SHRI VINOD KUMAR SINGH KUSHWAH,INDORE vs. THE ITO 3(3), INDORE

आदेश /O R D E R

PER SHRI C.M. GARG, JM

This appeal has been filed by the assessee against the

order of the learned CIT(A)-I, Indore, dated 1.8.2016 in

First Appeal No. IT-52/2014-15/23 for the assessment

year 2009-10.

2. The grounds of appeal raised by the assessee–appellant read

as follows :-

“1. That the issuance of notice under section 148 is illegal, Wrong, without authority of law and jurisdiction

to press ground nos. 1 and 2. Therefore, the same are dismissed as

not pressed.

perused the relevant material placed on record of the Tribunal. The

learned counsel for the assessee submitted that the Assessing

Officer has passed the assessment order without affording proper

and reasonable opportunity of being heard to the assessee and the

additions of Rs. 13,22,100/- and Rs. 2,65,000/- have been made on

illegal, wrong and unjustified basis. The learned counsel for the

assessee further submitted that the case was taken up in scrutiny

for verification of AIR information regarding the cash deposit of

Rs.13,22,100/- into Axix Bank account of the assessee. The learned

counsel for the assessee further pointed out that the assessee has

not deposited cash of Rs. 13,22,100/- on a single day and the same

has been deposited in the form of small amounts of cash on

different dates and the assessee also withdrew cash on different

dates, which is apparent from the photocopy of the Axis Bank

account of the assessee. The learned counsel for the assessee

further pointed out that the opening balance as on 1.4.2008 was

Rs. 41,416/- and maximum balance during the year was

Rs.2,54,215/- on 11.9.2008 which is also apparent from the copy of

Axis Bank account. The learned counsel for the assessee

vehemently submitted that the assessee has shown agricultural

income of Rs. 2,65,000/- as the assessee is a horticulturist and the

assessee has taken on lease 44 bighas of agricultural land from

different farmers as per the copies of the agreements and on this

land the assessee used to produce only quality seeds. The learned

counsel for the assessee specifically drew our attention towards the

assessee’s paper book page 32 and submitted that out of total

impugned cash deposits, there was sale proceed of potato seeds of 3

Rs.2,50,000/- to KBA Traders and the payment was received by the

assessee on 11.9.2009 which is also discernible from the copy of

bank account and statement. The learned counsel for the assessee

submitted that the Assessing Officer wrongly dismissed the claim of

the assessee pertaining to exempt agricultural income and treated

the same as income from other sources amounting to Rs.2,65,000/-

prejudice to the above submissions, the alternative argument of the

assessee is that maximum balance in the accounts was only

Rs.2,54,215/-. Therefore, peak addition may be taken for taxation

purposes and the addition of Rs.13,22,100/- cannot be held

justified and sustainable. The learned counsel for the assessee

further submitted that the amount of peak addition i.e.

Rs.2,54,215/- is lesser than the amount of agricultural income

shown by the assessee at Rs.2,65,000/- which was treated by the

Assessing Officer as income from other sources, dismissing the

exemption claimed by the assessee which also covers this peak

amount. Therefore, no addition can be made in regard to the cash

deposits made to the assessee’s bank account.

6. Replying to the above, the learned Departmental

Representative strongly supported the action of the Assessing

Officer as well as the first appellate authority and submitted that

the assessee, being a salaried person, deposited huge amounts in

his bank account and there was no plausible and acceptable

explanation in this regard. Therefore, the Assessing Officer was

right in making the addition of Rs. 13,22,100/-. The learned DR

further submitted that since the assessee could not establish the

fact that he has earned income of Rs. 2,65,000/- out of agricultural

activities undertaken in the agricultural land of 44 bighas taken on

lease, therefore, the Assessing Officer was also right in treating the

same as income from other sources and, therefore, the learned

CIT(A) was quite justified in upholding the assessment order.

counsel for the assessee submitted that if at all the assessee’s claim

towards exempt agricultural income is dismissed and the income of

Rs. 2,65,000/- is treated as income from other sources, then it also

covered the maximum peak balance of Rs. 2,54,215/- on 11.9.2008

which was the result of deposit of Rs. 2,50,000/- received from KBA Traders on 11.9.2009 towards sale of potato seeds by the assessee.

The learned counsel for the assessee submitted that in any case,

the addition of Rs. 13,20,100/- cannot be held as sustainable on all

counts and, therefore, the same may kindly be deleted.

outset we observe that the Assessing Officer made the addition of

Rs.2,65,000/- by treating the agricultural income as income from

other sources dismissing the claim of exemption of the assessee by

observing that the assessee did not file all details and evidence

regarding the source of agricultural income. From the first appellate

order it is also discernible that the first appellate authority upheld

the action of the Assessing Officer by observing that the assessee

has agricultural income from leasing of 44 bighas of agricultural

land, which is found to be unsupported by any evidence. Therefore,

it cannot be accepted that the amount of Rs.2,65,000/- shown as

agricultural income was earned from the agricultural activities as

agricultural income of the assessee. The learned CIT(A) further

observed that the assessee has his own land and has also taken agricultural land on lease for one year which was pertaining to the

assessment year 2008-09 and not assessment year 2009-10. With

these observations, the learned CIT(A) upheld the action of the

Assessing Officer which treated the agricultural income as income

from other sources. Before us, the learned counsel for the assessee

drew our attention towards copies of the affidavits of the owners of

the agricultural land regarding extension of lease deed which is

placed at pages 21 to 24 of the paper book. Except these affidavits,

which were not submitted during the assessment proceedings,

there is no evidence to establish that the assessee took 44 bighas of

agricultural land and undertook agricultural activities thereon to

earn exempt agricultural income of Rs.2,65,000/-. We are in

agreement with the contention of the learned DR that if there was

written lease deed for the assessment year 2008-09 then there must

be extension of lease by way of written document only and in the

absence of the same, oral extension of lease on the basis of self-

serving after-thought affidavits, cannot be accepted and thus we

have no hesitation to hold that the Assessing Officer was right in concluding that the assessee’s claim for exempt agricultural income

is not acceptable and the Assessing Officer was right in treating the

amount as income from other sources.

Rs.13,22,100/- which was made by the Assessing Officer on

account of cash deposits by the assessee during the financial year

2008-09 i.e. between 1.4.2008 to 31.3.2009. From the copy of bank

account placed at paper book pages 25 to 31, we are satisfied with

the contention of the learned counsel for the assessee that the

impugned amount was not deposited on single day and the same

was deposited in small amounts during the entire financial period

and the maximum peak amount during the year was Rs. 2,54,215/-

on 11.9.2008, which was enhanced after deposit of Rs. 2,50,000/-

received by the assessee from KBA Traders. We also observe that

the assessee not only deposited various small amounts on various

dates but also withdrew small amounts therefrom. Thus, the

addition made by the Assessing Officer and upheld by the learned

CIT(A) by taking the total amount of deposits and ignoring the withdrawals and peak amount, cannot be held as sustainable. In

our considered view, the peak amount of maximum balance on

11.9.2008, which was Rs. 2,54,215/-, can be taken for the addition

on account of cash deposits. The total of cash deposits cannot be

taken for making the addition. At this juncture, we may also point

out that since in earlier part of this order we have upheld the

conclusion of the learned CIT(A) which confirmed the addition of

Rs.2,65,000/- made by the Assessing Officer by treating the

agricultural income as income from other sources, which also

covered the amount of Rs. 2,54,215/-, therefore, no further addition

on account of cash deposits can be held as sustainable.

peak credit is less than the amount of income from other sources

then no further addition is required to be made in this regard and,

therefore, the addition made by the Assessing Officer and upheld by

the learned CIT(A) of Rs. 13,22,100/- is wrong, unjustified and

unsustainable and, hence, we dismiss the same and the Assessing

Officer is directed to delete the addition in toto.

11. Accordingly, ground no. 3 of the assessee’s appeal is allowed

and ground no. 4 of the assessee’s appeal is dismissed.

Order pronounced in open Court on 20th March, 2017.

Sd/- sd/-

लेखा सद�य �या�यक सद�य (O.P.Meena) (C.M. Garg) Accountant Member Judicial Member

March 20th 2017.

Dn/