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Facts
The assessee did not file his return of income within the due date but filed it later, declaring a low income under a presumptive scheme. The AO received information about a large cash deposit in the assessee's bank account and reopened the assessment. The assessee claimed the deposits were from the sale of agricultural land by his mother, which was used to explain the source of funds.
Held
The Tribunal held that the assessee had sufficiently explained the source of the deposits as sale proceeds of agricultural land by his mother. Therefore, the addition made by the AO was not sustainable. However, the Tribunal found no error in the AO's decision to reopen the assessment based on the information received.
Key Issues
Whether the addition made by the AO is sustainable when the assessee provides a plausible explanation for the source of large deposits? Whether the reopening of assessment was justified?
Sections Cited
139(1), 44AB, 148, 69A
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Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY
The assessee is in appeal before the Tribunal against the order of ld. CIT(Appeals) dated 20.12.2023 passed for assessment year 2012-13. The assessee has raised two grounds of appeal, wherein he has pleaded that ld. CIT(A) has erred in confirming the re-opening of assessment and addition of Rs.1,26,00,000/- added by the AO with the aid of Section A.Y.2012-13 2 69A of the Income Tax Act, 1961.
2. The brief facts of the case are that assessee has not filed his return of income u/s 139(1) of the Act but filed on 02.12.2019 declaring total income of Rs.1,49,040/-. The above income was declared under the presumptive scheme of taxation u/s 44AB. He has declared total turnover of Rs.18,63,000/- and income was offered at 8% of the total turnover. The ld. AO got an information from Investigation Wing that a cash of Rs.1,48,40,000/- has been deposited in the bank account of the assessee, therefore, he recorded the reasons and reopened the assessment by issuance of a notice u/s 148 of the Act on 24.03.2019. The assessee has filed return of income on 02.12.2019. The assessee has contended that account with HDFC Bank was a joint account with his mother Smt. Amar Kaur, who was the primary account holder and the assessee is secondary account holder. It was contended that the money was deposited by his mother and not by the assessee. The mother of the assessee was expired. The ld. AO was not satisfied with the submissions of the assessee. He made an addition of Rs.1,26,00,000/- on account of deposits made in the Saving Bank Account with HDFC Bank.
A.Y.2012-13 3 3. In the appeal, assessee has contended that his mother has sold agriculture land and these amounts were received as advance qua the sale proceeds. These were deposited in the bank account by his mother and therefore, no addition deserves to be made. The ld. CIT(A) has rejected the contention of the assessee and confirmed the addition. The primary finding of the ld. CIT(A) is that during the course of assessment proceedings, assessee only submitted a hand- written Agreement in Punjabi script. Apart from the above, assessee has not submitted other details.
With the assistance of ld. Representative, we have gone through the record carefully. Copy of the alleged hand-written Agreement is available on page 19 and 20. Thereafter, its translation has been placed on page No. 21. A perusal of page 19 would indicate that mother of the assessee has agreed to sell 12 bighas of agriculture land comprised in Khatoni No. 22-25 Khasra No. 307 (4-0) 308 (4-0) and 310 (4-0). This was agreed to sell for a consideration of Rs.4,02,00,000/- to Shri Jyotinder Singh Cheema, S/o Shri Inderjeet Singh Cheema, resident of 1534, Sector 34, Chandigarh. The assessee has taken advance from the vendor. Ultimately, Sale Deed was registered and the land was sold for a consideration of A.Y.2012-13 4 Rs.6,70,00,000/-. The copy of the Sale Deed has been placed on page No. 63 to 67 of the Paper Book. The assessee has placed on record copy of Bank Statement on page Nos. 69 to 72. A perusal of the above documents would reveal that a sum of Rs.15 lacs was received by the mother of the assessee on 16.12.2011 and it was deposited on 20.12.2011. This fact is discernable from the details of money paid by the vendor, reflected in the Sale Deed vis-à-vis entries available in the bank account on page No. 69 of the Paper Book. The mother of the assessee has received sufficient money for sale of her alleged agriculture land which was stated to be deposited in the bank account. The assessee has demonstrated full details of the payments received under the Sale Agreement which was ultimately reflected in the Sale Deed. Thus, the mother of the assessee was having sufficient source for explaining the deposits in the bank account. The assessee has not been doing any other business which could have generated this much of money to him and the AO could be goaded to disbelieve the version put-forth by the assessee.
On due consideration of these facts and circumstances, we are satisfied that assessee has explained the source of deposits in the bank being sale proceeds of agriculture land A.Y.2012-13 5 sold by his mother. Accordingly, no addition is sustainable. We allow this ground of appeal of the assessee and delete the addition.
6. As far as second fold of grievance regarding re-opening is concerned, we find that it is not discernable that assessee has filed original return of income within due date u/s 139(1) of the Act. The AO has received an information that a huge cash of more than Rs. 1.48 Cr has been deposited in the bank account of the assessee which is not in consonance with the income of the assessee because return was not available. In this situation, there was no other choice with the AO to examine whether deposits in the bank account are from explained source or from unexplained source. Hence, he has to reopen the assessment. Therefore, we do not find any error regarding re-opening of the assessment. It is upheld.
In the result, appeal of the assessee is partly allowed.
Order pronounced on 03.06.2025.