SMT. USHA BALASAHEB TEKALE,PUNE vs. INCOME TAX OFFICER, PUNE

PER VIKAS AWASTHY, JM

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-6, Pune dated 19.12.2016 for the assessment year 2011-12. 2 A.Y.2011-12

made on account of unexplained investment and addition of Rs.1,80,500/-

made on account of unexplained cash deposit in the bank.

filed return of income for the impugned assessment year on 30.03.2012

declaring total income of Rs.1,84,740/-. The case of assessee was selected

for scrutiny through CASS. Accordingly, statutory notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was issued to the assessee on 01.08.2012. During scrutiny assessment proceedings, the Assessing Officer made following additions:

i) Undisclosed Long Term Capital Gain Rs.2,20,511/- ii) Unexplained cash deposit in the bank Rs.4,36,500/- iii) Undisclosed interest income Rs.2,608/-

filed appeal before the Commissioner of Income Tax (Appeals). In First

Appellate proceedings, the Commissioner of Income Tax (Appeals) enhanced

the assessment by making addition of Rs.3,00,000/- on account of unexplained investment. However, the Commissioner of Income Tax(Appeals)

deleted the addition made by the Assessing Officer on account of Long Term

Capital Gain of Rs.2,20,511/-. In respect of addition of Rs.4,36,500/- on account of unexplained cash deposits, the Commissioner of Income Tax

(Appeals) restricted the same to Rs.1,80,500/-. Now, against the findings of Commissioner of Income Tax (Appeals) in confirming the additions, the assessee is in second appeal before Tribunal by raising following grounds:

3 A.Y.2011-12

“1. On the facts and in the circumstances of the case and in law, the learned Assessing Officer earned in proposing the addition of Rs.3,00,000/- as unexplained investment by disregarding appellant contention and without offering an opportunity for explanation, thereby also erred in enhancing the income.

Mauje Katvai, Tal. Maval, Pune. The assessee along with other co-owners

sold the aforesaid property for a consideration of Rs.51,00,000/-. The assessee received Rs.3,00,000/- as her share from the said property.

However, the assessee did not disclose the gain from sale of the property in the return of income. The assessee gave money received from sale proceeds

of the property to one Mr. Deshmukh. The assessee after receiving money

back from Mr. Deshmukh, invested the same for purchase of flat. The Authorities below have failed to appreciate the fact that the money utilized

for purchasing flat is the same which the assessee has received as her share

from the sale of property in Gat No.

Capital Gain. The Commissioner of Income Tax (Appeals) has also erred in making addition of Rs.3 Lakhs on account of unexplained investment.

deposits in bank, the ld. AR submitted that the assessee has made cash

deposits on account of agricultural income. The Authorities below disbelieved

4 A.Y.2011-12

the explanation furnished by the assessee. The assessee had furnished the copies of 7/12 extract indicating the land holding of the assessee and cultivation of soybean and cotton on the land. The ld. AR referred to the copies of 7/12 extracts produced before the Authorities below at page 33 to 37 ad 39 to 44 of the paper book.

defending the impugned order submitted that the assessee has failed to substantiate that Rs.3,00,000/- received by the assessee from Mr.

Deshmukh is the same amount which he has received from sale of joint

property. The assessee has not furnished any confirmation from Mr.

Deshmukh.

(Appeals) on account of unexplained cash deposits in the bank, the ld. DR

submitted that the assessee has not placed on record any documentary

evidence to show that the cash deposits are on account of agricultural

income. No document whatsoever has been filed by the assessee before the Authorities below to show that the cash deposits in the bank are from agricultural operation. In fact, the assessee in its return of income offered

only Rs.86,500/- on account of agricultural income. The ld. DR prayed for dismissing the appeal of the assessee and confirming the findings of the Commissioner of Income Tax (Appeals).

ground raised in the appeal is in respect of addition of Rs.3,00,000/-. It is observed that the Assessing Officer during scrutiny assessment proceedings

made addition of Rs.2,20,511/- on account of Long Term Capital Gains.

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However, in the First Appellate proceedings, the Commissioner of Income

Tax(Appeals) deleted the addition and made of Rs.3,00,000/- on account of unexplained investment for purchase of residential flat. The contention of the assessee is that Rs.3,00,000/- is the same amount which the assessee

has received as her share in consideration from sale of capital asset jointly

owned by other two persons. The ld. AR pointed that assessee had given

Rs.3,93,000/- as advance to Mr. Deshmukh from her bank account during

2010-11 and received back Rs.3,00,000/- in cash before 04.11.2011 from Mr. Deshmukh. It is an undisputed fact that apart from agricultural income

and some miscellaneous income, there is no other source of income of the assessee. Once having accepted that the assessee has received

Rs.3,00,000/- as her share from sale of capital asset, the only presumption

is that the assessee has invested the same amount for purchasing residential

flat. Advancing Rs.3,00,000/- to Mr. Deshmukh and receiving back the same

amount in cash would not result in generating any other source of income.

Dehors above findings, it is observed that the Commissioner of Income

Tax (Appeals) has taxed Rs.3,00,000/- by identifying fresh source of income.

Such additions by the Commissioner of Income Tax(Appeals) are not permissible. It is a well settled law that the Commissioner of Income

Tax(Appeals) in First Appellate proceedings cannot bring into taxnet any fresh source of income. Therefore, in my considered view, the addition of Rs.3,00,000/-is unsustainable and hence, the same is deleted. Accordingly,

ground No.1 raised in appeal by the assessee is allowed.

account of unexplained cash deposits in IDBI Bank account of the assessee.

The assessee successfully demonstrated the source of deposits in respect of part deposits before the Commissioner of Income Tax (Appeals). Hence, the Commissioner of Income Tax (Appeals) restricted the addition to Rs.1,80,500/- as unexplained cash deposits. The ld. AR has submitted that the source of cash deposits is agricultural income. The Commissioner of Income Tax (Appeals) in the impugned order has recorded that in return of income, the assessee has disclosed agricultural income of Rs.86,500/-. The Authorities below while making addition has observed that the assessee has failed to substantiate agricultural income. The assessee has filed paper book

interalia containing copies of Bank Statement, 7/12 extracts etc. The ld. AR

of assessee has certified that all these documents were submitted before the Lower Authorities. A perusal of the 7/12 extract at page 39 and 40 shows

that assessee has some share in agricultural land wherein soybean and cotton is cultivated. Thus, a perusal of the revenue records indicate that some land holding exists in the name of assessee and the said land was under cultivation. The agricultural income offered by the assessee in the return has genesis to the land holding of the assessee and the agricultural

operations on the said land. Thus, generation of cash can be linked to the sale of agricultural proceeds. Hence, I am of considered view that cash

deposits to the extent of agricultural income disclosed by assessee in return

of income have stands explained. Accordingly, after giving the benefit of agricultural income, I restrict the addition to Rs.94,000/- ( Unexplained cash

deposits in the bank Rs.1,80,500/- - agricultural income disclosed in return

Rs.86,500/-). Accordingly, ground No. 2 raised in the appeal by assessee

is partly allowed.

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Order pronounced on Friday, the 28th of September, 2018. ("वकास अव"थी /VIKAS AWASTHY) "या"यक सद"य/JUDICIAL MEMBER

पुणे / Pune; "दनांक / Dated : 28th September, 2018. SB आदेश क" ""त"ल"प अ"े"षत / Copy of the Order forwarded to :

अपीलाथ" / The Appellant.

"नजी स"चव /Private Secretary आयकर अपील"य अ"धकरण, पुणे / ITAT, Pune.