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Income Tax Appellate Tribunal, BENGALURU BENCH A, BENGALURU
Before: SHRI. A. K. GARODIA & SHRI. LALIET KUMAR
IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'A', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER (Assessment Year : 2008-09) Shri. A. R. Pradeep, No.759, 8th Cross, 5th Main, 2nd Block, R. T. Nagar, Bengaluru 560 032 .. Appellant PAN : AIAPR2926E v. Income-tax Officer, Ward – 15(1), Bengaluru .. Respondent Assessee by : Shri. C. Ramesh, CA Revenue by : Shri. Vikram Suryavamshi, ACIT Heard on : 20.02.2019 Pronounced on : 22.03.2019 O R D E R
PER LALIET KUMAR, JUDICIAL MEMBER :
The present appeal is filed by the assessee, against the order of the CIT (A) -3, dt.19.10.2016, for the assessment year 2008-09.
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2. Following grounds are filed by the assessee are as under :
1. The CIT (Appeals) was not correct in confirming the additions made by A.O. to the extent of Rs.18,70,000/- towards Un Explained Cash Deposit as the Appellant has fully explained the sources of Cash Deposit.
The CIT (Appeals) was not correct in not accepting the explanation and documents submitted by the Appellant relating to the sources of Appellant Father's Agricultural Income.
3. The Appellant has established the Genuineness, Identity and Creditworthiness of the person, who has given money. Hence the AO/CIT (A) were wrong in not accepting the contention of Appellant.
4. The Appellant craves leave to add, to alter, to amend or to delete any of the grounds that may be urged at the time of hearing of the Appeal.
The Ld. AR had drawn our attention to the additional ground raised
before us, which reads as under :
1. The CIT (Appeals) was not correct in not adjudicating Ground filed before CIT (A), where the A. O erred in treating the Agricultural income as unexplained cash credit in the absence of credit entry in the Books of Account. The existence of Books of Accounts is a condition precedent to attract the provisions of Section 68.
2. The CIT (A) was not correct in confirming the addition made by A. O. U/s.68, as the Appellant was not carrying the business activities and not maintained any books of accounts as contemplated u/s.68. For the reason mentioned in the application for admission of the additional ground, we admit the additional ground urged before us.
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All the grounds urged before us including the additional ground are summarised in one ground i.e., whether the addition made on account of unexplained cash credit of Rs.18,70,000/- is required to be deleted ? In this regard the assessee has submitted that the assessee has a joint account along with his father in The Karnataka State Cooperative Apex Bank Ltd, where the cash of Rs.18,70,000/- was deposited on 07.11.2007 and Rs.10 lakhs was deposited into the housing loan again on 07.01.2008 by the father of the assessee. It was the case of the assessee that during the assessment proceedings the AO has wrongly recorded that the assessee had failed to prove the accumulation of cash of Rs.18,70,000/- and has failed to substantiate and provide the details of the source of evidence for the sum of Rs.18,70,000/-.
The Ld. AR had drawn our attention to page 15 of the paper book where a letter of confirmation issued by the father of the assessee is placed. It was also submitted that the amount received by the assessee was from various persons who had also given the letter of confirmation to the effect that the amount was paid by them in cash to the assessee. Such letters are found at pages 31, 33, 35, 37, 39, 41 and 43 of the paper book. It was submitted by the Ld. AR that besides the above, the AO has wrongly invoked the provision of Section 68 and treated that the amount deposited in the bank account is akin to unexplained cash deposit in the bank account and therefore it was submitted that the pass book is not the books of account and therefore the addition cannot be sustained u/s.68 of the Act.
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Per contra the Ld. DR had drawn our attention to para 5.1 to 5.4 of the order of the CIT (A), which is as under : 5.1 In his submission dated 22.09.2016; the appellant has stated that the amount received by him from his father was out of the sale proceeds accumulated over a couple of years from sale of coffee and tobacco. It was also clarified that normally these products are sold in the auction at the Coffee Board in Hassan and Tobacco Board at Ramanathapuram. However, in his submissions dated 06.10.2016 the appellant has furnished specific details regarding sale of coconut, areca nut, lemon and other items, from which the money was generated by his father. There is absolutely no reference to the income arising from sale of Tobacco and Coffee, as claimed in hi earlier submission. The reason for this change in the source of income is very much apparent. As stated by the appellant in his earlier letter dated 22.09.2016, the coffee and tobacco produced were sold through the Coffee Board and Tobacco Board, respectively. It is obvious that the sale proceeds from these Boards would be received through the banking channel and hence it would not be possible for the appellant to manipulate the figures relating to the sale of tobacco and coffee. On the other hand by claiming that his father had sold agricultural produce such as coconut, areca nut and lemon to various persons, the appellant can easily claim that the amount was received in cash and in such circumstances it would be easy to manipulate the quantum of agricultural income and would also make it difficult to cross verify the facts 5.2 In this regard the appellant has claimed that his father had apparently accumulated 1,51,500 coconuts and around 16 quintals of areca nut, which were sold to various persons in the month of November 2007. Similarly the appellant claims that in the same month his father had sold 125000 pieces of lemon to one vendor. The sheer number and quantity of the agricultural produce claimed to have been produced and sold by the appellants father in one month makes the whole claim far-fetched and improbable. It is difficult to accept that the appellant's father had accumulated more than 1.5 lakh ITA.1888/Bang/2016 Page - 5
pieces of coconut, 1.6 tons of areca nut and 1.25 lakh pieces of Lemon to be sold in one month and to have earned more than Rs.20 lakhs from the same during the same period - November 2007. It is also difficult to accept the claim that all the income generated from agricultural activities was kept in the form of cash and not deposited in any bank account of the appellants father, even though the amount is claimed to be more than Rs.20 takhs.
5.3 It is also observed that there are other major factual contradictions in the claim made by the appellant with regard to the quantity of agricultural produce and the amount of agricultural income earned by his father. In this regard it is relevant to note that in the submissions made by the appellant in his letter dated 06.08.2016, the appellant has enclosed a certificate from the Deputy Director (Horticulture), Zilla Panchayat, regarding the quantity of the agricultural produce harvested by the appellant's father and the estimated income derived by him during the financial year 2005-06 to 2008-09. In this statement it is stated that the appellant had 300 coconut trees and the net income per tree is estimated at Rs.411,60. Accordingly, the income of the appellant from sale of coconut for the year is estimated at Rs.91,080/-. The income received from sale of coconuts during the earlier two years and the subsequent year is also found to be in the same range, varying between Rs.91,080/- to Rs.1,00,740/-. However, in the submissions made by the appellant on 06.10.2016, the appellant has claimed that his father had sold approximately 151000 pieces of coconuts during the month of November 2007 and a further 20000 coconuts in January 2008. in this regard the appellant has claimed that he has received Rs.6.86 lakhs from the sale of coconuts alone during these two months. This amount is found to be almost 600% higher than the income of Rs.91,080/- estimated by the Deputy Director (Horticulture), Zilla Panchayat, which was furnished and relied upon by the appellant himself. The appellant has not been able to furnish any evidence to explain the six fold increase in the amount of income received from the alleged sale of coconuts. Similarly, the appellant has claimed that Rs. 50,000/- was received from the sale of 125000 pieces of lemon during the month of November 2007. In the statement ITA.1888/Bang/2016 Page - 6 furnished by the Deputy Director (Horticulture), there is no reference to any production of lemon from the and belonging to the appellant's father. These variations clearly indicate that the details furnished by the appellant with regard to the quantum of agriculture produce harvested by the appellant's father and the amount of income generated. from such activities are completely false, fabricated and factually incorrect. The figures relating to both the quantum of production and the amount of agricultural income have been grossly exaggerated and hence cannot be accepted. 5.4 It is also relevant to note that the entire claim of having received agricultural, income is sought to be established by the appellant only on the basis of letters and confirmations from different persons, who claim to have purchase the agricultural produce. It is difficult to accept such explanation because the identities of these persons have not been established and all the transactions made with such persons are claimed to be in cash, in is also difficult to accept that the appellants father had accumulated more than 1.5 lakh pieces of coconut and 1.6 tons of areca nut, to be sold during the month of November 2007. Similarly it is claimed that 1.25 lakh pieces of lemon was sold on 04/11/2007. Prima-facie, it is difficult to accept the appellants claim made in this regard. Moreover, the appellant has not furnished any definite evidence in real terms to prove the generation of agricultural income as claimed above. It is very surprising that the appellants father have chosen not to deposit any part of agricultural income in his bank accounts and keep it all in the form of cash, notwithstanding the high quantum of such income.
On the basis of the above, it was submitted that the assessee failed to substantiate the deposits made in the bank account and, if the grievance of the assessee is that wrong invocation of Section 68, than the case of the assessee can at best treated u/s.69 of the Act.
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