HARDEEP SINGH KANDOLA,RATIA vs. ITO, FATEHABAD

In the consequential assessment order dated 15-03-2022, the assessee furnished various documents which were rejected by Ld. AO and finally the addition of Rs.26.50 Lacs was made to the income of the assessee. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us.

From the case records, it emerges that the case of the assessee was specifically reopened to examine the sources of cash deposit. During regular assessment proceedings, the assessee furnished various documents in support of the same. After due consideration thereof, Ld. AO accepted the sources of cash deposits and framed the assessment. The Ld. Pr. CIT, while revising the assessment, has noted that the assessee and his father owned 50.11 acres of land. The agricultural land was sold on 25-05-2020 for Rs.18.50 Lacs which was purchased on 04-05-2010 for Rs.18.40 Lacs and therefore, there was no cash generation since sale consideration as well as purchase consideration was almost identical. The assessee is stated to have received sale proceeds of Rs.30,000/- per acre from cultivation of wheat and Rs.33,000/- per acre form cultivation of paddy. The assessee received sale proceeds of Rs.31.50 Lacs and reflected agricultural income of Rs.26.83 Lacs which was rejected on the ground that an agriculturist has to spend around 60% of the sale proceeds on various agricultural operation expenses. Further, the assessee did not file J-Form and the cash was deposited within short period of time.

Upon due consideration of material facts, we find that land holding of the assessee has not been disputed by lower authorities. The fact of earning of agricultural income is also not in dispute. The observation that an agriculturist has to spend around 60% of the sale proceeds on various agricultural operation expenses is a general observation which does not discredit the claim of the assessee of earning of agricultural income. Another observation is that the agricultural land was sold on 25-05-2020 for Rs.18.50 Lacs which was purchased on 04-05-2010 for Rs.18.40 Lacs and therefore, there was no cash generation since sale consideration as well as purchase consideration was almost identical. The said conclusion is fallacious observation since the source of purchase of property on 04-05-2010 was neither disputed not subject matter of impugned assessment year. The fact remains that the assessee sold the land in this year for Rs.18.50 Lacs and the sale proceeds were part source of impugned deposits in the bank and therefore, the sources, to that extent stood clearly explained by the assessee. On these facts, the impugned addition of Rs.26.50 Lacs could not be sustained in law. We order so. The assessee succeeds in this appeal. Consequently, the challenge to revisionary proceedings u/s 263, which is subject matter of has been rendered infructuous and need not be gone into. 7.