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Facts
The AO made an addition of Rs.20,50,500/- under Section 69A for unexplained cash deposits in the assessee's bank account for AY 2011-12. The assessee contended that the deposits were proceeds from the sale of agricultural land, received as earnest money prior to the registration of the sale deed. Both the AO and the CIT(A) confirmed the addition, considering the assessee's explanation an afterthought.
Held
The Tribunal found that the assessee had provided sufficient evidence, including the sale deed, agreement to sale, and bank statements, which matched the deposit amount. The purchaser of the land also appeared before the AO and confirmed the transaction. As the AO failed to rebut the evidence, the Tribunal held that the assessee had proved the source of the deposits, and therefore, the addition was ordered to be deleted.
Key Issues
Whether the addition made by the AO under Section 69A for unexplained cash deposits was justified when the assessee provided comprehensive evidence of agricultural land sale proceeds, duly confirmed by the purchaser.
Sections Cited
69A
AI-generated summary — verify with the full judgment below
आदेश/Order The present appeal has been preferred by the assessee against the order dated 30/12/2024 passed by the Ld. Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’], for the Assessment Year (AY) 2011-12.
The assessee, in this appeal, has agitated against the confirmation of addition of Rs.20,50,500/- made by the Assessing
ITA 75-Chd-2025 Karan Singh vs. ITO Ward-2 AY 2011-12 2 Officer (AO) u/s.69A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
The brief facts of the case are that the AO noticed that there were cash deposits of Rs.20,50,500/- in the bank account of the assessee, source of which was not explained. Since the assessee did not file any explanation before the AO about the source of deposits, the AO made the impugned addition into the income of the assessee treating the said deposits in the bank account of the assessee as the income of the assessee from unexplained sources.
3.1. During the appellate proceedings before the CIT(A), the assessee submitted that the assessee sold agricultural land at Shahabad, Kurukshetra (Haryana) for Rs.26,20,000/- and that the sale proceeds of the said land were deposited in the bank account. The assessee, in this respect, furnished additional evidences before the Ld.CIT(A), whereupon, the Ld.CIT(A) called upon remand report from the AO. The assessee, during the remand proceedings, submitted that he had sold agricultural land for Rs.26,20,000/- in financial year (FY) 2011-12 and that whole of the amount was received in advance on account of Earnest Money vide agreement to sale dated 20/10/2010. The assessee also furnished the copy of the agreement to sale before the AO. The assessee also furnished the copy of the registered sale-deed. The assessee also furnished copies of bank account to prove that the payment of the sale consideration was received earlier at the time of execution of sale agreement. However, the sale-deed was executed later on. The AO also called upon the purchaser of the land to verify of the said contention,
ITA 75-Chd-2025 Karan Singh vs. ITO Ward-2 AY 2011-12 3 whereupon Shri Rajat Kumar purchaser of the property appeared personally before the AO whose statement was recorded by the AO, wherein he admitted that the assessee Karan Singh had sold his agricultural land to him and further that the Agreement to sale was executed in October-2010 and that the entire amount of Rs.26.20 lakhs was paid by him to the assessee at that time and, whereas, the sale-deed was executed on 02/12/2011. The AO, however noted that the sale agreement was unregistered and that the sale-deed was executed on 02/12/2011, where the amount in question was deposited in the FY 2010-11. Therefore, he observed that the aforesaid source of deposit explanation given by the assessee was an after-thought. He held that the assessee had failed to prove the source of deposit and, therefore, made the impugned addition.
The Ld.CIT(A) confirmed the addition made by the AO.
I have heard the rival submissions and gone through the record. In this case, the assessee has produced the sale-deed on record in which mentioned consideration amount exactly matches with the deposit amount of Rs.26,20,000/-. The assessee has duly produced a copy of agreement to sale to show that the entire amount was received as Earnest Money. The purchaser of the land has personally appeared before the AO and in his statement he has duly confirmed the aforesaid transaction. The AO could not bring any material on record to rebut the evidence furnished by the assessee. Therefore, the assessee has duly proved the source of deposits. Thus,