YOGESHKUMAR BABUBHAI PATEL,SURAT vs. INCOME TAX OFFICER, WARD-2(3)(4), SURAT

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH (SMC), SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 352/Srt/2022 (Assessment Year 2017-18) (Virtual hearing) Yogeshkumar Babubhai Patel, I.T.O., 48, Rajput Faliya, Kumbhariya Ward-2(3)(4), Vs. Gam, Punagam, Surat. Surat. PAN No. ANMPP 0363 N Appellant/ assessee Respondent/ revenue

Assessee represented by Shri Ashwin K Parekh, A.R. Department represented by Shri Vinod Kumar, Sr. DR Date of hearing 26/06/2023 Date of pronouncement 09/08/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals) (in short, the ld. CIT(A)) dated 13/10/2022 for the Assessment Year (AY) 2017-18. The assessee has raised following grounds of appeal: “1. The learned Commissioner of Income-tax (Appeals) has grievously erred in law and on facts in confirming the addition to the extent of Rs.5,01,114/- by disallowing Agriculture Income without appreciating the facts of Agriculture land holding, bills of Agriculture produce sold and explanation of appellant. The addition of Rs. 5,01,114/- should therefore be deleted. 2. The learned Commissioner of Income-tax (Appeals) has grievously erred in law and on facts in confirming the addition of Rs. 10,00,500/- for cash deposited in bank without appreciating the evidences of Gift received, income from other sources and other receipt duly shown in Return of Income. The addition of Rs. 10,00,500/- should therefore be deleted. 3. The learned Commissioner of Income-tax (Appeals) has grievously erred in law and on facts in confirming the addition of Rs. 8,33,020/- for Agriculture Income

ITA No. 352/Srt/2022 Yogeshkumar Babubhai Patel Vs ITO and cash deposited Rs. 10,00,500/- thereby making the double addition to the extent of Rs. 8,33,020/- by disallowance of Agriculture Income and deposit of cash. The telescoping benefit to the extent of Rs. 8,33,020/- should be allowed. 4. The learned Commissioner of Income-tax (Appeals) has grievously erred in law and on facts in charging Tax u/s. 115BBE of the Act on cash deposited and disallowance of Agriculture Income without appreciating the satisfactory explanation on source of cash deposited and Agriculture Income. The appellant reserves the right to add, alter, modify, amend or withdraw any of the grounds of appeal before hearing.” 2. Brief facts of the case are that the assessee is an individual, filed his return of income for A.Y. 2017-18 on 05/12/2017 declaring income of Rs. 6,04,130/-. The case of assessee was selected for scrutiny. During the assessment, the Assessing Officer noted that the assessee has shown agricultural income which is abnormally higher comparative to earlier years. Further the agricultural income shown by the assessee is not supported by documentary evidences. The Assessing Officer also compared the agricultural income with subsequent financial years. The assessee has shown net agricultural income of Rs. 8,33,020/- for A.Y. 2017-18 and in subsequent financial year, the assessee has shown agricultural income of Rs. 4,19,508 and Rs. 3,31,906/- in AY 2018-19 & 2019-20 respectively. On the basis of such discrepancy, the Assessing Officer took his view that the agriculture is nothing but income from undisclosed sources. The Assessing Officer issued show cause notice as to why amount of Rs. 8,33,202/- should not be added to the income under Section 68 of the Act.

ITA No. 352/Srt/2022 Yogeshkumar Babubhai Patel Vs ITO 3. The Assessing Officer further noted that the assessee has made deposit of Rs. 10,00,500/- during demonetization period. On preliminary enquiry, the assessee explained the source as per the cash book for F.Y. 2016-17 and that he has received gift of Rs. 3.50 lacs and rental income of sound system of Rs. 5,28,850/- and other receipt. No proof of gift was furnished. Further the income from sound system was not shown before 25/07/2016 and after 24/10/2016. Further, no proof of running or hiring of sound system was furnished. There were discrepancies in the opening cash balance in the cash book filed by assessee. On the basis of such discrepancies, the Assessing Officer also issued show cause notice as to why amount of Rs. 10,00,500/- deposited in bank during demonetization period should not be added as income under Section 68 of the Act. 4. The Assessing Officer recorded that the assessee was required to furnish his reply by 15/11/2019. The assessee not furnished his reply till such date. Thus, the Assessing Officer proceeded to complete the assessment on the basis of material before him. On the issue of agricultural income, the Assessing Officer was of the view that the agricultural activities of assessee is not supported with reliable documentary evidences. On perusal of cash book of F.Y. 2016-17, the assessee introduced cash receipt with small amounts on various dates with narration of agricultural income. Last receipt in the name of agricultural income is on 17/11/2016 of Rs. 25,480/-. There is no receipt after 17/11/2016. For subsequent

ITA No. 352/Srt/2022 Yogeshkumar Babubhai Patel Vs ITO financial year, the assessee has shown agricultural income of Rs. 4,19,508/- and Rs. 3,31,906/- for A.Y. 2018-19 and 2019-20 respectively. On the basis of such observation, the Assessing Officer held that net agricultural income shown by assessee is not genuine and added the agricultural income of Rs. 8,33,020/- as income under Section 68 of the Income Tax Act, 1961 (in short, the Act). 5. For other issue that of cash deposit during demonetization period, the Assessing Officer found that the assessee claimed a gift of Rs. 3.50 lacs and rent from sound system of Rs. 5,28,850/- and other receipts. The Assessing Officer recorded that no proof of gift was furnished. Further, no rental income of sound system was shown by the assessee before 25/07/2016 and after 24/10/2016. No evidence of such business is furnished. There was other discrepancies in the cash book for various years, accordingly, the Assessing Officer made addition of Rs. 10,00,500/-. 6. Aggrieved by the additions in the assessment order, the assessee filed appeal before the ld. CIT(A). Before ld. CIT(A), the assessee filed his detailed written submission. The submission of assessee is not recorded by the ld. CIT(A) except by recording that the assesse filed written submission which was taken on record. The assessee in his submission, on the addition of agricultural income submitted that he had furnished ledger account of agricultural receipt and sample bill to support the

ITA No. 352/Srt/2022 Yogeshkumar Babubhai Patel Vs ITO source of his agriculture income. The Assessing Officer treated the entire agricultural income as income from undisclosed source under Section 68 of the Act on the ground that the income for A.Y. 2018-19 and 2019-20 is less than the year under consideration. Agricultural activities is depending on seasonal conditions, nature and factors of rain and irrigation. If the Assessing Officer was not satisfied, he should have calculated agricultural income based on data of other years. The assessee also furnished cash book and deposits showing the sales bill of agricultural produce and prayed for deleting the entire addition. On the additions of cash during demonetization period, the assessee submitted that the assessee received gift of Rs. 3.50 lacs and return of sound system of Rs. 5,28,850/- and there was other receipts of Rs. 1,21,650/- . The assessee furnished gift deed executed by Mrs. Maniben Govindbhai Patel, sister of mother of assessee. The assessee also furnished bills of sound system and other deposits out of agricultural income. The assessee also stated that the addition cannot be taxed under Section 115BBE of the Act as the assessee ha satisfactorily explained the source of cash deposit and agricultural income. 7. The ld. CIT(A) after considering the submission of assessee, on the issue of agricultural income, held that the area of agricultural land and the nature of crops are not known from the evidences furnished by assessee. In subsequent assessment years, the assessee has declared income of

ITA No. 352/Srt/2022 Yogeshkumar Babubhai Patel Vs ITO Rs. 4,19,508/- and Rs. 3,31,906/- respectively, however, for this year, the assessee has declared/claimed agricultural income of Rs. 8,33,020/- which is higher compared to other years. The ld. CIT(A) after considering the income of subsequent assessment year at Rs. 3,31,906/-, allowed agricultural income to that extent, thereby granted partial relief to the assessee and remaining of Rs. 5,01,114/- was upheld (Rs. 8,33,020 – 3,31,906). 8. On the other addition of cash deposits of Rs. 10,00,500/-, the ld. CIT(A) held that the assessee has not shown rental income of sound system after 24/10/2016 and no evidence of such business was furnished by assessee. The assessee has filed copy of gift deed executed by sister of his mother. There is no reference as to why gift was given to assessee and source of gift by donor is not known. How the donor has kept such huge amount is a big question. The assessee is trying to give colour for the cash deposit during demonetization period by way of gift and rent of sound system and other receipts. As per Assessing Officer, there was negative balance as on 13/11/2016 after cash deposit in bank, thus, the source of cash deposit of Rs. 10,00,500/- is not genuine and upheld the action of Assessing Officer. The ld. CIT(A) also upheld the action of Assessing Officer in taxing such addition under Section 115BBE of the Act by taking a view that the assessee could not explain the source of cash deposit during demonetization period and genuineness of

ITA No. 352/Srt/2022 Yogeshkumar Babubhai Patel Vs ITO agricultural income. Further aggrieved, the assessee has filed present appeal before the Tribunal. 9. I have heard the submissions of the learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue. The ld. AR of the assessee submits that the ld. CIT(A) confirmed the addition of agricultural income of Rs. 5,01,114/- out of Rs. 8,33,020/- thereby granted partial relief to the assessee. The assessee has furnished complete details about the agricultural receipts which contains the quantity of agricultural product, rate and payment received. Thus, the agricultural activities and agricultural income are genuine. During the hearing, the ld. AR of the assessee was asked to show the evidence of ownership of agricultural land in the form of 7/12 and Form-8 or any other evidence to substantiate the facts that he was holding agriculture land for his cultivation. The ld. AR of the assessee fairly accepted that there is no such evidence about the ownership of land in his paper book. The ld. AR of the assessee was directed to place on record the ownership of agricultural land if any, within two weeks. 10. On the addition of cash deposit in bank during demonetization, the ld. AR of the assessee submits that the assessee has shown income from sound system rent at Rs. 5,45,850/- and evidence of rent are placed at page No. 270 to 281 of paper book. The assessee claimed expenses of

ITA No. 352/Srt/2022 Yogeshkumar Babubhai Patel Vs ITO Rs. 99,591/- against the income from sound system and net income of Rs. 4,46,259/- is shown in the head income from business. Such fact is not disputed by Assessing Officer. The assessee made cash deposit of Rs. 10,00,500/- in cash. The cash was available with the assessee. The cash of Rs. 8,33,020/- of agricultural income and Rs. 4,46,259/- of sound system thereby aggregating of Rs. 12,79,279/-. Even Rs. 5,01,114/- is taxed from income from other sources and Rs. 3,31,901/- was taxed as agricultural income. Entire amount of Rs. 8,33,020/- is liable to telescoping benefit against the cash deposit, the eligible amount for set off of Rs. 12,79,279/- is more than Rs. 10,50,500/- deposited in the bank. The addition of Rs. 10,00,500/- should be deleted on account of telescoping of addition made by Assessing Officer and income of sound system. The assessee submitted that the assessee has opening cash balance of Rs. 6,98,546/- as on 01/04/2016 which is accepted by Assessing Officer. Hence, there was more cash balance available for telescoping benefit than the cash deposited in the bank. The ld. AR of the assessee submits that the ld. CIT(A) allowed agricultural income of two assessment years, the higher of agricultural income is Rs. 4,19,508/- for A.Y. 2018-19. The assessee has furnished all sales bills of vegetable items grown in agricultural land on spot sales. Entire agricultural income be allowed and additions sustained by ld. CIT(A) be deleted.

ITA No. 352/Srt/2022 Yogeshkumar Babubhai Patel Vs ITO 11. On the other hand, the ld. Sr. DR for the revenue submits that when the assessee does of the Act own agricultural land, there is no question of any agricultural income. All the contentions of assessee was considered by the lower authorities. The assessee failed to prove either source of agricultural income or source of cash deposit. The alleged gift deed filed by assessee was not furnished before the Assessing Officer for proper verification. All the plea raised by assessee on both the additions are nothing but imagination of afterthought story. The assessee deserve no relief. 12. I have considered the submissions of both the parties and have gone through the orders of the lower authorities carefully. Ground No.1 relates to the disallowing agriculture income to the extent of Rs. 501,114/-. I find that the assessing officer disallowed the entire agriculture income by taking view that agriculture income is not supported with reliable documentary evidences and in other years the assessee has shown less agriculture income. The agriculture income was treated as non-genuine. However, the ld CIT(A) granted partial relief to the assessee by taking view that in subsequent years the assessee has shown similar income of Rs. 4,19,508/- and Rs. 3,31,906/- in AY 2018-19 and 2019-20. The ld CIT(A) on the basis of agriculture income declared in AY 2019-20, granted relief to that extent. Before Tribunal the assessee has filed various documents to substantiate the agriculture income, however, the

ITA No. 352/Srt/2022 Yogeshkumar Babubhai Patel Vs ITO basic evidence to substantiate such income i.e. the evidence of holding of agriculture land is not filed either before assessing officer, or before ld CIT(A) or before me. During hearing of appeal I raised very specific question that how, much agriculture land is owned by the assessee. The ld AR for the assessee fairly accepted that he does not have any evidence with him to show that the assessee owned agriculture holding. Thus, in absence of such basic and primary evidence, I do not find any merit in submissions of the ld AR for the assessee to extent any further relief, in addition to the relief granted by ld CIT(A) in absence of owner ship of the land. In the result, this ground of appeal is dismissed. 13. Ground No.2 relates to additions of cash deposits. I find that the assessing officer made the additions of cash deposits by taking view that during the demonetization period the assessee made deposit during demonetization period, on show cause, the assessee claimed a gift of Rs. 3.50 lacs from relative and rent from sound system of Rs. 5,28,850/- and other receipts. The Assessing Officer held that no proof of gift was furnished. Further, no rental income of sound system was shown by the assessee before 25/07/2016 and after 24/10/2016. No evidence of such business is furnished and there was discrepancies in the cash book for various years, accordingly, the Assessing Officer made addition of Rs. 10,00,500/-. As recorded above before ld CIT(A) the assessee retreated that he has received Gift of Rs. 3.50 lacs from sister of his mother namely

ITA No. 352/Srt/2022 Yogeshkumar Babubhai Patel Vs ITO Maniben Govindbhai. The assesse also filed gift deed executed by the donor, however, ld CIT(A) not accepted such gift deed by taking view that why the donor kept such cash amount with her. I find that the ld CIT(A) has neither made any investigation of fact before discarding the gift not sought any remand report from the assessing officer. And as such the evidence in the form of gift deed was discarded without bringing any evidence against such evidence. Thus, I accept the gift of Rs. 3.50 lakh as genuine. So far as other remaining receipt of Rs. 1,21,650/- and receipt of Sound system is concerned I find that CBDT in its instruction No. 3/2017 [F.NO.225/100/2017/ITA-II], Dated 21-2-2017, has issued standard operating procedure (SOP) that cash deposits up to Rs. 2,50,000/- may be accepted in case of individual, thus, by giving benefit of the above circular, hence, the addition to the extent of Rs. 2,50,000/- is also deleted from disallowance of Rs.1,21,650/- and Rs. 5,28,850/-. Thus, the assessee is allowed total relief of Rs. 3.50 lakhs and Rs. 2.50 lakhs against the total addition of Rs. 10,00,500/-. However, on remaining addition of Rs. 4,00,500/- is concern, I concurred with the finding of ld CIT(A) that no such rental income was shown by assessee prior to 25.07.2016 and after 24.10.2016 and there were discrepancies in the cash book. In the result, this ground of appeal is partly allowed. 14. In Ground No. 3, the assessee is claiming telescoping benefits. Considering the facts that I have dismissed the ground No. 1 and granted

ITA No. 352/Srt/2022 Yogeshkumar Babubhai Patel Vs ITO substantial relief to the assessee on ground No. 2, therefore, the assessee is not eligible for further relief. In the result, this ground of appeal is dismissed. 15. Ground No. 4 relates to taxing the addition of cash deposits and agriculture income under section 115BBE. I find that no specific submissions were made by ld AR for the assessee, therefore, this ground of appeal is treated as not pressed and dismissed accordingly. 16. In the result, the appeal of the assessee is partly allowed. Order announced in open court on 09th August, 2023.

Sd/- (PAWAN SINGH) JUDICIAL MEMBER Surat, Dated: 09/08/2023 *Ranjan Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR By order 5. Guard File Sr. Private Secretary, ITAT, Surat