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Facts
The assessee, an agriculturist, deposited Rs. 10,24,000/- into his Kisan Credit Card account during the demonetization period (AY 2017-18). The Assessing Officer made an addition of this amount u/s 69A read with 115BBE, treating it as unexplained money, through a best judgment assessment u/s 144 due to non-filing of return and lack of satisfactory explanation. The CIT(A) confirmed this addition, rejecting the assessee's claims that the source was agricultural income or prior cash withdrawals from his and his father's bank accounts.
Held
The Tribunal observed that lower authorities did not adequately examine the assessee's claims regarding agricultural activities and income as the source of the cash deposit, nor the availability of cash from his/father's bank withdrawals, and did not provide sufficient opportunity of being heard. It noted a discrepancy in the addition amount (Rs. 10,40,000/- vs Rs. 10,24,000/- contested). Thus, the Tribunal set aside the CIT(A)'s order and remanded the matter back to the Assessing Officer for fresh verification of the assessee's claims.
Key Issues
1. Validity of addition under Section 69A/115BBE for unexplained cash deposits during demonetization, claimed by the agriculturist assessee as agricultural income or from prior bank withdrawals. 2. Whether the lower authorities adequately considered the assessee's claims and provided sufficient opportunity of being heard.
Sections Cited
Section 144, Section 142(1), Section 69A, Section 115BBE, Section 10(1), Section 271D, Section 269SS, Section 147, Section 148
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Income Tax Appellate Tribunal, AMRITSAR BENCH, ‘DB’: AMRITSAR
Before: UDAYAN DAS GUPTA & SHRI BRAJESH KUMAR SINGH
Date of Hearing 22.05.2025 Date of Pronouncement 19.08.2025 ORDER PER BRAJESH KUMAR SINGH, AM,
This appeal by the assessee is directed against the order of learned Addl/JCIT of Income Tax (Appeals)-10, Mumbai, (hereinafter referred to ‘ld. CIT(A)’) dated 30.12.2024 pertaining to Assessment Year 2017-18, arising out of assessment of order u/s 144 of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) dated 10.12.2019.
Brief facts of the case:-The Assessing Officer issued a notice 2. dated -142(1) of the Act on 09.03.2018 calling the assessee to file his return of income which was not filed by the assessee. In view of the above fact, the Assessing Officer proceeded with completion of ‘best judgment assessment’. Thereafter, a notice u/s 142(1) along with the questionnaire dated 26.08.2019 and a show cause notice dated 05.09.2019 was issued to the assessee but according to the Assessing Officer, there was no compliance for the same. As per information with the Assessing Officer, the assessee had deposited cash in his bank account no.XXXXXX0231, Canara Bank, Maur, amounting to Rs.10,24,000/- on 12.11.2016. In absence of any explanation or any response from the assessee regarding the source of the above deposit, the Assessing Officer concluded that the assessee does not intend to say anything or has any documentary evidence regarding the source of said cash deposited during the period of demonetization i.e. for 08.11.2016 to 30.12.2016 and therefore added the amount of Rs.10,24,000/- u/s 69A of the Act r.w.s. 115BBE of the Act.
Aggrieved with the said order, the assessee filed an appeal before the ld. CIT(A), which was adjudicated by Addl. CIT/JCIT(A)-10, Mumbai. Before the Ld. Addl. CIT/JCIT(A), the assessee filed a written submission dated 07.10.2023. In the written submission, it was contended that undisputed facts are that the assessee is an agriculturist holding about 14 killas of agricultural land jointly with his father. It was further submitted that the assessee was having agricultural limit account known as Kissan Credit Card Scheme with Canara Bank, Maur Account No.5888840000231 and demonetization was announced on 08.11.2016. Thereafter, the assessee deposited Rs. 10,24,000/- in this account on 12.11.2016. It was further submitted that a notice has been received from the department for verification of source of deposit in the bank during demonetization period and in response to the notice, reply was filed online explaining that the source of cash deposited in the bank was the income from sale of agriculture produce. Copy of notice and reply filed were enclosed at Page-1 to 2 of the Paper Book. The relevant extract as filled in B-2 of the reply is reproduced here-as-under:-
B.2 Cash out of 10,24,000 receipts exempt from tax Remarks THE CASH DEPOSIT AMOUNT RS.1024000/- IN THE BANK ON THE SALE OF AGRICULTURE PROCEEDS
It was further submitted that thereafter the assessee received notice u/s 142(1) dated 09.03.2018 for filing of income tax return. A response was duly submitted on 31.03.2018 that assessee is an agriculturist and does not have any other income and therefore, it was not mandatory to file income tax return as his income did not form part of taxable income. In view of these facts, it was submitted that the Assessing Officer was not justified in issuing notice u/s 142(1) of the Act for filing the income tax return when the assessee had denied of having any taxable income at the time of making enquiry by the Department and in such circumstances, notice issued was not valid notice. In this regard, reliance was placed by the assessee on the judgment of Hon’ble Apex Court in the case of Income Tax Officer, Ward-1()2), vs Mohanlal Charmpalal Jain [2019] 111 taxmann.com 67 (SC).
4.1. On merits, it was submitted that the assessee was having only agricultural income and the amount had been deposited in the bank account out of the agricultural produce. It was contended that without considering these replies, the assessment was completed ex- parte without giving sufficient and reasonable opportunity to the assessee as required under law. It was further submitted that in view of the above facts and circumstances and the law laid down by the Hon’ble Supreme Court of India and Circular of the Board, the addition made by the Assessing Officer was not justified and the same may be deleted. The Ld. CIT(A) took notes of the above explanation of the assessee and also of the explanation of the assessee that cash deposit in the bank account was from the cash withdrawn of Rs.9,50,000/- from his bank account No.XX13 and Rs.11,27,000/- from his father from his bank account no.XXXXXX11 in Canara Bank as evident from the table of the cash withdrawal placed at page 29 of the paper book. However, the ld. Addl.
CIT/JCIT(A)-10, did not accept the above explanation of the assessee and dismissed the appeal of the assessee. The relevant extract of the Ld. Addl. CIT/JCIT(A)-10 in para 5.4.1 to 5.6.5 is reproduced as under.
5.4.1 The appellant contended that he did not have any taxable income and therefore he was not required to file the return of income. He relied upon the decision in the case of Income Tax Officer, Ward-1(2) vs. Mohanlal Charmpalal Jain [2019] 111 taxmann.com 67 (SC). 5.4.2 Though the appellant had agriculture income but it does not absolve him form the onus cast on him to explain the nature and source of the cash deposits of Rs.10,40,000/- Mere statement that the cash deposits were out of exempt agriculture income is not sufficient to discharge the onus cast on him. 5.4.3 As regards the decision relied upon wherein SLP was dismissed against High Court ruling that where Assessing Officer issued a reopening notice on ground that assessee had made transactions of huge amount in national/multi commodity exchange but he had not filed his return of income and assessee filed an objection that he had not earned income out of trading in commodity exchange and he had actually suffered loss and, therefore, he had not filed return of income, since Assessing Officer had not looked into objections raised by assessee and proceeded ahead, impugned reassessment notice was unjustified The facts of this case were entirely different than that of present case of the appellant. In the present case, the appellant could not explain source and nature of cash deposits before the Assessing Officer. Therefore, the Assessing Officer correctly proceeded with re-assessment proceedings and completed the assessment accordingly. 5.5. The appellant argued that he was not given sufficient opportunity of being heard. However, the same has now provided during appeal proceedings. 5.6. Source of cash deposits: - 5.6.1 The appellant explained the source of cash deposits as cash withdrawn from his account as well as his father's account. xxxxxxxxxxxxxxxxx 5.6.2 The appellant tried to explain the cash deposits from the cash withdrawn from his father's bank account. The same cannot be accepted in the absence of any confirmation from his father. If the money of his father was used, the amount would be nothing but loan to the appellant and the appellant would be liable for penalty u/s 271D of the I. T. Act 1961. 5.6.3 Apart from the above, the appellant was required to establish the quantum of agriculture income earned year to year basis. If-the appellant had sufficient agricultural income, there was no need to obtain loan on OD. 5.6.4 The OD was obtained in the month of July 2016 which was the time for harvesting of rice crop. The appellant was required to engage labour to tilt field, buy seeds, fertilizer, pesticides etc. Hence, the cash so withdrawn could not be available with the appellant for re- deposit in the bank account. 5.6.5 Under the circumstances, I hold that the appellant failed to explain the source and nature of cash deposits of Rs. 10,40,000/- Therefore, the A.O. had correctly treated the same as unexplained money u/s 69A of the I. T. Act 1961. All the grounds of appeal are dismissed.
5. Aggrieved with the said order, the assessee is in appeal before us on the following grounds of appeal:-
“1. On the facts and circumstances of the case as well as in law, the Ld. Additional CIT(A) has erred in confirming addition of Rs. 10,40,000 /- (whereas addition made & contested is only of Rs. 10,24,000/-) by holding that: - i. The validity of notice under section 142(1) of the Act when the assessee appellant has claimed that he has no other income except the agricultural income, therefore, not required to file the return. ii. The assessee appellant has failed to prove the agricultural income without considering the evidence placed on record i.e. holding of agricultural land, agricultural limit account (Kissan Credit Limit) and Board instructions with regard to deposit made during demonetization period out of the exempt income. iii. The assessee appellant has sufficient agricultural income then there is no need to obtain OD without appreciating that it is not an OD but a Kissan Credit Limit (i.e. current running account for the purpose of agricultural process provided to the Kissans who hold agricultural land). iv. The assessee appellant has not filed confirmation from his father whereas all the evidence has been placed on record before the Ld. Additional CIT(A) but rejected the version on the ground that if it is accepted then assessee appellant will be liable for penalty under section 271D of the Income Tax Act without appreciating that the provisions of section 269SS of the Act arc not applicable as both of them are having only agricultural income. v. The assessee appellant availed OD in the month of July, 2016 i.e. period of harvesting of rice prop without appreciating that crop is ready for sale in the market in the month of September and October whereas the amount has been deposited in the month of November, 2016. Even otherwise also the past savings/bank withdrawals from the bank could not be ignored.
2. On the facts and circumstances of the cas^1 as well as in law, the Ld. Additional CIT(A) has erred by dismissing the appeal on misstated facts that: - i. Assessment, has been reopened under section 147 of the Income Tax Act by issue of notice under section 148 of the Income Tax Act whereas no such notice has been issued in this case but notice under section 142(1) of the Act was issued. (ii) As per appellate order addition of Rs. 10,40,000/- has been confirmed whereas the actual addition made and contested of Rs. 10,24,000/-. (iii) Appellate order has been completed after affording proper opportunity as the AO has not provided the same to the assessee appellant at the time of assessment whereas the appellate order has been passed without considering the evidence placed on record.”
6. Before us, the assessee filed a written synopsis along with paper book containing pages 1 to 29. The written synopsis of the assessee is reproduced as under:-
1. The assessee is an individual primarily engaged in agricultural activities on own agricultural land situated at Village Maur Distt. Bathinda. The agricultural income earned is exempt under section 10(1) of the Income-tax Act, 1961.
2. During the assessment year under consideration, the assessee received the notice for the cash deposits made by the assessee during the demonetisation period. The copy of the said notice is enclosed at Page No-1 of the Paper Book 3. The Assessee against such notice furnished its response contending that the he has deposited an amount of Rs. 10,24,000/- on account of sale of agricultural produce in its Kisan Credit Card Scheme bank account bearing account number 5888840000231 on 12.11.2016. 4. However, the Ld.AO without affording reasonable opportunity of being heard to the assessee passed order u/s 144 of the Act and made addition of Rs. 10,24,000 u/s 69A by treating the same as un- explained money. 5. Aggrieved by same the assessee had filed an appeal before the Worthy CIT(A) against the above-mentioned addition, however, the same has been dismissed by the CIT(A) against the assessee. The findings of the CIT(A) are given on page 12 of the appellate order. 6. Now, the assessee has filed an appeal before your honour and brief synopsis in respect of the same are as under:
BRIEF SYNOPSIS
The Assessee and his father namely Sh. Mewa Singh are doing agricultural activities jointly from past many years.
The assessee during the year demonetisation period has deposited Rs. 10,24,000/-on 12.11.2016 in its agricultural limit account maintained with Canara Bank. Refer Page No-15 of the Paper Book 3. The source of these deposits is from the sale proceeds of agricultural produce as the assessee along with its father namely Mewa Singh are owning 14 killas of the agricultural land situated in Tehsil Mour, District Bathinda. The copy of the Jamabandis along with its English Translation is enclosed at Pages 5 to 14 of the Paper Book. 4. The assessee during the year had withdrawn substantial amounts of cash during the year from the appellant saving account maintained with Canara Bank bearing account no. 5888101001113 along with its father saving account bearing account number 5888101001111 in routine course. 5. However, the withdrawn cash was not immediately used and was redeposited and remained with the assessee in hand for some time, later being redeposited due to demonetisation. There is no prohibition under law against re-depositing one's own cash withdrawn earlier.
The copies of the saving bank statements and cash flow statement of the appellant along with its father are enclosed at Page No. 18-29 of the Paper Book .
That the following cash has been withdrawn by the assessee and his father from their saving bank accounts which is being tabulated as under: Amount of cash Relevant Pages of Particulars withdrawal till Paper Book 12.11.2016(in Rs.) 18 & 19 read with Gurpal Singh Sidhu 9,31,000/- Page 29 Mewa Singh 24,25 & 26 read 10,66,000/- (Assessee’s Father) with Page 29 8. It worthwhile to mention here that the department has not brought any contrary evidence to suggest that the assessee was engaged in any other additional source of income nor the department could spell out in his order that cash deposits made by the assessee was from some undisclosed source. 9. The appellant has filed all the documentary evidences before the CIT Appeals, assessee in the shape of bank statements which proves that there was sufficient amount of cash withdrawn from the saving accounts of appellant and his father. Also, such fact is also not disputed by your goodself. 10. That there was sufficient cash was available with the appellant as on 12.11.2016 as detailed above.
11. Further we also rely upon the following Judgments wherein it has been held that no addition can be made of the cash deposits in the bank account of the assessee if the cash withdrawn from the bank account is re deposited in the bank account where the department could not prove that cash in hand available was utilised by the assessee else where. a) SHIV CHARAN DASS VS. CIT AS REPORTED in 126 ITR 263 (P&H HC) in this regard, it has been held by the Hon'ble jurisdictional High Court that the onus is on the Department to show that the explanation of the assessee should not be accepted. Further, it is trite that nobody can be asked to prove a negative, as was sought to be done by the AO. Unless the Income Tax Department prove that the cash was utilized somewhere else, addition cannot be made. b) RAVINDER SINGH NEGI VS. DCIT IN & 812/CHD/2014 (CHANDIGARH BENCH) “12(iv) Considering the above discussion, it is proved by the assessee on record that assessee has made cash withdrawals during the year under consideration from various banks in a sum of Rs. 7.65 Cr and made re- deposit of cash of Rs. 4.30 Cr in the same year out of such cash withdrawals. Thus, assessee proved that assessee was having availability of the cash for re- deposit in other bank accounts. The Assessing Officer has not brought any evidence on record to prove that assessee has spent the amount of withdrawn of cash somewhere else. Therefore, in the absence of any adverse material against the assessee on record, authorities below should not have rejected the explanation of the assessee. The onus upon revenue has not been discharged in any manner.” c) ITO VS. ASHOK KUMAR JAIN (ITA NO. 180/CHD/2013) ORDER DATED 3.11.15 (CHANDIGARH BENCH) “The Ld. CIT (A) has correctly held that this observation of the Assessing officer is without any basis. The Ld. CIT(A) further observed that assessee had explained during the course of assessment proceedings that cash was withdrawn with the intent ion to buy some properly. The Ld. CIT(A) has categorically observed that actual amount of cash required in these circumstances would be known to the assessee only. He has also stated that there is no bar in keeping the cash at home according to requirements. Thus, observations of the Ld. CIT(A) are correct and, therefore, we do not see any infirmity in the order of the CIT(A). The quest ion involved in this case is of facts and the Ld. CIT(A) has correctly appreciated the facts of the case and decided the issue correctly. In view of the above discussion, we do not find any merit in the appeal filed by the Revenue and accordingly we dismiss the same.” d) ACIT VS. SH. JOGINDER PAUL (ITA NO. 734/CHD/2014) ORDER DATED 12.01.2015 (CHANDIGARH BENCH) 6. On appeal, it was mainly submitted that cash of Rs. 80 lakhs was available out of the surrender made during the search and cash was duly reflected in the Wealth Tax Return and, therefore, there is no justification in the addition.
7. The Ld. CIT(A) found force in these submissions and decided the issue in favour of the assessee.
8. Before us Ld. DR strongly supported the order of Assessing Officer and further submitted that how the amount surrendered in 2007 could be available and assessee has not shown any justification in keeping such a huge amount with him. 11.In our opinion Ld. CIT(A) has correctly decided the issue because admittedly the assessee had disclosed a sum of Rs.1.03 crores in assessment year 2007-08, and a sum of Rs.10 lakhs in assessment year 2008-09. This amount was surrendered during the search and taxes have been duly paid and the assessed income includes this amount of surrender. Further, cash is duly reflected in the Wealth Tax Return. Once the fact of having cash deposited by the Revenue during wealth tax assessment proceedings, then later on Revenue cannot challenge the existence of cash, therefore, we find nothing wrong with the order of Ld. CIT(A) and we confirm the same.” e) HARCHARAN SINGH VS. ITO (ITA NO.164/ASR/2015) ORDER DATED 3.2.2016. (AMRITSAR BENCH) “8. In "CIT vs. Palwinder Pal Singh" (supra), the Hon'ble High Court took due cognizance of the fact that the Revenue had failed to bring on record any evidence to show that the explanation of the assessee was incorrect to the effect that the amount was withdrawn for the purchase of some agricultural land and when the purchase did not materialize, the amount was deposited in the bank account of his son.
The other decisions relied upon on by the assessee in the cases of "ITO vs. Ashok Kumar Jain" (supra), "ACIT vs. Joginder Paul" (supra), "Gordhan vs. ITO" (supra), "ITO vs. Deep ali Sehgal" (supra), and "Saurin Nand Kumar Shodhan" (supra) are to the same effect. No decision to the contrary has been brought on record.
Therefore, the additions of Rs.4,50,000/- and Rs.15,000/-, being but a result of mere conjectures and surmises, are unsustainable in law and are deleted. Ground no.1 is accepted.” f) It is also worth to mention the case of CIT vs. Palwinder Pal Singh (P&H HC) in of 2011 order dated 14.11.2011 wherein relief was allowed for the amounts withdrawn from the bank accounts of the family members and deposited in the Assessee’s Bank A/c for the purpose of immigration.
g) ITO VS. CHANDAN NIJJER IN ORDER DATED 08.08.2016 (AMRITSAR BENCH) “10. Thus, the source of cash deposit of Rs. 50 lacs, Rs.20 lacs and Rs. 25 lacs, on 18.08.2010, 04.09.2010 and 18.11.2010, respectively, was found to be this very cash in hand amount of Rs.1,31,11,293/-. Before us, nothing whatsoever has been brought by the Department to rebut this source of the cash deposit, as rightly arrived at by the ld. CIT(A).
The Department contends that since the assessee had not disclosed the purpose of withdrawal of cash from bank and usage thereof, the ld. CIT(A) ought not to have granted her the benefit of such cash withdrawn from the bank, a long period back. However, there is no legal basis for such stand taken by the department. There is no law warranting any such requirement for the assessee to make such a disclosure. As per the decision of the Delhi Bench of the Tribunal in the case of 'Mrs. Deepali Sehgal', dated 05.09.2014, in ITA A.Y. 2011-2 No.5660/Del/2012, as correctly taken note of and followed by the ld. CIT(A), it is not mandatory under any law that an individual has to keep his/her savings in the bank account only and not as cash in hand. In 'Shiv Charan Dass vs. CIT', 126 ITR 263 (P&H), in this regard, it has been held by the Hon'ble jurisdictional High Court that the onus is on the Department to show that the explanation of the assessee should not be accepted. Further, it is trite that nobody can be asked to prove a negative, as was sought to be done by the AO.
The department is also wrong in contending that since the assessee is not filing her wealth tax returns regularly, the ld. CIT(A) has erred in accepting that the assessee maintains personal books of account and draws personal balance sheet. Here, it needs to be reiterated that it is the department itself, which has accepted the balance sheets drawn by the assessee in her personal capacity and that for the assessment years 2007-08 to 2011-12, in the wealth tax cases of the assessee, the wealth tax returns filed by the assessee were based on the personal balance sheets of the assessee and it was the same AO who accepted the cash in hand, which was as per the balance sheet of the assessee, for wealth tax purposes.
No material has been brought on record by the Department to contradict the well reasoned findings of fact recorded by the ld. CIT(A).
In view of the above, we do not find any infirmity in the well versed, elaborate and reasoned order of the ld. CIT(A), which does not require any interference on our part. Accordingly, all the grounds of appeal
of the Revenue are rejected.
15. In the result, the appeal of the Revenue is dismissed.” Keeping in view the above factual submissions and legal precedents the addition sustained by the CIT Appeals deserves to be deleted.
7. The ld. Sr. DR has relied upon the orders of the authorities below.
We have heard both the parties and perused the materials available on record. The assessee in sub-ground (i) of ground no.1 submits that the assessee has no other income except agricultural income and therefore he was not required to file the return. Further, in his written submission filed before us in para no.8 as reproduced above, it has been submitted that the department has not brought any contrary evidence to suggest that the assessee was engaged in any other additional source of income nor the department could spell out in his order that cash deposits made by the assessee was from some undisclosed source. The same has been carefully considered but not found acceptable to us. The onus is on the assessee to explain the source of cash deposits in his bank account and to establish that he carried out agricultural activities and the source of the cash deposit was from his income arising out of agricultural activities as claimed by the him. This onus cannot be shifted to the Assessing Officer as contended by the assessee because the AO cannot be omnipresent to discover all the expenditure made by the assessee or the purpose of the said withdrawals made by him from his bank account and also to discover any other activity which may result in taxable income. As per the provisions of section 69A of the Act, the onus is squarely on the assessee to furnish a reasonable explanation regarding the source of deposit in his bank account and substantiate it with cogent evidence. As noted above, the assessee only explained before the Assessing Officer that the source of cash deposit in the bank account was out of his agricultural income but did not file any supporting evidence before the Assessing Officer.
Moreover, the Assessing Officer did not take cognizance of his explanation as according to him no explanation was filed by the assessee and he completed the assessment u/s 144 of the Act.
8.1. The contention of the assessee before us is that cash deposit of Rs.10,24,000/- on 12.11.2016 in his bank account i.e. during the demonetization period was out of cash withdrawals of Rs.9,31,000/- from his bank account. The said explanation of the assessee was not accepted by the ld. CIT(A) for the reason given by the Ld. CIT(A) in para no. 5.6.4. of his order, which is reproduced as under:-
“5.6.4 The OD was obtained in the month of July 2016 which was the time for harvesting of rice crop. The appellant was required to engage labour to tilt field, buy seeds, fertilizer, pesticides etc. Hence, the cash so withdrawn could not be available with the appellant for re-deposit in the bank account.” 8.2. Further, the ld. CIT(A) did not accept the explanation of the assessee that source of cash deposits was from withdrawal of Rs.10,66,000/- by his father from his bank account for the reasons stated in para no.5.6.1 and 5.6.2, which is reproduced as under:-
“5.6.1 The appellant explained the source of cash deposits as cash withdrawn from his account as well as his father's account. xxxxxxxx 5.6.2 The appellant tried to explain the cash deposits from the cash withdrawn from his father's bank account. The same cannot be accepted in the absence of any confirmation from his father. If the money of his father was used, the amount would be nothing but loan to the appellant and the appellant would be liable for penalty u/s 271D of the I. T. Act 1961.” 8.3. The case laws relied upon by the assessee in his written submission has been carefully perused by us and we find that all the said case laws have peculiar facts, based on which the said decisions were given and it does not lay down any general principle that when there was cash withdrawal in the past then the said cash withdrawal can be an explanation for the cash deposit made in the assessee’s bank account at a later stage. The assessee has not filed any confirmation from his father about confirming the fact that the withdrawal of Rs.10,66,000/- by him was given by him to his son and which was utilized by the assessee to deposit in his bank account on 12.11.2016 even though it was adversely observed by the ld. Addl.
CIT/JCIT(A) as noted above. Therefore, this aspect of explanation of the assessee is not acceptable and the same is rejected. Similarly, no explanation has been furnished by the assessee about the observations of the Ld. Addl. CIT/JCIT regarding the reasoning for rejecting the claim of the assessee about the availability of the cash out of the cash withdrawals of Rs.9,31,000/- by the assessee from his bank account. The details of the said cash withdrawal and the pattern of the cash withdrawal as submitted by the assessee on page no.29 of the paper book is reproduced as under:-
8.4. The above pattern shows that there is a cash withdrawal of Rs.10,000/- out on several occasions (except for 2 large cash withdrawals of Rs.3,50,000/- on 22.07.2016 and 25.07.2016 and further cash withdrawal of Rs.4,000/- on 15.10.2016 and the last withdrawal of Rs.10,000/- on 28.10.2016) before the demonetization reinforces the observation of the ld. Addl. CIT/JCIT(A) that the withdrawal from the OD account in the month of July 2016 was at the time for harvesting of rice crop, wherein, the assessee was required to engage labour to till field, buy seeds, fertilizer, pesticides etc. and hence, the cash so withdrawn could not be available with the assessee for re-deposit in the bank account. Moreover, the assessee is having two bank accounts and having regular banking transactions including the withdrawals as referred on page no.29 of the paper book does not inspire confidence in the explanation of the assessee that such regular cash withdrawals would be again available with the assessee to again redeposit in his bank account as claimed by him.
8.5. Therefore, we are in agreement with the findings of the ld. CIT(A) that the source of the cash deposit of Rs.10,24,000/- in the bank account of the assessee is not out of cash withdrawals from his bank account or from the bank account of his father as claimed by him and we reject the said explanation of the assessee.
8.6. This leaves us with the third explanation of the assessee that the source of the cash deposits in the bank account of the assessee was from sale of agricultural produce/agricultural income. In this regard, sub ground no.(ii), (iii) & (v-relevant extract only) of ground no.1 of the assessee is reproduced once again:-
1. On the facts and circumstances of the case as well as in law, the Ld. Additional CIT(A) has erred in confirming addition of Rs. 10,40,000 /- (whereas addition made & contested is only of Rs. 10,24,000/-) by holding that: - xxxxx “ii. The assessee appellant has failed to prove the agricultural income without considering the evidence placed on record i.e. holding of agricultural land, agricultural limit account (Kissan Credit Limit) and Board instructions with regard to deposit made during demonetization period out of the exempt income. iii. The assessee appellant has sufficient agricultural income then there is no need to obtain OD without appreciating that it is not an OD but a Kissan Credit Limit (i.e. current running account for the purpose of agricultural process provided to the Kissans who hold agricultural land). xxxxxxxxxxxxxxx v. The assessee appellant availed OD in the month of July, 2016 i.e. period of harvesting of rice prop without appreciating that crop is ready for sale in the market in the month of September and October whereas the amount has been deposited in the month of November, 2016.………..” 8.7. We have carefully perused the above grounds of the assessee and submissions of the assessee in this regard. The assessee claims ownership of 14Killas of agricultural land alongwith his father and has filed evidence of such land holding on page no.5 to 14 of the paper book. Further, the assessee has agricultural limit account (Kissan Credit Card) at Canara Bank Account no.XXXXXX231 placed at page no.29 of the paper book. These facts prima facie show that the assessee is involved in agricultural activities. However, the said claim of agricultural activities and the agricultural income arising out of said land holding to the extent available as a source for cash deposits of Rs.10,24,000/- in his bank account has not been examined by the lower authorities. As noted above, the Assessing Officer had passed the assessment order u/s 144 of the Act making the said addition in absence of any explanation regarding the source of the cash deposits. Further, the Ld. CIT(A) even though in para no.5.6.3 of his order stated that the assessee was required to establish the quantum of agriculture income earned year to year basis and further that if the assessee had sufficient agricultural income, there was no need to obtain loan on OD but it is a fact that he did not give an opportunity to the assessee to establish the quantum of agricultural income claimed to have been earned by him.
8.8. Therefore, since the claim of agricultural activities and the agricultural income arising out of said land holding to the extent available as a source of cash deposits of Rs.10,24,000/- as claimed by the assessee has not been examined by the lower authorities, the order of the Assessing Officer and confirmed by the Ld. Addl.
CIT/JCIT(A) cannot be sustained. Therefore, we set-aside the order of the ld. Addl. CIT/JCIT(A) and restore the matter to the file of the Assessing Officer to verify the claim of the assessee of agricultural activities and the agricultural income arising out of said land holding to the extent available as a source of cash deposits of Rs.10,24,000/- in his bank account as claimed by him.
8.9. In the result, the appeal of the assessee is partly allowed for statistical purposes subject to the observations made by us in this order.
Order pronounced in the open court on19th August, 2025.