BASAVARAJ RAMESH INDIVIDUAL,KRISHNAGIRI vs. ITO, WARD-1, KRISHNAGIRI, KRISHNAGIRI

The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of AO in treating the cash deposit in assessee’s savings bank accounts maintained with Bank of India, State Bank of India and Union Bank of India during the demonetization period in Specified Bank Notes (SBNs) as unexplained investment u/s.69 of the Act amounting to Rs.15,96,500/-. For this, assessee has raised various grounds which are explanatory, factual, and argumentative and hence, need not be reproduced.

I have heard rival contentions and gone through the facts and circumstances of the case. I noted that the assessee is an individual earning interest income from money lending and agricultural income. The AO noted that the assessee has deposited cash during demonetization period which is brought out in para 3 of the assessment order at pages 2 & 3, total cash deposit in three savings bank accounts amounting to Rs.18,46,500/-. The AO required the assessee to explain the cash deposit of Rs.18,46,500/- in demonetized currency and the assessee explained that the same is income earned from agricultural activity. The assessee in support of agricultural income filed land holding details and claimed that he owns 13.53 acres of land in villages in Krishnagiri Taluk and - 3 - accordingly, he filed patta, chitta, adangal and other details. The assessee also filed the claim of agricultural income and return filed after the period of demonetization and AO brought out the same in his assessment order in chart at para 5, which is being reproduced as under:- A.Y. Date of filing Income Agricultural Remarks of Return of Returned Rs. Income Rs. income 2014-15 NIL 2,65,000 2,40,000 ROI not filed 2015-16 26.11.2016 3,14,200 8,10,000 ROI filed 2016-17 26.11.2016 4,27,820 11,62,000 ROI filed 2017-18 12.07.2017 3,23,260 9,60,000 ROI filed The AO accepted the cash deposit of Rs.2.50 lakhs in SBNs and balance of Rs.15,96,500/- was treated as unexplained investment u/s.69 of the Act and taxed the same as per the provisions of section 115BBE of the Act. Aggrieved, assessee preferred appeal before CIT(A).

The CIT(A) did not believe the increase in agricultural income from Rs.2.40 lakhs in financial year 2013-14 to Rs.8.10 lakhs in financial year 2014-15 to Rs.11.62 lakhs in financial year 2015-16 and to Rs.9.60 lakhs in financial year 2016-17. According to CIT(A), cash was deposited in three bank accounts in different bank branches and spread over period of one month on various days.

- 4 - Applying the test of human probabilities, he confirmed the addition. Aggrieved, assessee is in appeal before the Tribunal.

I noted that there is every possibility of earning of agricultural income but the assessee is unable to file any details like crop grown or the crop sold in market and in what rate. It is not doubted that assessee is holding agricultural land to the extent of 13.53 acres and claim of assessee was that Mango was grown in this land and he has declared the agricultural income in the returns of income as noted above. I cannot doubt that assessee is not having agricultural income but not to that extent, what he has claimed. Hence, I make a fair estimate of agricultural income and treat cash deposit partly as explained and partly as unexplained. Going by the circumstances and theory of human probabilities and the fact is that assessee is holding agricultural land and growing mangoes in this land, which is supported by adangal, chitta and VAO certificates, I estimate the agricultural income annually at Rs.5 lakhs for these three years i.e., financial years 2015-16, 2016-17 & 2017-18 that means, assessee is having availability of Rs.15 lakhs of cash, out of this, assessee might have incurred household expenses and used the cash for household expenses. I estimate the household expenses at Rs.5 lakhs and the balance cash available with the assessee for depositing in the bank

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