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Income Tax Appellate Tribunal, DEHRADUN “SMC” BENCH, DEHRADUN
Before: SHRI SATBEER SINGH GODARA & SHRI M. BALAGANESH
PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2023-24/1061203184(1), dated 20.02.2024, involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
ITA No.47/DDN/2024
Case called twice. None appears at the assessee’s behest. He is accordingly proceeded ex-parte. 3. The assessee’s twin substantive grounds herein seek to reverse both the learned lower authorities’ action, inter alia, disallowing his agricultural income of Rs.9,85,000/- and cash deposits of Rs.15,15,490/-; respectively, upheld in the lower appellate discussion, reading as under: “8.1 Ground No 4 is directed against the AO making addition of Rs.9,85,000 on account of disallowance of Agricultural income. The AO during the course of assessment proceedings found that the appellant has declared agricultural income of Rs 9,85,000. The AO held that the appellant in spite of several opportunities failed to submit details and evidences of the same and therefore disallowed the agricultural income of Rs 9,85,000. 8.2 The appellant during the course of appeal proceedings has submitted that he owns a Farm land at Village Daha Farm, Khatima and that his return was also subject to scrutiny for the AY 2014-15, in which he had disclosed an agricultural income of 6,50,000. The appellant submitted that vide the Assessment Order u/s 143(3) of the Act dated 26/12/2016 the Income tax Assessment of the appellant was completed by accepting the return income for the year. The appellant also submitted a copy of KhasraKhatauni of the Farm land situated at Daha (Bilheri) Tehsil Khatima-Udham Singh Nagar- Uttarakhand having total joint family land holding of 14.146 Hectare. 8.3 I have carefully considered the facts of the case, the submission of the appellant and evidences on record. I find that the appellant has only submitted the details of ownership of farm land owned by the appellant joint family land but has not submitted any evidence of any agricultural activities carried out or and bills/vouchers evidencing of purchase seeds, fertilizers, labour etc. as well as sale of agricultural produce etc. The fact that the scrutiny for the A.Y 2015-16 was completed by the AO accepting the agricultural income in that year does not mean that the agricultural income from A.Y 2017-18 also needs to be accepted. It may be that in that year the appellant actually carried out agricultural activities but did not carry out in later years. Therefore, in view of the non-submission of evidences by the appellant 2 | P a g e
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that agricultural activities were actually carried out in the relevant previous year, the addition made by the AO is sustained and the appeal on Ground No 4 is thus dismissed. 9.1 Ground No 5 is directed against the AO making addition of Rs.48,45,500 on account of cash deposit U/s 69A of the Act. During the course of assessment proceedings, the AO found that there are several bank accounts which are linked with the PAN of the appellant. The AO also observed that in all such accounts a total of Rs 92,09,740 was deposited in cash during F.Y 2016-17 out of which an amount of Rs 17,65,490 was deposited during the demonetization. The AO requested the appellant to explain the debit and credit entries but the appellant failed to do so. The AO found that an amount of Rs 33,79,240 which is linked with the PAN of the appellant was of M/s Kaler Gas Service but it was found to be run by his sister with separate PAN in the GST registration and therefore, it was not considered as income of the appellant. The AO also reduced an amount of Rs 9,50,000 which is the agricultural income claimed by the appellant but not allowed by the AO. The balance amount of Rs 48,45,500 [Rs 92,09,740-(33,79,240+9,85,000) was treated as unexplained income u/s 69A of the Act by the AO. 9.2 The appellant during the course of appeal proceedings has submitted that the AO lost sight of the fact that during the year, he had withdrawn the cash from his bank accounts and deposited/redeposited the same in the Banks. The appellant submitted that he had withdrawn total cash amounting to 40,19,000 from his Current Account No. 15774011000060. The appellant also submitted that the bank deposits include the business turnover of 87.50 Lakhs as disclosed and accepted by the AO. The appellant contented that as he had offered the Income for taxation under the presumptive tax scheme, U/s 44AE of the Act, he was not obliged to maintain books of accounts U/s 44AA of the Act and thus the question of recording the said alleged money in the books of accounts does not arise. 9.3 I have carefully considered the facts of the case, the submission of the appellant and evidences on record. I find that the appellant has withdrawn total cash amounting to Rs 40,19,000 from his Current Account No. 15774011000060. Therefore, there is possibility that some of the cash deposited may be out of the cash withdrawn. Further, the appellant also has a business turnover of Rs 87.60) Lakhs and I find that the AO has not considered that this turnover may be part of the cash deposits made. Some of the cash deposits may be on account of the business receipts of the appellant of Rs 87,50,000 as discussed in above paras. However, it is also to be noted that out of Rs 87.50 lakhs turnover an amount of Rs 57,89,812 3 | P a g e
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paid by Hindustan Petroleum Corporation Ltd to the appellant would have been through bank credit/cheque and not in cash. Therefore, only parts of amount of Rs 29,60,188 could have been through cash. 9.4 Further, it is also a fact that the appellant has itself admitted that it does not maintain any books of accounts and therefore, the working of the cash withdrawal and deposit made by the appellant is also not a reliable document. The appellant has deposited an amount of Rs.17,65,490 during the demonetization. I find that this is not satisfactorily explained by the appellant. In view of the above facts and discussion, considering the nature of business of the appellant and possibility of the appellant having some cash in hand when demonetization was announced, credit of Rs 2,50,000 is given and the AO is directed to bring to tax only Rs 15,15,490 (Rs 17,65,490- 2,50,000) instead of Rs 48,45,500. The appeal on Ground No 5 is partly allowed.”
Learned departmental representative vehemently supports both the impugned disallowance/addition made in the assessee’s hands. He could hardly dispute the clinching fact recorded in the above extracted lower appellate discussion that the assessee cultivates/owns and possesses agricultural lands at Daha (Bilheri), Tehsil Khatima, Udham Singh Nagar, Uttarakhand, admeasuring 14.146 hectare. In the earlier assessment year, his disclosure of agricultural income amounting to Rs.6.5 lakhs stood duly accepted in section 143(3) assessment framed on 26.12.2016. 5. That being the case, we hold that it could be reasonably inferred that the assessee’a agricultural income stood increased from 6.5 lakhs to that of Rs.9.85 lakhs in question going by the principle of the human probability etc. We thus accept the instant 4 | P a g e
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former substantive ground to delete the impugned disallowance of Rs.9.85 lakhs in very terms subject to a rider that the same shall not be treated as a precedent. 6. Next comes the latter issue of cash deposit addition amounting to Rs.15,15,490/-. We make it clear that the assessee is having other sources of income as well i.e transport business and some of the deposits also involve receipts from M/s. Hindustan Petroleum Corporation Limited (para 9.3). That being the case, it could reasonably be inferred that the impugned cash deposits represent his business turnover although not specifically reconciled to the entire satisfaction of the impugned lower authorities. We thus deem it appropriate to conclude that a lumpsum addition of Rs.2 lakhs only would be just and proper with a rider that the same shall not be treated as a precedent. The assessee gets further relief of Rs.12,15,490/- in other words. 7. So far as assessee’s assessment under section 115BBE is concerned, we quote S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No.2078 of 2020 & 1742 of 2020, dated 19.11.2024 (Madras) that the impugned statutory provision would come into effect on the transaction done on or after 01.04.2017 only. The assessee is
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accordingly directed to be assessed under the normal provision as per law. 8. This assessee’s appeal is partly allowed. Order pronounced in the open court on 13th June, 2025 Sd/- Sd/- (M. BALAGANESH) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 13th June, 2025. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi
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