessee to meet the end of justice as under:-
“5.5 Accordingly, the addition made by the AO is appears to be correct and sustainable. But, it is found that the appellant has obtained crop loan and having 1.64 vigha of land in his name. By considering the same, I am of the considered view that agricultural income @Rs.2,00,000/- per vigha may be allowed to meet the justice. Hence, the AO is directed to allow the agricultural income for the year amounting to Rs.3,28,000/- in the hands of the appellant and the balance amount of Rs. 14,10,500/-may be treated as unexplained income. Accordingly, the grounds of appeal on this issue is partly allowed.”
7. I am not in agreement with ld. CIT(A). It is clear the ld. CIT(A) has given allowance and consideration to the explanation of the assessee of the cash being found in his bank account from his agricultural activities only to the extent of land owned by him 1.64 vigha. He has completely ignored the factum of the remaining land of 3.5 vigha owned by the assessee along with his family members. He has also completely ignored the factum of crop loan taken by the assessee of Rs. 3,36,000 in his name and Rs. 12,00,000/- jointly with other family members for carrying out agricultural activities, as also the factum of having taken the same in his preceding years and repaid the same also. Further, the findings of the ld. CIT(A) that an allowance of Rs. 2,00,000/- on agricultural land per vigha may be allowed to the 4 assessee, I find is without any basis at all. Therefore, I do not find any merit in the order passed by ld. CIT(A) giving allowance of only Rs. 3,28,000/- of the cash deposited in the bank account, out of Rs. 17,38,500/-, as attributed to agricultural income earned by the assessee. On the contrary, considering the evidences/explanation of the assessee duly substantiated with evidences, by way of crop loan taken during the year as also the land holding of the assessee himself along with his family members, I am of the view that the assessee is entitled to greater allowance in this regard. Accordingly in the interest of justice and considering the entire facts and circumstances of the case, I hold that agricultural income to the tune of approximately 14 lakhs be attributed to the cash deposited in the bank account and the remaining addition accordingly is directed to be confirmed.
In effect, the appeal of the assessee is partly allowed.