RAJESH RATHORE,KHARGONE vs. ITO KHARGONE, KHARGONE

ITA 860/IND/2019Status: DisposedITAT Indore28 January 2022AY 2015-165 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the total business and agricultural income earned by the assessee in the preceding six years was sufficient to prove the genuineness of the accumulated past savings of Rs. 3,44,000/-. Therefore, the addition made by the AO was deleted.

What were the facts?

The Assessing Officer (AO) made an addition of Rs. 3,44,000/- to the assessee's income, doubting the genuineness of past savings claimed as a source for cash deposits. The assessee contended that this amount represented accumulated savings from business and agricultural income earned over several years.

What were the issues?

Whether the genuineness of accumulated past savings claimed by the assessee as a source for cash deposits can be accepted based on past income.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI MAHAVIR PRASAD & SHRI MANISH BORAD

For Appellant: Shri S.N. Agrawal, AR

For Respondent: Shri Amit Soni, Sr. DR

Hearing: 21.01.2022Pronounced: 31.01.2022

The above captioned appeal filed at the instance of the Assessee is directed against the order of Ld. Commissioner of Income Tax(Appeals) (in short ‘Ld. CIT(A)]-II, Indore dated 27.05.2019 which is arising out of the order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 18.12.2017 by ITO- Khargone.

The Assessee has raised following grounds of appeal:

1.Income tax Officer has not considered past savings of Rs.3,44,000/- in spite of appellant running business for more than 15 years and registered under MPVAT and made the addition which is not correct and thus to be cancelled.

Assessing Officer consider that this much amount is consumed in his household expense, which is wrong as he was earning business and agriculture income from more than past 10 years. And every businessman would save some money out of his profit either he roll back in business or invest for future purpose. Thus, no past savings to the tune of Rs.344000/- is not acceptable considering his business as agricultural income.

2. The only issue relates to addition for Rs.3,44,000/- made by the ld. AO ignoring the contention of the assessee that the said amount was accumulation of past savings. Action of the ld. AO was confirmed by the Ld. CIT(A).

Aggrieved assessee is now in appeal before this Tribunal. Ld. counsel for the assessee submitted that both the lower authorities erred in doubting the genuineness of the accumulated past savings 2 of Rs.3,44,000/- available with the assessee from past income from business and agricultural operations. Reference was made to the written synopsis filed on 31.03.2022 and also paper book containing 78 pages filed on 15.01.2001.

Per contra, Ld. DR vehemently argued supporting the orders of both lower authorities.

We have heard rival contentions and perused the records placed before us. Sole issue relates to addition of Rs.3,44,000/- made by the Ld. AO for not accepting the claim of the assessee having past savings. We observe that the assessee is an individual and during A.Y. 2015-16 earned business income of Rs. 5,52,720/- and agricultural income of Rs.2,38,000/- and the same was declared in the return filed on 30.03.2017. During the course of scrutiny proceedings carried out through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act, Ld. AO observed that there was cash deposit of Rs.86,88,500/- in the account held with Bank of India. Assessee was asked to explain the source of cash deposits.

Assessee made detailed submissions stating that the source of the cash is Rs.81,08,800/- received from sales declared in the returned income, Rs.2,38,000/- income from agricultural and Rs.3,44,000/- out of accumulated past savings. Both lower authorities have only doubted the genuineness of the past saving of Rs.3,44,000/- and have accepted the source of remaining sum.

We, observe that the year under appeal is A.Y. 2015-16. During A.Y. 2009-10 to A.Y.2014-15 the assessee has shown total business income of Rs.12,14,802/- and agricultural income of Rs.12,00,000/-. This fact is not disputed at the end of the revenue authorities. Even prior to A.Y. 2009-10 assessee has claimed to be earning income.

We, therefore, under the totality of the facts, are of the considered view that against total income of Rs.24,14,802/-( business income Rs.12,14,802/- + agricultural income Rs.12,00,000/-) earned in last six years are sufficient enough to prove the genuineness of the accumulated past saving of Rs.3,44,000/-. We, therefore, find no merit in the finding of both the lower authorities doubting the genuineness of Rs. 3,44,000/- as accumulated past savings. We, thus, reverse the finding of Ld. CIT(A) and delete the addition of Rs. 3,44,000/- made by the Ld. AO and allow all the grounds raised by the assessee.

In the result, Assessee’s appeal ITANo.860/Ind/2019 is allowed.

The order pronounced as per Rule 34 of ITAT Rules, 1963 on 31.01.2022.

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