Loading judgment…
Facts
The assessee, an agriculturist, did not file an income tax return for AY 2017-18. The AO noticed cash deposits of Rs. 12,85,000/- in the bank account during the demonetization period. The assessee explained the source as an opening balance of Rs. 2,00,000/-, cash gift of Rs. 5,00,000/- from his wife, agricultural income of Rs. 4,00,000/-, and sale of popular trees for Rs. 2,00,000/-. The AO accepted only the opening balance and added the remaining Rs. 10,85,000/- as unexplained income.
Held
The Tribunal accepted the cash gift of Rs. 5 lakhs from the assessee's wife (originating from her father) as a genuine gift. However, regarding the agricultural income of Rs. 4,00,000/- and sale of popular trees for Rs. 2,00,000/-, the Tribunal restored these issues to the file of the AO for factual verification.
Key Issues
Whether the addition of Rs. 10,85,000/- as unexplained cash credit in the bank account was justified. Whether the sources claimed by the assessee (gift, agricultural income, sale of trees) were genuine.
Sections Cited
139(1), 144, 142(1), 69A, 115BBE, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH “SMC”: AGRA
O R D E R
The appeal in AY 2017-18, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. NFAC’, in short] dated 30.01.2025 against the order of assessment passed u/s 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 24.09.2019 by the Assessing Officer, ITO, Ward-4(1)(3), Aligarh (hereinafter referred to as ‘ld. AO’).
The only issue to be decided in this appeal is as to whether the Learned CITA was justified in confirming the addition made in the sum of Rs 10,85,000/- on account of cash deposits made in the bank account in the facts and circumstances of the instant case.
I have heard the rival submissions and perused the materials available on record. The Assessee is an agriculturalist and the only source of income is from agriculture. Accordingly, the Assessee had not filed his return of income under section 139(1) of the Act. The Learned AO noticed that the Assessee had deposited a sum of Rs 12,85,000/- in specified bank notes during the demonetization period in the bank account. Accordingly, a notice under section 142(1) of the Act was issued to the Assessee on 8-3-2018 calling for return of income for assessment year 2017-18. But no income tax return was filed by the Assessee for the relevant assessment year even in response to notice under section 142(1) of the Act. The Assessee was confronted by the Learned AO to explain the source of cash deposits made in specified bank notes during the demonetization period in the bank account. In response to that, the Assessee explained that there was an opening cash balance of Rs 2,00,000/- as on 31-3- 2016 and he had received a sum of Rs 5,00,000/- as gift in cash from his wife ; Rs 4,00,000/- was received as agricultural income on account of agricultural land given on lease and Rs 2,00,000/- was received by him on sale of popular tree receipts. Accordingly, the Assessee explained that he had a cash balance of Rs 13,00,000/- which was eventually deposited in the bank account during the demonetization period. Out of the aforesaid explanation, the Learned AO accepted only a sum of Rs 2,00,000/- being the opening cash balance as explained and did not agree with the other sources of cash balances available with the Assessee and accordingly completed the assessment under section 144 of the Act on 24-9-2019 by adding a sum of Rs 10,85,000/- ( Rs 12,85,000 minus Rs 2,00,000) as unexplained cash under section 69A read with section 115BBE of the Act.
The Learned CITA observed that the assessee’s claim of gift received from his wife is based on a gift received by her from her father in cash in the sum of Rs. 5 lakhs. He noted that Gift deed, for such a donation by Shri Anees (father of assessee’s wife) to his daughter, claimed to have been given on 25- 10-2016, was executed on 13-12-2017, which proves that the same is an afterthought. Accordingly, the Learned CITA observed that gift from wife of Rs. 5 lakhs in cash was rightly rejected by the Learned AO. With regard to claim of assessee regarding receipt of agricultural income of Rs 4,00,000/-, the learned CITA noted that the lease deed was executed on a plain paper for cultivation of land given to Shri Mahendra Singh instead of same being executed on a stamp paper. Accordingly the same is not reliable and the learned CITA observed that the learned AO rightly rejected the same as a available cash source. With regard to cash received on sale of popular trees of Rs 2,00,000/- to Shri Shadab Ali, the Learned CITA noted that the sale deed for sale of the same was executed on a plain paper instead of stamp paper thereby raising suspicion and accordingly observed that the learned Ao rightly rejected the same as an available cash source.
The Learned AR placed on record a copy of the scrutiny assessment order framed under section 143(3) of the Act dated 28-12-2017 for assessment year 15-16 wherein assessee filed his return of income on 28-1- 2017 declaring taxable income of Rs 2,60,000/- out of retail business of cloth . The said return was duly accepted in the scrutiny assessment by the Learned AO. The assessee submitted that he had taken KCC loan of Rs 10 lakhs on 14- 9-2015 from Punjab National Bank and the bank pressed for repayment of the said loan. Accordingly the assessee received gift of cash gift of Rs 5 lakhs from his wife Mrs. Nahid Parveen on 25-10-2016 and repaid the bank loan. In support of this, the gift deed given by assessee’s wife to assessee and gift deed executed by assessee wife’s father to assessee’s wife was placed on record which were filed by the assessee during the course of scrutiny assessment proceedings of assessment year 15-16 were placed on record. The bank statement of assessee wife's father for the relevant period was also filed, wherein a sum of Rs 14 lakhs was withdrawn by assessee’s father-in-law from his bank account and out of that, a sum of Rs 5 lakhs was given as cash gift to his daughter (assessee’s wife) and that sum was in turn transferred by assessee’s wife to assessee. The bank statement of assessee’s father-in-law is enclosed in pages 10 and 11 of the paper book. Since the assessee’s father-in- law is having sufficient cash source to advance cash gift to the assessee’s wife, the execution of gift deed in support of this cash gift given by him to assessee’s wife at a later point of time somewhere in 2017 does not make the cash gift given earlier ingenuine. Hence, I accept the cash gift given by assessee’s father-in-law to assessee’s wife which in turn was advanced by assessee’s wife to assessee as a genuine gift and consequentially consider the same as available cash source with the assessee to explain the cash deposits made in the bank account.
With regard to the sum of Rs 4,00,000/- received in cash as agricultural income from agri-land given on lease to Shri Mahendra Singh, the Learned AR placed on record a certificate issued by the Gram Pradhan stating that the land owned by the assessee was taken on lease by Shri Mahendra Singh. This is enclosed in page 12 of the paper book. Further, an affidavit of Shri Mahendra Singh together with his KYC proof was filed in pages 12A to 12C of the paper book. This fact requires factual examination by the Learned AO. Hence, I deem it fit and appropriate to restore this aspect of the issue to the file of the Learned AO to make a factual verification of the claim made by the assessee in this regard. If the explanation given by the assessee for the cash source of Rs 4,00,000/- is found to be correct, then the same is to be accepted as an available cash source for explaining the cash deposits made during the demonetization period.
With regard to cash received in the sum of Rs 2,00,000/- on sale of popular trees to Shri Shadab Ali, the Learned AR placed on record a copy of sale deed together with an affidavit of Mr. Shadab Ali and his proof of identity in pages 13 to 13 C of the paper book. This fact requires factual examination by the Learned AO. Hence, I deem it fit and appropriate to restore this aspect of the issue to the file of the Learned AO to make a factual verification of the claim made by the assessee in this regard. If the explanation given by the assessee for the cash source of Rs 2,00,000/- is found to be correct, then the same is to be accepted as an available cash source for explaining the cash deposits made during the demonetization period.
With the above observations, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 17/09/2025.