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Facts
The assessee, an individual agriculturist, did not file an income tax return for AY 2018-19. His case was reopened due to significant cash withdrawals of Rs. 1,39,02,130/- from his Axis Bank account, which the Assessing Officer treated as unexplained money under Section 69A due to a lack of documentary evidence for payments to farmers for maize purchases and subsequent sales. The CIT(A) sustained this addition, noting the assessee's failure to provide critical evidence like farmers' identities, cultivation records, and reconciliation of cash withdrawals with reported purchases.
Held
The Tribunal observed contradictory views between the Assessing Officer's remand report (which accepted ledger accounts) and the CIT(A)'s finding. Given the assessee's failure to furnish relevant supporting bills for sales and purchases of maize, the Tribunal set aside the CIT(A)'s order and remanded the matter back to the Assessing Officer for de-novo consideration, directing a fresh opportunity for the assessee to explain and provide evidence.
Key Issues
Whether cash withdrawals from a bank account, claimed as payments to farmers for maize purchases, can be treated as unexplained money under Section 69A due to insufficient documentary evidence for the genuineness of purchases and sales transactions.
Sections Cited
147, 148, 148A(b), 148A(d), 142(1), 143(2), 69, 69A, 115BBE, 144B, 44AB, 139
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Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G.
IN THE INCOME TAX APPEALTE TRIBUNAL : VISAKHAPTNAM BENCH : VISAKHAPATNAM AT HYDERABAD [THROUGH VIRTUAL HEARING] BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G. ACCOUNTANT MEMBER ITA.No.283/Vizag/2025 Assessment Year 2018-2019 Sri Venkateswara Rao Gopalam, Guntur. The Income Tax Officer, PIN – 522 234. vs. Ward-1, State of Andhra Pradesh. TENALI. PAN BQYPG7092M (Appellant) (Respondent) For Assessee : Sri DL Narasimha Rao, Advocate-[Hybrid Mode] For Revenue : Dr. Aparna Villuri, Sr. AR Date of Hearing : 31.07.2025 Date of Pronouncement : 06.08.2025 ORDER PER MANJUNATHA G. :
This appeal has been filed by the assessee against the order dated 25.03.2025, of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, relating to the assessment year 2018-2019.
2 ITA.No.283/Vizag/2025 2. Brief facts of the case are that, the assessee is an individual, agriculturist and derives income towards commission on sale of agriculture produce on behalf of the farmers. The assessee did not file return of income for the assessment year 2018-2019 under consideration. The case of the assessee has been flagged as per Risk Management Strategy through Insight Portal under the Head “NMS” cases. As per the information, the assessee has not filed his return of income for the assessment year 2018-2019 and there are cash withdrawals in current account maintained with Axis Bank to the tune of Rs.1,39,02,130/-. Therefore, the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment. The Assessing Officer based on the information, reopened the case of the assessee u/sec.147 of the Income Tax Act, 1961 [in short "the Act"]. The Assessing Officer issued notice u/sec.148A(b) of the Act on 21.03.2022 and called-upon the assessee to explain the cash withdrawals. In response, the assessee submitted that, he belongs to agriculture family and taken lands on lease for the last 20-25 years. With his experience
3 ITA.No.283/Vizag/2025 in the field of agricultural farm products, he has carried on the activity for supply of Maize to Millers, outsiders on behalf of farmers and has earned income from farmers for each bag towards commission. In this process, all the suppliers have remitted the amount to his Axis Bank A/c and the assessee has withdrawn this amount and repaid the amount to the local farmers and has received only commission from farmers during seasonal days. The assessee has also filed bank statement maintained with Axis Bank, capital account, balance sheet, P & L A/c, cash book for the financial year 2017-2018 relevant to assessment year 2018-2019. The Assessing Officer after considering the submissions of the assessee noted that, the assessee has not substantiated the claim of payments of cash aggregating to Rs.1,39,02,130/- withdrawn from his Axis Bank Account to farmers with proper documentary evidence and thus, the Assessing Officer concluded that, income chargeable to tax has escaped assessment. Accordingly, the Jurisdictional Assessing Officer passed an order u/sec.148A(d) of the Act on 12.04.2022 and notice u/sec.148 of the Act was issued
4 ITA.No.283/Vizag/2025 to the assessee on 12.04.2022 calling the assessee to file his return of income. In response to the notice u/sec.148 of the Act, the assessee filed his return of income on 10.11.2023 declaring total income at Rs.1,93,040/- under the Head “Income from Business”. During the course of assessment proceedings, the Assessing Officer issued various notices u/sec.142(1), 143(2) dated 21.08.2023, 08.09.2023, 12.10.2023, 15.12.2023 and show cause notice dated 04.03.2024 calling for various details such as a note on business activities, income tax computation, source for total credits in the bank account from which cash withdrawals have been made, financial statements etc. However, the assessee did not file any reply to the above notices. Therefore, the Assessing Officer, in absence of proper explanation with supporting documentary evidence from the assessee, treated the total cash withdrawals from the current account with Axis Bank as unexplained money and determined the total income of the assessee at Rs.1,51,42,975/- as unexplained u/sec.69A r.w.s.115BBE
5 ITA.No.283/Vizag/2025 of the Income Tax Act, 1961 vide order dated 15.03.2024 u/sec.147 r.w.s.144B of the Income Tax Act, 1961.
On being aggrieved, the assessee carried the matter in appeal before the learned CIT(A). Before the learned CIT(A) the assessee reiterated his submissions made before the Assessing Officer. The assessee has filed certain additional evidences in the form of audited books of accounts u/sec.44AB of the Act, payments made to farmers through banking channel worth Rs.12,37,000/- and with respect to balance sales, the assessee had filed sale ledger along with Form-35 before learned CIT(A). The learned CIT(A) has forwarded the additional evidences to the Assessing Officer for remand report. The Assessing Officer has submitted his remand report dated 17.03.2025 and the same has been forwarded to the assessee for his rejoinder. The assessee has filed his rejoinder on 20.03.2025. The learned CIT(A) after considering the submissions of the assessee, remand report of the Assessing Officer and rejoinder of the assessee, noted that, the assessee had failed to submit critical evidence such as farmers’ identities, cash
6 ITA.No.283/Vizag/2025 vouchers or cultivation records, quantitative details of purchases, farmers PANs, land records or acknowledgment of cash receipts to establish their existence or maize cultivation. Further, there is glaring absence of quantity/quality details of maize purchased from each farmer and there is no reconciliation between cash withdrawals totalling to Rs.1.34 crore and reported purchases. Further, the sale details do not contain transport receipts or weighbridge records to validate sales. In absence of satisfactory explanation from the assessee with the supporting above critical documentary evidence, the learned CIT(A), sustained the addition made by the Assessing Officer.
Aggrieved by the order of the learned CIT(A), the assessee is now, in appeal before the Tribunal.
Sri DL Narasimha Rao, Advocate-Learned Counsel for the Assessee submitted that, the learned CIT(A) erred in sustaining the addition made by the Assessing Officer towards credit in bank account as unexplained money under section 69 of the Income Tax Act, 1961
7 ITA.No.283/Vizag/2025 without appreciating the fact that, the earlier report submitted by the Assessing Officer supports the stand of the assessee that, the assessee is a trader in Maize and credits in bank account pertains to sale proceeds. Learned Counsel for the Assessee referring to the remand report of the Assessing Officer submitted that, although, the assessee did not file his return of income under section 139 of the Act, but, filed his return of income in response to notice under section 148 of the Act and reported the income from business out of trading in Maize. Further, the assessee maintained books of accounts and said books of accounts are audited by an Accountant. From the books of accounts furnished by the assessee, it is undisputedly clear that, the assessee is engaged in the business of trading in Maize and credits in bank account are out of sale proceeds. The assessee had also furnished corresponding purchases from the farmers with relevant details. Although, the assessee has furnished all the details, but, the learned CIT(A) rejected the evidences filed by the assessee and sustained the addition made by the Assessing Officer only on the ground 8 ITA.No.283/Vizag/2025 that, no proper documentary evidences has been maintained for the quantitative details of goods traded and other supporting evidences. Therefore, he submitted that, the addition made by the Assessing Officer should be deleted.
Dr. Aparna Villuri, learned Sr. AR for the Revenue, on the other hand, submitted that, the assessee did not file his original return of income in terms of section 139 of the Act. Although, the assessee filed return of income in response to notice under section 148 of the Act and claims that, credits in bank account pertains to sale proceeds, but, no supporting evidence has been furnished. The Assessing Officer and the learned CIT(A) after considering the relevant facts, has rightly treated the credits in bank account as unexplained money and taxed under section 115BBE of the Act. Therefore, he submitted that, the order of the learned CIT(A) should be upheld
We have heard both the parties, perused the material on record and gone through the orders of the 9 ITA.No.283/Vizag/2025 authorities below. There is no dispute with regard to the fact that, the assessee did not file his return of income under section 139 of the Income Tax Act, 1961. It is also not in dispute that, the case of the assessee has been reopened under section 147 of the Act as per the information available in inside portal under the Head “NMS” that, the assessee has made huge cash withdrawals including through cheques in current account for Rs.1,39,02,130/-. The assessee filed return of income in response to notice under section 148 of the Act and claimed that, credits in bank account pertains to sale of Maize to various parties and cash withdrawal from bank account is, out of sale proceeds of Maize and the same has been withdrawn from bank for making payment to the farmers. The assessee has filed relevant books of accounts including ledger extract of sales and purchases along with confirmation from the traders to whom the goods has been sold. During the remand proceedings, the Assessing Officer verified the details submitted by the assessee and found that, the credits in bank account with narration matches with the 10 ITA.No.283/Vizag/2025 confirmations filed by the assessee from few parties regarding sale of Maize. The Assessing Officer had also verified purchases with reference to few names of the farmers and claimed that, the purchases reported by the assessee is matching with the corresponding cash payments. However, the learned CIT(A) rejected the explanation of assessee only on the ground that, the books of accounts maintained by the assessee is not supported by necessary details in support of sales and purchases. The assessee has failed to file relevant details of names and PAN of the farmers from whom the goods has been purchased. The assessee has furnished relevant ledger account of Maize purchases and Maize sales.
We have gone through the relevant ledger account and find that, the assessee claims to have purchased Maize from farmers and upon perusal of ledger account, we find that, the purchases claimed to have been made by the assessee from farmers are uniform which is almost between Rs.1,90,000/- to Rs.1,90,000/- from each farmer. Even the quantity and rate is also even. Similarly, assessee claimed
11 ITA.No.283/Vizag/2025 to have sold Maize to few parties and upon perusal of ledger account, we find that, the sale is also uniform which varies from Rs.2.5 lakh to Rs.3 lakh to each party including quantity rate are also uniform. From the details filed by the assessee, it raises certain doubts about the genuineness of purchases and sales because, except filing ledger account and few confirmations from the parties, the assessee could not furnish any details for purchases and sales of Maize. Although, the farmers selling the agriculture produce without any bills, but, the assessee could have raised self made purchase bills for purchases. Similarly, the assessee should have maintain sale bills for selling the Maize to various traders with their GST number etc. In absence of relevant details, it is difficult to accept the arguments of the assessee that, entire credit in the bank account is out of the sale proceeds of Maize. However, the Assessing Officer during the remand proceedings has verified the statement of the assessee and accepted the fact that, the ledger account of sales and purchases are tallying with the bank statements. Since, there are contradictory views from the 12 ITA.No.283/Vizag/2025 Assessing Officer and the learned CIT(A) and further, the assessee failed to furnish relevant supporting bills for sales and purchases of Maize, in our considered view, the matter needs to be set-aside to the file of Assessing Officer for de- novo consideration of the issue. Thus, we set-aside the order of the learned CIT(A) and restore the issue back to the file of Assessing Officer. The Assessing Officer is directed to reconcile the issue de-novo, after providing reasonable opportunity of hearing to the assessee to explain his case. The Assessee is also directed to file relevant evidences in support of his claim.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 06.08.2025.