OLIVIA MIRANDA,MOODBIDRI vs. INCOME TAX OFFICER, WARD-2(2), MANGALURU

The ld. FAA dismissed the legal ground raised by the assessee and on merits he noted that the cash deposits during the demonetisation period was not supported by any corroborative evidence and assessee has not maintained books of accounts. Accordingly he dismissed the appeal. Aggrieved, the assessee is in appeal before the ITAT.

At the outset, there is a delay of 24 days in fling the appeal before the ITAT for which the assessee has stated the reason as negligence on the part of tax practitioner. She is a senior citizen aged about 72 years now and not well versed with the income tax proceedings. On going through the reasons for condoning the delay, we note that there are sufficient reasons for the delay and following the judgment of the Hon'ble Apex Court in the case of Collector, Land Acquisition Vs. MST. Katiji and Others (1987) 167 ITR 471, delay in filing the appeal before the Tribunal is condoned.

The ld. AR submitted that the AO was not justified in completing the assessment u/s. 144 of the Act. The assessee filed return in ITR-2 on 1.5.2019 online and it was specifically mentioned that the return was filed in response to notice dated 9.3.2018 u/s. 142(1) and therefore the return was a legitimate return. The online portal has accepted the return and the CPC received it on 5.5.2019. Therefore the order passed u/s. 144 treating the return as non est is not sustainable.

The ld. AR further submitted that the during the course of assessment proceedings, the documents of RTC regarding agricultural land ownership was given to the AO and it is clear that there was sales realisation from agricultural produce. The AO has simply stated that the assessee has not substantiated the agricultural income. The ld. AR submitted that in the case of assessee compulsory maintenance of books of account are not applicable. If the AO had any doubts regarding crops as declared in the RTC, he could have rejected the document. He further submitted that the assessee is a 70 years old lady (72 now) and there is no banking facility, therefore the previous years sales and net profit from agricultural activity were kept in cash. Her husband demised in 2011 and since then she is managing the entire agricultural activity. The agricultural crops grown are coconut, arecanut, banana and pepper and the details were submitted during assessment proceedings and placed at pages 50-55 of PB. Reply was also submitted by the assessee against the final show cause notice issued by the AO.

On the other hand, the ld. DR relied on the orders of lower authorities and submitted that the assessee has not filed return of income within the due date specified in the notice u/s. 142(1) and time was granted to the assessee upto 30.4.2019. It is discretionary power of AO for granting time u/s. 142(1) in the notice itself. Therefore the AO has not issued any notice granting time. However the assessee fled the return on 1.5.2019. Therefore the return is non est in the eyes of law. In respect of agricultural income of Rs.7,85,000 the assessee has not given any single piece of evidence and only written submissions and RTC were filed. Therefore it cannot be said that assessee had sufficient cash for deposit during the demonetisation period with cogent material.

Considering the rival submissions, we note that notice u/s. 142(1) was issued to the assessee observing that during the demonetisation period assessee has deposited Rs.12,50,000 in her bank account and return of income was not filed. Subsequent notice u/s. 142(1) was issued granting time to file the return. The objection raised by the assessee is regarding best judgment assessment and treating the return as non est. The assessee did not file the return in response to notice u/s. 142(1) till 30.4.2019. We are in agreement with the ld. DR on this point and we reject the grounds of the assessee.

The assessee has declared gross total income of Rs.10,56,321 and the net agricultural income is Rs.7,70,690. We note that during the assessment proceedings, the assessee filed details of agricultural income and RTC copies of agricultural land owned, quantitative details of yield. The assessee has 6.77 acres of land and crops grown are coconut, arecanut, pepper and banana. As per the submissions of assessee, her husband demised in 2011, since then she was managing the entire agricultural activity. The nature of crops grown are mentioned in the RTC and the AO has not disputed it. The assessee submitted that the net agricultural income was Rs.7,70,690 out of which sum of Rs.4,65,000 was earned upto 10.11.2016. Considering the agricultural land holding and nature of crops grown and sold by the assessee, we hold that agricultural income available with assessee of Rs.4,65,000 is justified.

Further in respect of savings of entire life of Rs.7,85,000 the AO noted that assessee has not produced any books of accounts. The age of assessee is 70 years (72 now). After her husband’s demise, the assessee was managing the agricultural activities. As per provisions of the Act u/s. 44A, the assessee is not required to maintain books of accounts. We note that the assessee has no banking facility available. Therefore, from the nature of crops grown the accumulated cash balance in the hands of the assessee for deposit of Rs.7,85,000 is not on the higher side and justified. Hence, we delete the addition made by the AO and sustained by the ld. FAA.

In the result, the appeal by the assessee is partly allowed.

Appellant 2. Respondent 3. Pr.CIT 4. CIT(A) 5. DR, ITAT, Bangalore.