RAMLING PRABHU SHINDE,MUMBAI vs. ITO WARD 3(2), MUMBAI

The dispute in the present appeal is confined to the addition of ` 35,80,000, under section 69A of the Income Tax Act, 1961 (for short "the Act").

Brief facts are, the assessee, an individual, is stated to be a retired employee of Municipal Corporation and derives income from Pension and agricultural activity. For the assessment under dispute, the assessee filed his return of income on 29th April 2015, declaring total income of ` 1,70,020. In the course of assessment proceedings, the Assessing Officer on verifying the return of income found that the assessee has shown income from other sources amounting to ` 1,80,000 and agricultural income of ` 7,20,000. After verification of further details called for, he found that during the year under consideration, the assessee has made cash deposit of ` 43,00,000, in a bank account maintained with Gopinath Patil Parsik Janata Sahakari Bank Ltd. When called upon by the Assessing Officer to explain the source of such cash deposit with supporting evidences, it was submitted by the assessee that such deposit has been made from the following sources:–

After considering the explanation of the assessee and source of cash deposit, the Assessing Officer accepted assessee’s explanation to the extent of ` 7,20,000, representing the agricultural income.

The learned Authorised Representative submitted, out of the cash deposits made in the bank account an amount of ` 7,00,000, deposited on 1st February 2014, was out of cash withdrawals made of ` 8,10,000, from assessee’s Pension account. Further, he submitted, in the preceding assessment year i.e., A.Y. 2013–14, the assessee has offered net agricultural income of ` 9,35,812, which was available with the assessee. Further, he submitted, the assessee has advance some loan to friends and closely known persons in their time of need which was re–paid by them since the assessee wanted funds for the purpose of foreign education of his son. The learned Authorised Representative submitted, towards re–payment of loan the assessee received an amount of ` 13,25,000. Thus, he submitted, balance amount of cash deposit almost stands explained. He submitted, to prove receiving back loans, the assessee has furnished affidavits of the concerned persons who had availed loan as well as their identification. He submitted, learned Commissioner (Appeals) without considering the 4 Ramling Prabhu Shinde veracity of the statements made in the affidavits has mechanically rejected them by simply observing that they are self–serving documents. In support of such contention, he drew our attention to the affidavits placed in the paper book and their translated version in English. Explaining the purpose of cash deposit in the bank account, the learned Authorised Representative submitted, for the purpose of obtaining visa for his son’s foreign education, the assessee as per requirement had to maintain a balance in the bank account. Accordingly, the cash deposits were made in the bank account and thereafter convert into fixed deposit. Thus, he submitted, the addition made should be deleted.

The learned Departmental Representative strongly relying upon the observations of the Assessing Officer and learned Commissioner (Appeals) submitted, the assessee has not properly explained the source of cash deposit with supporting evidences. He submitted, the amount received towards re–payment of loan was not proved by producing the concerned persons either before the Assessing Officer or before learned Commissioner (Appeals). He submitted, only before learned Commissioner (Appeals), the assessee furnished affidavit of the persons who allegedly availed loan from the assessee. He submitted, by merely furnishing affidavits assessee’s claim cannot be accepted. As regards the claim of agricultural income, the learned

We have considered rival submissions and perused the material on record. Undisputedly, the assessee has made cash deposit of ` 43,00,000, in a bank account standing in his name. Before the Assessing Officer, the assessee has explained the source of such cash deposits by furnishing certain evidences. As could be seen, except the amount of ` 7,20,000, representing the agricultural income earned in the impugned assessment year, the Assessing Officer has disbelieved assessee’s explanation with regard to the balance cash deposit. Before us, the assessee has filed certain documentary evidences in the form of a paper book. On a perusal of the said documentary evidences, it is evident, the assessee has two bank accounts. One is a pension account and the other one is the account wherein cash deposits have been made. On a perusal of the pension account, it is noticed that on 4th January 2014, the assessee has withdrawn cash amounting to ` 8,10,000, whereas, he has deposited cash amounting to ` 7,00,000, in the other account on 1st February 2014. It is the say of the assessee that the aforesaid cash deposit of ` 7,00,000, is out of the earlier cash withdrawal of ` 8,10,000. Though, there may be a delay of about 24– 25 days between the cash withdrawal and cash deposit, however, the 6 Ramling Prabhu Shinde explanation of the assessee in this regard is acceptable. Therefore, the cash deposit of ` 7,00,000, made on 1st February 2014, in our view, stands explained. Further, it is the claim of the assessee that in the immediately preceding assessment year, it has shown net agricultural income of ` 9,35,812, which is available with the assessee in the form of cash and was deposited in the bank account. From the material on record, it is apparent that the assessee has agricultural land holding and derives income from agricultural activity. In fact, in the impugned assessment year, the assessee has offered net agricultural income of ` 7,20,000, which has been accepted by the Assessing Officer. Therefore, explanation of the assessee that he has past savings from agricultural income cannot be rejected totally. However, assessee’s claim that the entire net agricultural income of ` 9,35,812, was available with him is also not acceptable considering the fact that the assessee must have utilized some amount out of such income for his domestic and other expenditure. Thus, in our opinion, out of the net agricultural income of the past years, the assessee could reasonably be accepted to have saved an amount of ` 9,00,000. Therefore, to that extent, cash deposit made in the bank account stands explained. This leaves us with the balance cash deposit of ` 19,80,000. To explain this, the learned Authorised Representative has submitted that assessee has received back the amount of ` 13,25,000, from three persons who have availed loan from him. In this context, the assessee