SHRI VIJAY SINGH,GURGAON vs. ITO, GURGAON
Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI M. BALAGANESHShri Vijay Singh, Village nainwal, PO Manesar, Gurgaon Vs. Income Tax Officer, Ward-4(4), Gurgaon (Appellant)
PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.928/Del/2017 for AY 2013-14, arises out of the order of the ld. Commissioner of Income Tax (Appeals)-1, Gurgaon [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. 436/15-16 dated 14.12.2016 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 09.03.2016 by the Assessing Officer, ITO, Ward-4(4), Gurgaon (hereinafter referred to as „ld. AO‟). 2. The assessee has raised the following grounds of appeal before us:- “1. The order of the learned Commissioner of Income-tax (Appeal) is erred in law and facts. Shri Vijay Singh 2. That on the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeal) has erred in upholding arbitrarily reducing the agricultural income from Rs. 48,35,480/- to Rs. 10,65,450/- on the basis of the disputed report of the Tehsildar and has failed to verify the evidence in nature of patwari report and the agreements of lease with the landlord (for the purpose of cultivation of strawberry). 3. That on the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeal) has erred in upholding the addition of Rs. 94,34,550/- in respect of cash deposited in the bank account of the appellant allegedly treating the same as unexplained deposits. 4. That on the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeal) has further erred in summarily ignoring the contemporary & conclusive evidence filed before him and rejected them without giving any proper reasoning for the same. 5. That on the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeal) has erred in confirming the addition made by the Id AO on the basis of his assumption/probability that the appellant at the relevant time was engaged in any other business or means of income and earned the income which was not offered to tax. 6. That on the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeal) has erred in ignoring the settled principles of taxing real income as laid down by the Hon'ble Supreme Court in various pronouncements. 7. The appellant craves leave to alter, amend or add any other ground of appeal either before or during the course of hearing.”
The assessee has also raised additional grounds as under:- “i. That in view of the facts and circumstances of the case and in law, the Ld. AO has erred in law and on facts in rejecting the Assessee's agricultural income as per accounts filed, without invoking Section 145 of the Act, and proceeded to estimate the same arbitrarily, which is contrary to settled law. ii. That in view of the facts and circumstances of the case and in law, the Ld. AO failed to provide the Assessee the opportunity to cross- examine Smt. Poonam Sharma and Smt. Renu Sharma, whose statements were relied upon, thereby violating principles of natural justice. Shri Vijay Singh iii. That in view of the facts and circumstances of the case and in law, the Ld. AO erred in law in disregarding the affidavit of the Assessee affirming that the land was sold to the husbands of the two ladies and that the denial of the ladies was misleading, especially when the affidavit was not rebutted, and thus deemed to be true.”
These additional grounds are in support of the original grounds raised by the assessee and hence the same are admitted and taken up for adjudication along with the original grounds. 5. We have heard the rival submissions and perused the materials available on record. The assessee filed his return of income electronically on 25.03.2014 declaring total income of Rs 5,05,700/- and net agricultural income of Rs 48,35,480/-. The assessee derives income from contractor ship. In the return of income, the assessee has shown gross receipts of Rs 63,65,855/- and declared net profit at Rs 5,09,268/- at the rate of 8% on gross receipts, claiming that no books of accounts are maintained for the same. The assessee also submitted that he derives agricultural income from sale of strawberry cultivated by him on the land partly owned by him and partly taken on lease. The assessee claimed that he had cultivated strawberry on over 5 acres of agricultural land and furnished copy of zamandi and lease agreement. The assessee furnished the agricultural income accounts before the ld AO wherein the gross agricultural receipts were reflected at Rs 64,27,811/- and net income of Rs 48,35,480/- , the difference being the agricultural expenditure. The ld AO disbelieved the assessee‟s contention that strawberries were cultivated on his own land measuring 1 acre and land taken on lease measuring 4 acres during the year. The ld AO relied upon the report of Tahsildar, who purportedly stated that only a portion of the land was used for strawberry cultivation. Based on this, the ld AO estimated the agricultural income at Rs 10,65,450/- and balance amount of Rs Shri Vijay Singh 37,70,030/- (4835480-1065450) was treated as income from other sources. The ld AR submitted that in Tahsildar‟s report, he had stated that only 12 kanal 16 marlas of land i.e. 1.6 acres of land was used for strawberry cultivation while the remaining land was utilized for growing rice, wheat, etc., with a portion lying vacant. Based on this, the ld AO estimated the net agricultural income at Rs. 10,65,450, which was calculated as a certain percentage of the total agricultural receipts. The ld AR submitted that the Tehsildar is not a competent authority to determine the nature of the crops cultivated, as his role is limited to land registrations. Furthermore, the ld AR submitted that the Tahsildar‟s report was never furnished to assessee for his rebuttal and that it was first made known to the assessee only from few extracts reproduced in the assessment order by the ld AO. However, the ld CIT(A) did not heed to the contentions of the assessee and upheld the action of the ld AO. 6. At the outset, we find that the fact of assessee having carried out agricultural activities by cultivating strawberries, rice, wheat etc on the lands owned by him or on the lands taken on lease, is not disputed by the revenue herein or by the Tahsildar. The assessee was in receipt of Rs 21,02,964/- by cheque on sale of agricultural produce and supporting evidences in this regard were duly submitted before the ld AO. Eventhough the accounts for agricultural income was furnished by the assessee before the lower authorities, the supporting evidences were not fully submitted thereon to justify the claim for the cash receipts of agricultural income. Hence the onus from the side of the assessee is not proved beyond reasonable doubt. But at the same time, the ld AO had relied on the Tahsildar‟s report without even furnishing the same to the assessee for his rebuttal. Hence the mistake has been committed Shri Vijay Singh from both the sides. However, the determination of agricultural income at Rs 10,65,450/- is considered too low , in our considered opinion, given the crops cultivated by him on the agricultural lands (either owned or leased). Further we find that strawberries obviously would yield better returns for the assessee. Considering the totality of facts and circumstances, we estimate the net agricultural income in the following manner:- Gross receipts
64,27,811
Less: Agricultural expenses
15,92,331
Less: Cheque receipts
21,02,964
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Net agricultural income in cash
27,32,516
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80% relief to the assessee
21,86,013
20% relief to the revenue
5,46,503
This, in our considered opinion, would meet the ends of justice for both the sides. Hence we direct the ld AO to sustain only a sum of Rs
5,46,503/- as addition on account of agricultural income being treated as income from other sources. Accordingly, the original grounds and additional grounds raised with regard to determination of agricultural income are partly allowed.
7. The next issue to be decided in this appeal is as to whether the ld
CIT(A) was justified in confirming the addition made in the sum of Rs
1.05 crores on account of cash deposits made in the bank account.
8. We have heard the rival submissions and perused the materials available on record. It is not in dispute that the assessee had deposited cash of Rs 40 lakhs on 02.01.2013 and Rs 65 lakhs on 03.01.2013 in his bank account. When asked about the source , the assessee explained that the said amounts were received as advance consideration against
Shri Vijay Singh the sale of agricultural land belonging to his father, who did not maintain a bank account. The advances were received from Smt Poonam Sharma and Smt Renu Sharma in October 2012 and thereafter and the same were deposited in the bank account of the assessee in Jan 2013. It was also explained that eventually the agricultural lands were sold by assessee‟s father to the husbands of the two ladies mentioned supra on 03.01.2013 as evident from the registered sale deeds filed before the lower authorities. The ld AO however disbelieved the same and proceeded to add a sum of Rs 94,34,550/- [10500000 -1065450
(agricultural income accepted by AO) ] as unexplained money u/s 69 of the Act. On first appeal, the arguments were reiterated by the assessee. The ld CIT(A) issued notices u/s 133(6) of the Act to the two ladies who replied that they had neither purchased land nor paid any cash to the assessee. When this was confronted to the assessee, it was submitted that the lands were sold to the husbands of those two ladies and not to the two ladies. It was submitted that agreement to sell was entered into with the aforesaid two ladies. But the sale deeds were ultimately executed in the names of the husbands of the two ladies.
The assessee also filed an affidavit affirming the same and clarified that he had withdrawn cash from his bank account and handed it over to his father once the land sale was concluded. Given the fact there are certain inconsistencies in the stand of the assessee that advance consideration was received from two ladies on proposed sale of agricultural land by assessee‟s father, which was denied by them in response to notice u/s 133(6) of the Act. But yet another crucial fact that cannot be brushed aside is that the cash was deposited by the assessee in his bank account on 2.1.2013 and 3.1.2013, being the date of execution of registered sale deed. Hence the proximity and nexus between the cash deposits with the registered sale deed is getting established, eventhough not complete.
Shri Vijay Singh
The assessee had stated that he has withdrawn the cash from the bank and later repaid to his father. Hence the explanation given by the assessee could not be ignored in toto, but at the same time, it is to be concluded that assessee had not proved the source of cash deposits beyond reasonable doubt. Hence in order to take care of the deficiencies, a lumpsum addition on an estimated basis is warranted in the facts of this case. For this purpose, the amount of agricultural income (net) which has already been accepted to have received in cash is certainly available with the assessee for explaining the source of cash deposits. Hence a sum of Rs 27,32,516/- is to be reduced from the cash deposits of Rs 1.05 crores and on the remaining sum of Rs 77,67,484/-,
80% relief is given to the assessee and 20% relief is given to the revenue. Accordingly, we direct the ld AO to add only a sum of Rs
15,53,497 (7767484*20%) as unexplained cash deposits u/s 69 of the Act. This, in our considered opinion, would meet the ends of justice for both the sides. Hence we direct the ld AO to sustain only a sum of Rs
15,53,497/- as addition on account of unexplained cash deposits.
Accordingly, the original grounds and additional grounds raised with regard to this issue of cash deposits are partly allowed.
9. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 01/04/2025. - - (SATBEER SINGH GODARA) (M BALAGANESH)
JUDICIAL MEMBER
ACCOUNTANT MEMBER
Dated: 01/04/2025
A K Keot