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Facts
The assessee, an individual earning salary income, filed a return declaring Rs.5,31,920/-. The return was selected for scrutiny due to cash deposits of Rs.91,42,000/- in his savings bank account. The assessee explained the deposits as arising from sale proceeds of crops and advance for sale of agricultural land, which was rejected by the AO.
Held
The Tribunal noted that while the assessee attempted to prove the source of cash deposits, the explanation was not fully corroborated by cogent evidence. However, the Revenue's endeavor to disbelieve the assessee was also not fully justified. The Tribunal deemed it appropriate to make a lump-sum addition of Rs. 8 lakh in the interest of justice.
Key Issues
Whether the explanation provided by the assessee for the cash deposits aggregating Rs.91,42,000/- was satisfactory, and if not, what would be the appropriate addition.
Sections Cited
68, 143(2), 143(3)
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Income Tax Appellate Tribunal, DELHI ‘G’ BENCH,
Before: SHRI SATBEER SINGH GODARA, & SHRI NAVEEN CHANDRA
This appeal by the assessee is directed against the order of the ld.
CIT(A)/NFAC dated 24.04.2024 pertaining to A.Y 2014-15.
The assessee has raised the following grounds of appeal:
“1. That the Ld. CIT(A) has erred in law and the facts of the case by confirming the addition of Rs.91,42,000/- as made by the Ld AO u/s 68 of the income Tax Act, 1961 and the findings made are Page 1 of 8 unjust & unwarranted and the submissions of the appellant have not been considered in right perspective thereof 2. That the Lo CIT(A) has erred in law and facts of the case by ignoring the affidavits of the appellant, his co-sellers and the witness to the unregistered agreement under consideration without bringing anything on record so as to prove that the facts stated therein are incorrect.
3. That without prejudice to above the authorities below have erred in law by ignoring the submissions of the appellant that the cash deposit of Rs.89,00,000/- was made out of the advance received against sale of agricultural land and Rs.2,42,000/- as proceeds of sale of crops plants and trees standing thereon without bringing on record any other possible source from which the appellant could have earned such huge amount of income thereby ignoring the judgment of the Hon'ble Jurisdictional Allahabad HC in the case of CIT vs. Intezar Ali (2015) 372 ITR 0651 (All).
4. That the appellant respectfully craves leave to add alter omit or substitute any or all of the above grounds of appeal at any time before or at the time of hearing of appeal to enable your good self to decide the appeal in accordance with law.”
Briefly stated, the facts of the case are that the assessee is an individual earning salary income from the Irrigation department of the U.P. Government. The assessee filed his Return of income for the year under consideration on 29.07.2014, declaring an income of Rs.5,31,920/-. Thereafter, the return was selected for scrutiny Page 2 of 8 assessment through CASS for the reason of cash deposits of Rs.91,42,000/- in his saving bank account and accordingly, notice u/s 143(2) of the Income-tax Act, 1961 [the Act, for short] was issued on 28.08.2015.
The assessee explanation that the said cash deposit was out of sale proceed from crops etc and advance for sale of agricultural land was not accepted by the AO and consequently he added the same to the income of the assessee u/s 143(3) of the Act.
On appeal, the additions were confirmed by the CIT(A) who rejected the explanation of the assessee that the cash was deposited out of the cash received as per the unregistered agreement dated 11.11.2013. Aggrieved, the assessee is before us.
The ld AR vehemently submitted that during the year under consideration, the assessee, his two sons namely, Shri Manmohan Saini and Shri Brijmohan Saini, and his two brothers namely, Sh. Lakhpat and Dharam Singh had executed a registered agreement dated 18.02.2014 to sell their agricultural land measuring 0.9172 hectare at Khasra No. 384, Village Kamalpur, Meerut with M/s Renuka Buildtech Pvt. Ltd. for a total consideration of Rs.2,56,85,000/-.
At the time of execution of agreement to sell, total advance of Rs.25,25,000/- was paid vide three cheques to the sellers of the said
Page 3 of 8 land after making TDS of Rs. 25,000/-. The assessee has furnished copy of the registered agreement in the paper book. Before execution of the registered agreement, an unregistered agreement was executed on 11.11.2013 between the assessee and M/s Renuka Buildtech Pvt. Ltd. to sell the above mentioned agricultural land for total consideration of Rs.4,60,74,000/-. Copy of the said unregistered agreement is also placed on record. As per the said unregistered agreement an amount of Rs.
10,00,000/- was paid in cash on 07.10.2013 and an amount of Rs.80,00,000/- was paid on 11.11.13 in cash and Rs.25,00,000/- was paid vide three cheques, making the total advance of Rs. 1,15,00,000/- upto that date.
The Cheques mentioned in the unregistered agreement executed on 11.11.13 were also mentioned in the registered agreement executed on 18.02.2014. The amount received in cash by the appellant was deposited by him in his saving bank account. Rs. 1,00,000/- on 07.10.2013, Rs.9,00,000/- on 8.10.2013 out of cash of Rs. 10,00,000/- received on 07.10.2013 and Rs.79,00,000/- on 11.11.13 out of Rs.80,00,000/- received on 11.11.13. Apart from above, cash of Rs.2,42,000/- was also deposited in the bank account of the assessee on various dates, which was out of the sale proceeds of crops, plants and trees grown on the aforesaid land.
The ld. counsel for the assessee further stated that the authenticity of the said agreement is evident from the fact that the 3 cheques mentioned in the said unregistered agreement totaling to Rs.25,00,000/-, were also duly mentioned in the registered agreement dated 18.02.2014 and in the registered sale deed executed on 31.05.2015. The cheque number 574425 of Rs. 10,00,000/- and cheque number 574427 of Rs.5,00,000/- were duly credited in the same bank account of the assessee in which the cash was deposited. Copy of the statement was furnished on record.
The ld. counsel for the assessee submitted that above noted facts have also been stated on oath in the affidavits of the assessee, his co- sellers and the witnesses to the transactions, which were duly filed before the lower authorities. The Assessing Officer as well as Id. CIT(A), in their respective orders, did not bring anything on record to rebut or controvert the claim made by the assessee, his co-sellers and witnesses, in their respective affidavits filed before them.
The remaining amount of Rs.2,42,000/- has been deposited by the assessee out of the agricultural income earned by him during the year and out of the sale proceeds of trees grown on the agricultural land sold by the appellant. Reliance was placed on the judgment of the Hon'ble Apex Court in the case of Mehta Parikh & Co. Vs. CIT (SC) [30 ITR 0181]
Page 5 of 8 and the judgment of the jurisdictional Allahabad High court in the case of L. Sohan lal Gupta vs. CIT (AII HC) [33 ITR 0786] and judgment of the Hon'ble Allahabad HC in the case of CIT Vs. Intezar Ali [372 ITR 0651], copy placed at page nos. 49 to 54 of the paper book.
Per contra, the ld. DR relied on the orders of the Assessing Officer and the ld. CIT(A).
We have heard the rival submissions and have perused the relevant material on record. In the instant case, we find that the assessee has attempted to prove the entire source of cash deposit was out of sale proceed from crops, plants and trees etc and advance for sale of agricultural land. Although the assessee, prima facie, appears to have discharged its onus of explaining source of cash deposit, it’s contentions to prove the source, hardly deserves to be accepted in entirety especially when the AO found that the cash received from sale of agriculture produce is not corroborated by any cogent evidence. Further the explanation that cash received is advance received in cash for sale of agricultural land as per the unregistered sale deed, is being evidenced by only affidavits of the assessee, his co-sellers and the witnesses to the transactions. On the other hand, the Revenue’s endeavour to disbelieve the assessee’s contention that cash deposit has been made out of sales of crops and advance for sale of land, cannot be fully justified. In this Page 6 of 8 factual matrix, there is some element of failure to explain some of the cash deposit, cannot be ruled out. Be that as it may, it is deemed appropriate, in larger interest of justice, that a lump-sum addition of ₹ 8 lakh only would be just and proper with a rider that the same shall not be treated as a precedent, so as to cover all loopholes. The ground of appeal no 1 to 3 is partly allowed. allowed.
Order pronounced in open court on 04.11.2025.