JAYPRAKASH BHOVANBHAI JAGANI HUF,RAJKOT vs. ITO, WARD-1(1)(1), RAJKOT, RAJKOT

The facts of the case which can be stated quite shortly are as follows: The Return of income for the Assessment Year 2017-18, was e-filed by the assessee on 21/02/2018, with returned income at Rs. 9,450/-, claiming exempt agriculture income of Rs. 4,83,289/-. The assessee`s case was selected for scrutiny in CASS for e-assessment proceedings and a statutory notice u/s. 143(2) of the I.T. Act,1961 was issued on 21/09/2018, which was duly served upon assessee within time limit. Thereafter during the course of e-assessment proceedings, further Page | 2 notice u/s. 142(1), alongwith questionnaire was issued on 14/08/2019, which were duly served upon assessee. During the assessment proceeding, the assessing officer noticed that assessee has deposited Rs.6,00,000/- in the bank account, during the demonetisation period. Therefore, assessee was asked to explain the source of cash deposit to the tune of Rs.6,00,000/-.

In response, to the notice of the assessing officer, the assessee submitted, vide assessee`s reply dated 26/09/2019, the financial statements, sale bill and invoices related to agricultural receipt and agricultural expenses, copy of 7/12, that is proof of land holding, statement of past savings etc. The assessee has also explained the source of the cash deposit.

However, the assessing officer rejected the above contention of assessee and made addition to the tune of Rs.6,00,000/-, under section 69A read with section 115BBE of the Act.

Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal, before the ld.CIT(A) who has dismissed the appeal of the assessee. Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before the Tribunal.

Shri Mehul Ranpura, Learned Counsel for the assessee, argued that the assessee has deposited Rs.6,00,000/-, during the demonetisation priod out of the agriculture income, and past savings. The assessee has submitted bank statement, and agriculture docuemnts, such as bills, invoices. The assessee also submitted the evidence of ownership of the land, to prove its claim that the income is from agriculture income, therefore, the addition should be deleted.

On the other hand, the ld.DR for the revenue, submitted that the assessee has not explained the source of cash deposited in the bank account with cogent evidence. Therefore, the appeal of the assesseee should be dismissed.

I have heard both the parties and gone through the material available on record. I note that assesseee is an individual and agriculturist and since his income exempted from tax, therefore, the assessee did not file return of income, in past years. I note that the assessee has deposited cash during the demonetisation period of Rs.6 lakhs, and submitted the evidence of source of cash deposit during the assessment proceedings. Before the assessing officer, the assessee submitted the financial statements, sale bills, invoices related to agricultural receipts, agricultural expenses, copy of 7/12, that is, proof of land holding land and statement of past savings etc. The assessing officer just stated that documents and evidences produced by the assessee are not acceptable, without pointing out any specific defects in the documents and evidences so submitted by the assessee. Therefore, I find that assessee has explained the cash deposit with documentary evidences. For that reliance is placed on the decision of the Coordinate Bench of ITAT Delhi, in the case of Om Parkash Nahar [2022], 135 taxmann.com 377 (Delhi - Trib.), wherein, it was held that where assessee had no source of income apart from rental or pension income and some interest amount and same income had been withdrawn regularly from his bank account owing to his old age and various ailments and even after household withdrawal, there was a huge amount available with assessee in form of cash which he had deposited during demonetization, therefore, without any adverse material it could not be presumed that cash deposited by assessee was out of some undisclosed source and thus, additions made to income of assessee were to be deleted. The findings of the Coordinate Bench are reproduced below:

Thus, I find that assessee has submitted all the possible evidences to substantiate its cash deposit in the bank account. However, I find that some of the evidences furnished by the assessee are self- servicing documents. I, therefore take into account all these peculiar facts into account and taking into account the smallness of the amount, I note that to meet the end of Justice, it is reasonable to restrict the impugned disallowance @ 5% of Rs. 6,00,000/-, which comes to Rs.30,000/-. Since the assessee has deposited the cash in the bank account out of recognized sources, therefore, he is not liable to pay tax under section 115BBE of the Act, hence, I direct the assessing officer to tax Rs.30,000/-, by applying the normal rate of income tax.

I once again emphasize that this decision is rendered on the peculiar facts of this case and having regard to the smallness of amounts involved, and, therefore, it cannot be construed as laying down propositions of law of general applications. Hence, it is made clear that instant adjudication shall not be treated as a precedent in any preceding or succeeding assessment year.