PREMILA DINSHA PATEL,VADODARA vs. ITO WARD 1(3)(1), VADODARA

The addition challenged before me is on account of cash deposited in the bank account of the assessee amounting to Rs.12,57,500/- remaining unexplained. The assessment was framed ex parte with the assessee not participating in the proceeding at all, and therefore, in the absence of any explanation of the cash found deposited in the bank account of the assessee, the entire amount was added to the income of the assessee as unexplained cash deposits. 2 3. Before the ld.CIT(A), the assessee gave reasons for not appearing before the AO stating that the notices were served at her address in a village while she was living in the city, and pleadings were also made on merits of the case, furnishing the explanation of the cash deposits as being out of income earned from the agriculture activities. The same however were not convincing enough to the Ld.CIT(A), who accordingly confirmed the same.

Aggrieved by the same, the assessee has come up in appeal before me, raising the following grounds:

The order passed by the Learned CIT (A) Vadodara, is bad in law, contrary to legal pronouncements and same be quashed. The additions are unwarranted and same be deleted now. 2. a) The Learned C1T(A) has erred in ignoring the fact that the cash deposits were made out of agriculture income carried by the appellant on the land owned by the appellant's husband by carrying out agriculture activities by the appellant, not only during the year but also in earlier year(s). b) The appellant has carried out agriculture activities and sold the product(s) through APMC which is evident from the proof by way of sales bill submitted during the course of assessment proceedings and accordingly the addition made by the AO is unjust and uncalled for and be deleted now.

The ground no.1 is not pressed before me for adjudication, and therefore, the same is dismissed as not pressed.

In the ground no.2, the assessee has challenged the addition made on merits. 3 7. The contention of the ld.counsel for the assessee before me was that the addition was highly unjustified considering the facts which were brought to the notice of the Revenue authorities, of the assessee being a lady who never was required to file income tax return, belonging to a family of agriculturists and all income earned by the assessee family, therefore, was primarily out of the agriculture activities. That, part of the agricultural income was deposited in her bank account in cash. The ld.counsel for the assessee pointed out that entire details of the land put to use for agricultural purpose by the assessee’s family was pointed out to the ld.CIT(A), as also nature of crops grown in it, and it was also pointed out that the cash found deposited in the assessee’s bank account was during the period when one of the crops matured and was sold in the market. It was also pointed out that spouse of the assessee was regularly filing return of income disclosing agriculture income. My attention was drawn to the submissions made before the ld.CIT(A) which is reproduced at page no.7 of the impugned order as under:

The ld.counsel for the assessee further stated that it is common knowledge that women are also employed in agriculture activities and the statistics being that 78% of working women in India are employed in the agricultural sector. That the facts demonstrated by the assessee established that the assessee’s family was primarily into agricultural activities, there was therefore no case for attributing the cash deposited in the bank account of the assessee to any other source of income whatsoever.

The ld.DR, on the other hand, relied on the order of the ld.CIT(A) at para 5.5 to 5.8 as under:

He contended that since the contention of the ld.counsel for the assessee that the cash deposited was attributable to the agriculture income earned, which was disclosed by the spouse of the assessee in his return of income, remained unsubstantiated, despite specific query raised by the ld.CIT(A) during the appellate proceedings, the fact remained that the source of cash deposits in the bank account of the assessee remained unexplained. The ld.DR heavily relied on the order of the ld.CIT(A). 7 11. I have heard contentions of both the parties and gone through the orders of the authority below.

What is derived from these facts is that, the assessee belongs to a family of agriculturists and undoubtedly the cash amount has been deposited in the bank account of the assessee during the peak harvest period. 8 13. In the backdrop of these facts, I find substance in the explanation of the assessee that the cash deposit is to be attributed to the agriculture activities carried out by the family. It is a normal practice in Indian agricultural families that entire family is engaged in such activities and earn income primarily in cash. The assessee has claimed agricultural receipts of the family to be partly deposited in her husband’s account and part in her account. Undoubtedly, spouse of the assessee has disclosed agricultural income in his return of income. The fact also remains that the assessee has no other source of income so as to prompt any filing of the return of income at her end. There was no occasion, therefore, for her to disclose agricultural income in any of the years. The fact that the cash deposits were found deposited during the season of tur cultivation lend further credence to the explanation of the assessee. Moreover, being a lady, some amount of cash can be attributed to her savings in the past aggregated over the years.A very pertinent fact is that the Department has not been able to discover any other source of income of the assessee in any manner. It is an admitted fact that the assessee and her family are primarily involved in agricultural activities.

Considering totality of the facts and circumstances before me, therefore, I find merit in the explanation of the assessee of the cash being attributed to the agriculture activities carried out by the family of the assessee-lady.

The Ld.CIT(A) I find has not correctly appreciated the assesses explanation and therefore misdirected verification of the same. While the assessee contended part of agricultural receipts of the family , to the extent it was her income, was deposited in her account, the Ld.CIT(A) understood it to mean that agricultural income earned by the family was declared in the return by her husband and only part 9 of the receipts were deposited in her account. Therefore his inquiry was directed at verifying the agricultural income returned to tax by the assesses husband and the agricultural receipts deposited in his account. And finding the same to be commensurate therefore he rejected assessees attribution of cash deposited in her account to agricultural income earned, finding all agricultural income and receipts already disclosed by her husband. The Ld.CIT(A) noted that an amount of Rs.12,57,500/- deposited in the husband’s account against which he had disclosed agricultural income of Rs.8,10,000/- Based on this data, he held that the assessee’s husband had not disclosed any agriculture income received by the assessee. While this was never the pleadings of the assessee before the ld.CIT(A). Her case being that part of the agriculture income earned by the family was deposited and declared by her husband and part deposited in her bank account was her income, and since it was only the source of income, which was exempt from tax, the same was not disclosed in any return of income of the assessee.

In view of the above, we direct the deletion of addition made of Rs.12,50,000/- in the hands of the assessee of cash found deposited in the bank account.

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