AVIND JIVRAJ SHAH,MODNIMB vs. ITO WARD 1(2) SOLAPUR, AAYKAR BHAVAN, SOLAPUR

Briefly, the facts of the case are that the appellant is an HUF, return of income for the A.Y. 2017-18 was filed on 15.02.2018 disclosing total income of Rs.2,55,190/-. Against the said return of income, the assessment was completed by the Assessing Officer (AO) vide order dated 25.11.2019 at a total income of Rs.14,55,190/- after making addition of cash deposit of Rs.12,00,000/- made during the demonetization period with The Pandharpur Urban Co.op. Bank Ltd., Modnimb Branch. While doing so, the AO rejected the contention of the appellant that the said cash deposit was out of the sale consideration received against the sale of agricultural land situated at Gat No.871/B and 872, A/P. Lingnoor, Tal. Miraj, Dist. Sangli.

Being aggrieved, an appeal was filed before the NFAC who vide impugned order confirmed the action of the AO by holding that the explanation of the appellant cannot be believed since the appellant had bank account and there was no reason to keep cash of Rs.12,00,000/- at home for such a long time of 18 months.

Being aggrieved, the appellant is in appeal before the Tribunal in the present appeal.

We heard the rival submissions and perused the material on record. The solitary issue that arises for our consideration is whether, in the facts and circumstances of the case, the AO was justified in making addition of cash deposit of Rs.12,00,000/- made during the demonetization period on 17.11.2016, disbelieving the explanation of the appellant that the source for the said cash deposit made is out of the sale proceeds of agricultural land. In this case, the appellant sold the agricultural land situated at Gat No.871/B and 872, A/P. Lingnoor, Tal. Miraj, Dist. Sangli for a total consideration of Rs.12,00,000/- in cash. The sale deed (Certified English translation), placed at pages 81 to 85 of the paper book, clearly mentions that sale consideration of Rs.12,00,000/- was received during the period 01.04.2015 to 31.05.2015 and the sale deed was registered on 16.11.2016 with the O/o.Joint Sub- Registrar, Sangli. The appellant made the cash deposit in the bank account on 17.11.2016. Having regard to these facts of the case and the explanation of the appellant that the cash deposit was made out of the sale proceeds of agricultural land is plausible and cogent one. There is no reason to disbelieve the explanation tendered by the appellant. The fact that the sale deed was registered only on 16.11.2016 establishes the reasons for holding the cash without depositing the cash in bank pending the registration of the sale deed. The NFAC ought to have accepted the explanation tendered by the appellant. Therefore, we direct the AO to delete the addition of Rs.12,00,000/- made. Grounds of appeal filed by the appellant accordingly stands allowed.

In the result, the appeal filed by the assessee is allowed. Order pronounced on this 26th day of September, 2024.