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Facts
The assessee, an agriculturist, deposited cash of Rs. 13,47,500/- into a joint bank account with his brother during the demonetization period. This cash was allegedly from the sale of agriculture produce. The Assessing Officer (AO) treated this deposit as unexplained income under Section 69A of the Income Tax Act.
Held
The Tribunal held that the assessee had provided sufficient explanation and corroborative documentation for the source of the cash deposit. The explanation that the funds originated from the sale of agricultural produce and were deposited within a short period was found to be credible.
Key Issues
Whether the cash deposit made by the assessee, claimed to be from agricultural sale proceeds, can be considered as unexplained income under Section 69A of the Income Tax Act when adequate documentation was provided during appellate proceedings.
Sections Cited
69A, 144, 142
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िनधा"रती क" ओर से/Assessee by : Shri Tejmohan Singh, Advocate on behalf of Shri Rishabh Kapoor, Advocate राज"व क" ओर से/ Revenue by : Dr. Ranjeet Kaur, Sr. DR सुनवाई क" तारीख/Date of Hearing : 08/01/2025 उदघोषणा क" तारीख/Date of Pronouncement : 13/01/2025 आदेश/Order
PER VIKRAM SINGH YADAV, AM
This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 25/05/2024 pertaining to Assessment Year 2017-18.
At the outset, there is a delay in filing of the appeal as pointed out by the Registry. After hearing both the parties and the considering the affidavit of the assessee placed on record, I find that there was reasonable cause in the delayed filing of the appeal, the same is hereby condoned and the appeal is admitted for adjudication.
2 3. In the present appeal, the assessee has challenged the sustenance of addition of Rs. 13,47,500/- under Section 69A of the Act.
Briefly the facts of the case are that the assessment in this case was completed under section 144 dt. 23/12/2019 wherein the AO has brought to tax a sum of Rs. 13,47,500/- being cash deposited by the assessee in his bank account maintained with Kotak Mahindra Bank during the demonetization period, which, on appeal, has been sustained by the Ld. CIT(A) and against which, the assessee is in appeal before us.
During the course of hearing, the Ld. AR submitted that the assessee is an agriculturist and has deposited the cash out of the sale of agriculture produce in his joint bank account maintained with his brother and necessary proof in terms of copy of bank statement, copy of J-Forms, copy of the land holding were duly submitted before the Ld. CIT(A) however, he has failed to appreciate the same and has sustained the addition and in this regard, our reference was drawn to the submission and the documentation so filed by the assessee before the Ld. CIT(A) which found reproduced in the impugned order in para 5.2 and the contents thereof read as under: “5.2 Submission of the Appellant filed during the appellate proceedings dated 16.05.2022 as under: "Respected Sir/Madam, It is stated that assessment in the case have been completed by ITO Sunam U/s 144 of IT Act on 23.12.2019, on total income of Rs 13,47,500/-as no retum of income tax has been filed by Appellant in his case. I may submit that the appellant has not been given sufficient opportunity to represent his case before the AO as only one notice has been received by him and that was duly complied with submitting reply to the AO as per my letter dated 23/09/20219 Annexure A The non-compliance by the appellant with regard to other notices was not willful as he had not received these notices. I may further submit that there was no malafide intention on the part of the appellant to conceal any fact from the department, as he has no other source of income except agriculture income and as such he was not required to file income tax return. He is senior citizen aged about sixty years. The orders passed by AO was not reasonable and justified and lacks principal of natural justice to have been fairly given to the appellant. The appellant is an agriculturist and has no source of income except agriculture income. He along with his brother S. Hardev Singh has a joint bank account at Kotak Mahindra Bank Limited and has made various transactions in the account no. 80304404507. During the period 01.04.2016 to 31.03.2017, he along with his brother has deposited an amount of Rs 13,47,500/- (Thirteen Lac Forty Seven Thousand Five Hundred Rupees) in cash on different dates in the limit account of the bank account. Copy of Bank Account is enclosed for reference as Annexure B. The appellant and his brother namely S. Hardev Singh have sold the agriculture produce to two different Artiyas/Commission Agents and have received about Rs 11,41,166/- (Eleven Lac Forty One Thousand One Hundred Sixty Six Rupees) in cash from the commission agents for the sale of their agricultural produce on different dates during the paddy season ie 14.10.2016 to 29.10.2016. Total amount of Rs 13,51,166/- was available in cash upto 30.10.2016 out of which a sum of Rs 13,47,500/- was deposited in cash in the bank. Cash deposited in the bank account is the same cash which is available with the appellant out of sale proceeds of the agriculture produce as they have no other source of income except agriculture income, which is exempt and as such the appellant was not required to file his income tax return. This fact was also conveyed to the Assessing Officer Sunam as per letter dated 23.09.2019 and the Assessing Officer has also mentioned in his orders under appeal in table no. 2(3) which were passed U/s 144 of IT Act. That the notice U/s 142 (i) (ii) dated 17.09.2019 was compiled on 23.09.2019. A copy of the letter dated 23.09.2019 is attached herewith as Annexure A. Details of cash received by S. Ranbir Singh son of S. Mahinder Singh R/o Bagrol from his commission agent M/s Jora Singh Mann & Sons Bagrol, Sangrur as per form no. J issued by the commission agent on various dated and details of cash received by S. Hardev Singh son of S. Mahinder Singh from M/s Amarjeet Ranjiv Kumar of Sanour District Patiala as per form no. J are enclosed herewith as Annexure C (1 to 6). It is thus clear from the above submissions and considering the circumstances and facts of the case that appellant has deposited a sum of Rs 13,47,500/- on different dates in the bank account no. 80304404507 during the demonization period 9.11.2016 to 30.12.2016 out of the cash available with him from the normal agricultural receipt as he has no other source of Income except agricultural income. As per ITAT Delhi order in the case of Om Parkash Nahar v/s ITO appeal number 960/Del/2021 that no addition from cash deposited during demonetization out of cash available 27/01/2022. The assessee had todeposit the cash due to demonetization that to partiality le notes of rupees 500 and 1000 as they were no longer considered as legal tender. I hereby also produce the copies of land holdings Jamabandi of the land owned by him and his brother Hardev Singh Annexure D1 to D 7. Copy of Girdwari will be submitted as an early date as the same is not available due strike in the revenue department. I therefore pray that the addition made by the Assessing Authority may kindly be deleted/amended and modified in keeping in view the above submission and the appeal may kindly be disposed of accordingly.”
It was accordingly submitted that the assessee has provided the necessary explanation and documentation explaining the source of cash deposit and inspite of that, the addition has been sustained by the Ld. CIT(A) which may kindly be deleted.
Per contra, the Ld. DR has submitted that during the course of assessment proceedings, the assessee was provided multiple opportunities and he has only submitted a copy of solitary J Form dt. 29/10/2016 for Rs. 599,995/- without any further corroborative evidence which has resulted in AO rejecting the same and making the 4 addition holding the cash so deposited as unexplained. Further reliance was placed on the findings of the Ld. CIT(A) which read as under:
5.4 a) During the assessment proceedings, the assessee has been given sufficient opportunities vide issuing of statutory notices. The assessee remained non-compliance. However, the assessee filed reply on 23.09.2019 merely submitting the copy of J-Form. The assessee has also been issued Final show cause notice vide notice dated 12.12.20219 which remained uncompiled. Accordingly, the AO concluded the assessment ex-parte making addition of the alleged amount as unexplained money u/s 69A of the Act. 5.4 b) During appellate proceedings, the assessee has filed response vide letter dated 16.05.2022 submitting the appellant is an agriculturist having no other source of income except agriculture. The appellant along with his brother S. Hardev Singh doing agriculture business activity. The cash deposited in bank account is a joint bank account in the name of appellant and his brother. The appellant has submitted the copy of J-Form (i.e. sale purchase of agriculture produced), details of cash received by the assessee during the year under consideration, copy of bank statement. b) In view of the above, the assessee has not submitted the relevant documents except form J. The assessee has not submitted any supporting document to justify that agriculture activity and income earned thereon. In absence of the supporting documents, the contention of the appellant is found to be not tenable and the appellant has not been able to defend the grounds raised. Hence, grounds raised are rejected.
Having heard the rival contentions and after going through the material available on record, I find that the assessee has provided the necessary explanation with due corroboration and the amount so deposited cannot be brought to tax in his hands. Admittedly, the cash has been found deposited in the joint bank account maintained by the assessee with his brother. The source of cash so deposited in the joint bank account has been explained as out of sale of agriculture produce on different dates during the paddy season i.e 14.10.2016 to 29.10.2016. whereby they have received a sum of Rs 13.51 lacs and out of which, a sum of Rs 13.48 lacs has been deposited in the bank during the demonization period thus establishing the necessary nexus in terms of receipts from sale of agriculture produce and deposit in the bank account within next few days. In order to corroborate the same, even though the assessee couldn’t submit the requisite documentation during the assessment proceedings, however, during the appellate proceedings, he has submitted the particulars of cash received from commission agent, M/s Jora Singh Mann & Sons Bagrol, Sangrur and M/s Amarjeet 5 Ranjiv Kumar of Sanour District Patiala along with copies of Form No. J issued by such commission agents and details of land holding. The contents of the said documents remain unrebutted before me and in absence of any adverse material brought on record, I find the source of cash so deposited as duly explained and the addition so made is hereby directed to be deleted.
In the result, the appeal of the assessee is allowed.