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Facts
The assessee failed to file an income tax return for AY 2017-18, and the Assessing Officer (AO) noticed significant cash deposits during the demonetization period. The AO treated these deposits as unexplained income under Section 69A and made an addition. The CIT(A) sustained an addition of Rs. 7,18,193/-.
Held
The Tribunal rejected the contention regarding the absence of DIN in the assessment order. Regarding the merits, the Tribunal allowed the appeal for agricultural income by restoring the issue to the AO for one final opportunity to produce evidence. The Tribunal accepted the explanations for past savings and collection from trade debtors and directed the deletion of these additions.
Key Issues
Validity of the assessment order due to alleged lack of DIN and justification for the addition sustained by the CIT(A) on account of unexplained cash deposits.
Sections Cited
69A, 144, 142(1)
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Income Tax Appellate Tribunal, Hyderabad ‘SMC‘Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice- & Shri Madhusudan Sawdia
Per Madhusudan Sawdia, A.M.: This appeal is filed by Shri Yadagiri Gurram, (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 30.05.2025 for the A.Y 2017-18.
The assessee has raised the following grounds of appeal:
The brief facts of the case are that the assessee is an individual who did not file his return of income for the Assessment Year 2017–18. From the records available, the Learned Assessing Officer (“Ld. AO”) noticed that during the demonetization period, i.e. from 08.11.2016 to 30.12.2016, the assessee had deposited cash aggregating to Rs.17,16,257/- in his bank accounts.
1. Page 2 of 8 Accordingly, the Ld. AO issued a notice under section 142(1) of the Income Tax Act, 1961 (“the Act”) on 02.02.2018, calling upon the assessee to file his return of income for the Assessment Year 2017–18. However, the assessee neither filed the return of income nor complied with the subsequent statutory notices issued by the Ld. AO. Thereafter, the Ld. AO obtained bank statements of the assessee from HDFC Bank and State Bank of India and observed that the assessee had deposited total cash of Rs.21,77,257/- during the Financial Year 2016–17 in his bank accounts. In the absence of any explanation from the assessee, the Ld. AO treated the entire cash deposits as unexplained money under section 69A of the Act and completed the assessment under section 144 of the Act vide order dated 06.12.2019, assessing the total income of the assessee at Rs.21,77,257/-.
Aggrieved with the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), on verification of the bank statements, found that the actual cash deposits in the bank accounts of the assessee during the year under consideration were Rs.7,18,193/- and not Rs.21,77,257/- as taken by the Ld. AO. However, the Ld. CIT(A) was not satisfied with the explanation offered by the assessee regarding the source of cash deposits and accordingly sustained the addition to the extent of Rs.7,18,193/-, thereby partly allowing the appeal.
Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. At the outset, the Learned
Page 3 of 8 Authorized Representative (“Ld. AR”) raised a legal ground challenging the validity of the assessment order on the ground that the Document Identification Number (DIN) was not mentioned on the face of the assessment order. He invited our attention to page no.1 of the assessment order and submitted that though an order number is mentioned, the word “DIN” has not been specifically mentioned and therefore the assessment order is liable to be quashed.
On merits, the Ld. AR submitted that the sustained addition of Rs.7,18,193/- by the Ld. CIT (A) is unjustified. He explained that the source of cash deposits as explained to the Ld. CIT (A) was Rs.3,50,000/- out of agricultural income for the year under consideration, Rs.2,00,000/- out of past savings and Rs.1,68,193/- out of collection from sundry trade debtors outstanding as on 31.03.2016.
As regards agricultural income, the Ld. AR submitted that the assessee is the owner of 7.28 acres of agricultural land and earning agricultural income of Rs.3,50,000/- from such land is reasonable and not excessive. He further submitted that in rural areas agricultural produce is mostly sold in cash and normally no documentary evidence is maintained.
With respect to past savings of Rs.2,00,000/-, the Ld. AR submitted that the assessee had declared incomes of Rs.17,52,700/- in AY 2014–15, Rs.4,52,817/- in AY 2015–16 and Rs.3,02,200/- in AY 2016–17, and therefore accumulation of Page 4 of 8 savings of Rs.2,00,000/- is quite reasonable. He further submitted that during the demonetization period, the Government itself had announced that cash deposits up to Rs.2,50,000/- would not be subject to further verification.
Regarding the balance amount of Rs.1,68,193/-, the Ld. AR submitted that the assessee was earlier engaged in business and had sundry trade debtors of Rs.30,18,000/- as on 31.03.2016, as reflected in the return of income for AY 2016–17 under current assets (Page No.122 of the paper book). He submitted that collection of Rs.1,68,193/- out of such outstanding trade debtors cannot be doubted. Finally, the Ld. AR prayed for deletion of the addition sustained by the Ld. CIT(A).
Per contra, the Learned Departmental Representative (“Ld. DR”) relied on the orders of the lower authorities. He submitted that the assessee did not respond to the notices issued by the Ld. AO and failed to furnish any evidence in support of his explanation either before the Ld. AO or before the Ld. CIT(A). He further submitted that the assessee has not produced any corroborative evidence in support of agricultural income, past savings or collection from trade debtors. Accordingly, he submitted that the addition sustained by the Ld. CIT(A) deserves to be upheld.
With respect to the legal ground regarding DIN, the Ld. DR submitted that the assessment order clearly contains a system-generated number along with barcode and merely because Page 5 of 8 the word “DIN” is not specifically mentioned, the assessment order cannot be treated as invalid.
We have considered the rival submissions and perused the material available on record. At the outset, we deal with the legal ground raised by the assessee regarding non-mentioning of DIN on the face of the assessment order. On perusal of the first page of the assessment order, we find that the order clearly contains a system-generated number along with barcode. Merely because the word “DIN” has not been specifically mentioned, it cannot be concluded that the assessment order has been passed without a DIN. When the assessment order itself bears a unique system-generated identification number and barcode, non- mentioning of the expression “DIN” does not render the order invalid. Accordingly, we reject the legal ground raised by the assessee.
1. 13. On merits, the only issue is regarding sustenance of addition of Rs.7,18,193/- on account of cash deposits by the Ld. CIT (A). As regards the claim of agricultural income, it is an undisputed fact that the assessee is the owner of 7.28 acres of agricultural land. However, mere ownership of agricultural land, by itself, does not automatically establish that agricultural operations were actually carried out or that agricultural income was earned therefrom during the relevant previous year. We find that both the lower authorities have declined to accept the claim of agricultural income on the ground that the assessee failed to Page 6 of 8 furnish any corroborative evidence such as details of crops grown, yield obtained, or sale proceeds realised. At the same time, considering the fact that the assessee is admittedly in possession of agricultural land, the possibility of generation of agricultural income cannot be completely ruled out. In our considered view, the ends of justice would be met by granting one more opportunity to the assessee to substantiate its claim. Accordingly, in the interest of justice, we deem it appropriate to restore the issue to the file of the Ld. AO with a direction to afford one final opportunity to the assessee to produce supporting evidence in respect of its claim of agricultural income of Rs.3,50,000/-. The Ld. AO shall examine the evidence so produced and decide the issue afresh, in accordance with law, after providing due opportunity of being heard to the assessee.
Regarding past savings of Rs.2,00,000/-, we find that the assessee has declared incomes of Rs.17,52,700/- in AY 2014– 15, Rs.4,52,817/- in AY 2015–16 and Rs.3,02,200/- in AY 2016– 17. Hence, the assessee has declared substantial income in the preceding assessment years. Further, during the demonetization period, the Government itself had clarified that cash deposits up to Rs.2,50,000/- would not ordinarily be subjected to verification. In view of these facts, we find the explanation of past savings of Rs.2,00,000/- to be reasonable and acceptable. Accordingly, we direct the Ld. AO to delete the said addition of Rs.2,00,000/-.
With respect to the balance amount of Rs.1,68,193/- claimed to be collected from trade debtors, on perusal of balance of sundry debtors as shown in the income tax return filed by the assessee for the AY 2016–17, placed at page no. 122 of the paper book, the assessee has disclosed a balance of Rs.30,18,000/- under current assets. Considering the existence of substantial outstanding trade debtors, collection of Rs.1,68,193/- during the year under consideration cannot be doubted and is therefore acceptable. Accordingly, the Ld. AO is directed to delete the said addition of Rs. 1,68,193/-.
In the result, the appeal of the assessee is allowed for statistical purposes.