KARSHANBHAI RANABHAI GORANIYA,AAVADPAN vs. INCOME TAX OFFICER, PORBANDAR

Aggrieved by the order of assessing officer, the assessee carried the matter in appeal before the Ld. CIT(A) who has confirmed the action of the assessing Karshanbhai Ranabhai Goraniya v. ITO AY. 2013-14 officer. The ld CIT(A) observed that assessee had not explained the sources of the cash deposits in a satisfactorily manner as the creditworthiness of the persons purchasing the cattle have not been proved with reliable evidences. Therefore, ld CIT(A) confirmed the addition made by the assessing officer. Aggrieved by the order of the ld. CIT(A), the assessee is in further appeal before us.

Shri Sagar Shah, Learned Counsel for the assessee, pleaded that assessee is an individual and senior citizen residing at the small village and deriving the income from agriculture activity and cattle rearing activity for the relevant financial year. The return of income for the year under consideration was filed on 31.07.2013, by declaring the total income of Rs. 1,14,848/-. Later on, the information was received from the DDIT (Inv.) Jamnagar stating that the assessee had deposited cash of Rs.37,00,000/-, in saving bank account, during FY 2012-13, relevant to assessment year 2013–14 and the source to the extent of Rs.3,78,000/- was explained as proceeds of sale of agriculture land and however, the source of remaining cash deposits was not explained, therefore, based on this information, the assessee`s case was re-opened u/s 147 of the Act, and a notice u/s 148 was issued on 08/05/2020. The Learned Counsel for the assessee stated that during the remand proceedings, the assessee has submitted following documents and evidences, before the assessing officer to substantiate its claim: (i).Income Tax Return-V and computation of income, for return u/s 148 of the Act, vide page no. 1 to 3 of submission dated 20.02.2021, as a proof of source of income. (paper book page No. 02 to 03.). (ii).Form No.7/12 and 8A, the proof for agricultural land holding( Vide page 04 to 07.). (iii) Evidences along with Affidavit by purchaser party of cows/buffaloes, as an evidence of sale of cattle and bullock cart, ( vide paper book page No. 04 to 07.)

The Learned Counsel stated that without verifying any of these above evidences, the alleged addition was made, by the assessing officer, ignoring the actual facts of the case. The Learned Counsel also stated that when the assessee has already provided the explanation of the source of cash deposited into bank account, along with evidences, vide reply to notice, dated 22.12.2020, during appellate proceedings. The Ld. CIT(A) called a remand report from the assessing officer. During the remand proceedings, the assessee submitted the date- wise breakup of cash deposited along with source of such cash deposit and reference of necessary documents. During the remand proceedings, before the assessing officer, the assessee has submitted, the following documents and evidences, Viz: (1). PAN numbers and address of the persons to whom cows, buffaloes and/or a bullock cart and bullocks were sold that is, (i) Rajabhai Ranabhai Modhwadiya (ii) Nagabhai Ranabhat Modhwadiya (iii) Bachubhai Nagabhai Modhwadiya (iv) Rambhai Lakhabhai Khunti. The assessee also submitted the complete and latest correspondence address of above mentioned persons. The assessing officer, by way of issuing notices under section 131 of the Act, should have conducted independent enquiry from the above persons, however, the assessing officer has failed to do so, therefore addition made by the assessing officer may be deleted.

On the other hand, Ld. DR for the revenue heavily, relied on the findings of the assessing officer, and stated that assessee has failed to prove the sources of cash deposits of Rs.33,22,000/-. The submission of the documents and evidences Karshanbhai Ranabhai Goraniya v. ITO AY. 2013-14 by the assessee, like, Income Tax Return-V and computation of income, Form No.7/12 and 8A, and the proof for agricultural land holding, and evidences along with Affidavits by purchaser party of cows/buffaloes, as an evidence of sale of cattle and bullock cart are not sufficient. The assessee has to furnish more documents and evidences to substantiate its case. This way, the ld. DR for the Revenue, reiterated the stand taken by the assessing officer, and stated that addition made by the assessing officer may be sustained.

We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We find that during the remand proceedings, the assessee has submitted following documents and evidences, before the assessing officer, to explain the source of the cash deposit, and a brief chart, showing the explanations, which are reproduced below:

We note that assessee had provided all the information asked by the Assessing Officer during the remand proceedings, and submitted all possible documents and evidences. We find that assessee is engaged in business of selling of milk and net income is earned by him by selling the milk and by selling the livestock, belonged to him. The assessee had also sold the cattle- cart and land in the beginning of the financial year. The source of cash deposit has been duly explained and all the documents were duly submitted, before the assessing officer. The assessing officer did not find any fault in these documents and evidences submitted by the assessee, except to say that explanations of the assessee are not acceptable. We find that source of the cash deposited, which is out of cash available, out of earlier savings and cash received from sale of Bullocks, Cows, Buffaloes and Agricultural land, which were duly supported with the documentary evidences. The assessee also submitted the Affidavit stating all the facts and for that ld. Counsel for the assessee, relied on the judgement of Hon`ble Supreme Court, in case of Mehta Parikh 7 Co. V. CIT [1956] 30 ITR 181(SC), wherein it was held that "when there is no material on record to disprove the veracity of a statement made in affidavit, a finding arrived at ignoring the statement in the affidavit would be finding based on no evidence and a finding which no person acting judicially Karshanbhai Ranabhai Goraniya v. ITO AY. 2013-14 could have arrived at. "In holding so, we draw support and guidance from the judgement in case of Hanutram Ramprasad V. CIT [1978] 114 ITR 19 (Gauhati),wherein, the Gauhati High Court observed that "an affidavit is a valid piece of evidence which can be acted upon in course of assessment or the appellate proceedings. When the AAC accepted the contents of the affidavit considered filed by the creditor and deleted the addition on account of cash credit, the Tribunal ought not to have ignored the contents of the affidavit filed before AAC on the basis of which relief was given. In such a situation the assessee could assume that the contents of the affidavit had been accepted by the authorities."

We also find that assessee under consideration, is a senior citizen, therefore, as per circular of the CBDT, amount of Rs.5,00,000/-would be treated as explained, as it falls within the limit of maximum amount, which is not chargeable to Tax. The relevant excerpts of Instruction No. 3/2017[F.NO. 225/100/2017/ITA-II] dated 21.02.2017, in Annexure-“Source Specific General Verification Guidelines ” states as follows: “1 Cash out of earlier income or savings: In case of an individual (other than minors) not having any business income, no further verification is required to be made if total cash deposit is up to Rs.2.5 lakh. In case of taxpayers above 70 years of age, the limit is Rs.5.0 lakh per person. The source of such amount can be either household savings/savings from past income or amounts claimed to have been received from any of the sources mentioned in paras 2 to 6 below. Amounts above this cut-off may require verification to ascertain whether the same is explained or not. The basis for verification can be income earned during past years and its source, filing of ROI and income shown therein, cash withdrawals made from accounts etc.”

It can be seen from the above that the cash deposits are out of the available cash with the assessee at the relevant point of time. The assessee has amply demonstrated with evidences that the cash sales of cattle and cart and the cash deposits during assessment year, under consideration, are getting tallied with the Karshanbhai Ranabhai Goraniya v. ITO AY. 2013-14 relevant documents. We also find that some of the documents and evidences filed by the assessee before the assessing officer, were self -servicing documents, therefore entire addition made by the assessing officer cannot be deleted. We therefore, take into account all these facts and circumstances and hence in our opinion, the ends of justice would be met, if the impugned disallowance to the extent Rs.2,00,000/- , in lump sum only should be sustained in the hands of the assessee, with a rider that same shall not be treated as a precedent.

Before parting, we would like to make it clear that since the assessee has disclosed the total income of Rs.1,14,848/-, in the return of income, on account of cash deposited, in the bank account, therefore, the assessing officer should make the net disallowance to the extent of Rs. 85,152/- ( Rs.2,00,000- Rs.1,14,848) in the hands of the assessee, and compute the tax, by following the normal rate of tax.

In the result, appeal of the assessee is allowed partly, in above terms.