SHANKAR REDDY MARREDDY,HYDERABAD vs. INCOME TAX OFFICER, WARD-9 (1), HYDERABAD

The grounds raised by the assessee read as under :

The brief facts of the case are that on verification of the information available with the department, it was found that assessee has credited funds in his bank accounts held with HDFC Bank to the tune of Rs.13,69,500/- during the demonetization period and also found that assessee has not filed return of income for the year under consideration. Hence, a notice u/s 142(1) of the Act dated 13/03/2018 was issued to the assessee calling for return of income for the assessment year 2017-18. However, the assessee did not reply even after grant of sufficient opportunities. Hence, a final show cause notice dated 22.12.2019 was issued to the assessee requesting to provide the information. However, even after the date mentioned in the show-cause notice, the assessee did not file the information as on the date of passing the assessment order. As the assessee has not provided any document / evidence in support of his claims the entire cash deposits of Rs.13,69,500/- was treated as undisclosed income of the assessee for the FY 2016-17 relevant to the AY 2017-18 and accordingly brought to tax u/s 69A of the I.T.Act, 1961. Thus, the Assessing Officer completed the assessment u/s 144 of the Act and passed order on 26.12.2019 determining the total tax payable amount at Rs.12,95,824/-.

Feeling aggrieved with the order of Assessing Officer assessee filed an appeal before the ld.CIT(A), NFAC, Delhi, who dismissed the appeal of assessee.

Before me, ld. AR has submitted that the cash deposits in question pertains to past savings, rental income received in cash and cash sale on agricultural products. The past savings were deposited by the assessee in his bank during the period of demonetisation. He further submitted that assessee has filed return of income for four years, where the agricultural income on cash basis was shown. The ld. AR further submitted that though the Assessing Officer has also mentioned in assessment order that the assessee has agricultural income from 26 acres however, he ignored the same stating that there was no supporting document and evidence to substantiate his case of sale of agriculture produce in cash. The ld. AR pleaded that considering the above facts and circumstances, the addition of unexplained income was unwarranted and should be deleted.

Per contra, the ld. DR has relied upon the orders of lower authorities.

I have heard the rival submissions and perused the material on record. In the present case, the total addition made by the Assessing Officer and confirmed by the ld.CIT(A) was for a sum of rupees 13,69,500/-. The said amount was deposited by the assessee in his account during the demonetization period. The explanation of the assessee was that he is a regular income tax payer and was filing the return of income for the last 4 years. Out of the last 4 years, returns for two years were filed belatedly after lapse of two years and for the other remaining two years, the returns were filed in time, whereby the assessee has shown the agricultural income of Rs.2,35,000/- and Rs.4,15,000/- during those two years. However, there is no denial on the part of the Revenue that the assessee holds 26 acres of agricultural land (refer para 6 of Assessing Officer’s order) and there was agricultural income from that agricultural property. It is also not disputed by the Revenue that the assessee has been continuously showing the agricultural income on cash basis for the last two years.

In the result, the appeal of the assessee is partly allowed.