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Facts
The assessee deposited Rs. 11,87,000/- in cash during the demonetization period, which the AO treated as unexplained investment. The assessee claimed this was from agricultural income but failed to provide adequate documentary evidence.
Held
The Tribunal noted that the lower authorities had not considered the evidence filed by the assessee. Therefore, the matter was remanded back to the AO for a fresh examination, with an opportunity for the assessee to present all requisite documents.
Key Issues
Whether the addition of Rs. 11,87,000/- as unexplained investment was justified without proper consideration of the assessee's evidence and claim of agricultural income.
Sections Cited
69A, 144, 142(1), 139
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Income Tax Appellate Tribunal, DELHI BENCH “SMC’’ : NEW DELHI
Before: SHRI MAHAVIR SINGH, HON’BLE
ORDER This appeal by the assessee is emanating from the order of the Ld. NFAC, Delhi, dated 21.03.2025 pertaining to assessment year 2017-18 on the solitary ground relating to sustaining the addition of Rs. 11,87,000/- made by the AO u/s. 69A of the Act by treating the cash deposit as unexplained investment.
The brief facts of the case are that on the basis of data of analytics and information gathered during the phase of online verification under ‘Operation Clean Money’, the Income Tax Department gathered a list of assesses who had deposited substantial cash in bank account(s) during the demonetization period (9th November, 2016 to 30th December, 2016), but have not filed income tax return for AY 2017-18. The data reveals that the assessee has deposited cash of Rs. 11,87,000/- in the bank accounts during the demonetization period in old currency. Assessee neither filed any income tax return for AY 2017-18 u/s. 139 nor in response to notice issued u/s. 142(1) of the Act and therefore, the source of cash deposits made in old currency notes remained unexplained. Thereafter, proceedings were initiated u/s. 144 and notices u/s. 142(1) alongwith detailed questionnaire were issued to the assessee asking him to explain the source of cash deposited in the bank accounts during the demonetization period. In compliance to the aforesaid notices, Ld. AR attended the proceedings and submitted reply. It was the contention of the assessee that assessee deposited Rs. 15,63,000/- during the period of 1.4.2016 to 31.3.2017 and Rs. 11,87,000/- deposited during demonetization period 9.11.2016 to 31.12.2016 and balance Rs. 3,76,000/- in other than demonetization period from out of sales of his agriculture crop and trees. The assessee has 61 bigha agriculture land at his village and his area very fertile due to good atmosphere and easy availability of water for irrigation. And minimum income per bigha comes at Rs. 10000/- to 12000/- normally, in above scenario assessee’s agriculture income was comes to Rs. 6,50,000/-.
The assessee deposited all money from the sales of agriculture crop. In his bank account and the assessee meet out expenses i.e. agriculture expenses and household expenses after withdrawal from his saving account from his agriculture income. The house hold expenses was very low due to simple and easy living. The assessee is not highly educated and agriculturists so he have not mentioned any documentary proof related to sales of crops, trees and animals. Upon assessee’s reply, AO found that the assessee has failed to furnish any details and any supporting evidence in respect of cash at Rs. 11,87,000/- deposits made in the bank accounts, sources of cash deposits made during demonetization period. During the course of assessment proceedings in response the notices assessee only submitted his bank statement and copy of Khatauni. On anlaysis of bank account filed by the assessee it is noticed that assessee deposit cash only during the demonetization period
2 | P a g e and not deposit pre demonetization and post demonetization period. Hence, assessment was completed u/s. 144 of the Act at Rs. 11,87,000/- and agriculture income at Rs.
3,76,000/-. Aggrieved, Assessee preferred the appeal before the CIT(A), who had confirmed the action of the AO. Against the above, assessee filed the appeal before the Tribunal.
Heard both the sides and perused the records. It is noted that Ld. AR for the assessee submitted that AO has failed to make a best judgment assessment and has made the additions solely on the basis of the information available on the insight portal without any personal inquiry or assessment and Ld. CIT(A) has failed to notice such fat and invalidate the order so passed. It was the further contention that AO has miserably failed to consider the nature of receipts in the bank account of the assessee as identifiable from the narrations therein alongwith the documentary evidences including copy of Khatauni and thereby identify his occupation, resulting in an flawed assessment order and Ld. CIT(A) has failed to consider the same as well. It was the further contention that CIT(A) has erred in ignoring the fact that the AO has proceeded arbitrarily without giving a reasoned order, framing the assessment without giving adequate time to the assessee to represent the case and ignoring the guidelines of higher authorities. However, Ld. DR relied upon the orders of the authorities below. I find that AO noted that the assessee had made huge cash deposits of Rs. 11,87,000/- in his various savings bank accounts maintained with UBI, OBC and HDFC. Accordingly, various notices u/s. 142(1) were issued on the assessee seeking details and documents to establish the source of the cash deposits made during the period under consideration. AO noted that Assessee in response to the notices merely submitted that he was an agriculturist and had kisan credit card from OBC and limit of card was Rs. 10,97,679/- and he had deposited Rs. 5,60,000/- and Rs. 4,00,000/- in different accounts of the OBC and the balance of Rs. 2,27,000/- were out of sale of his agricultural crop and trees. AO noted that as the assessee failed to provide any documentary evidence in substantiation of his claim, the source of the cash deposit remained unverified, hence, he treated the same as unexplained cash deposit. Similarly, in the absence of any supporting evidences, CIT(A) upheld the action of the 3 | P a g e AO. The factual background of the instant case, in my considered view the matter needs to be examined afresh, as assessee has submitted before us that that lower authorities have not considered the evidences filed by the assessee and Ld. DR has relied upon and reiterated the findings of the lower authorities that assessee has not submitted the documentary evidence. Therefore, in the interest of justice, the matter needs to be examined afresh, and decide accordingly, by the AO, after giving adequate opportunity of being heard to the assessee by considering all the evidences properly and also the assessee is directed to furnish all the requisite documents before the AO to canvass his case adequately. AO is also directed to ensure that if documentary evidences furnished by the assessee are in order, the addition in dispute may be deleted, in accordance with law. I hold and direct accordingly and allow the ground raised
by the assessee for statistical purposes.
4. The instant assesseee’s appeal is allowed for statistical purposes in the aforesaid terms.