KIRANBHAI RANCHHODBHAI PATEL,KHEDA vs. THE ITO, WARD-3 NOW WARD-1, NADIAD

The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals), Vadodara arising in the matter of assessment order passed under s. 144 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2017-2018.

The issue raised by the assessee in ground number 4 is that the Ld. CIT(A), erred in confirming the addition made by the AO for Rs. 10,00,000/- on account of unexplained money by invoking the provisions of section 69A of the Act.

The assessee in the present case is an individual and claim to be engaged in the activity of agricultural activities. The AO during the assessment proceedings found that there is a cash deposit of Rs. 10,00,000/- in the bank of the assessee, the source of which was not explained. Therefore, the AO treated the same as unexplained money u/s 69A of the Act and added to the total income of the assessee.

Aggrieved assessee preferred an appeal to the Ld. CIT(A) and submitted that the cash has been deposited in the bank account from two sources firstly, out of agricultural operation and secondly, out of withdrawal made on previous dates. The submission was made by the assessee before the Ld. CIT(A) in the grounds of appeal and statement of facts.

Being aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us.

The Ld. AR before us filed a paper book running from pages 1 to 44 and contended that the assessee has made compliance vide letter dated 11/10/2019, in response to the notice issued u/s 142(1) of the Act, dated 23/08/2019. As per the Ld. AR, the assessee vide letter dated 11/10/2019 has submitted that the cash was deposited through the agricultural operation. Further, the assessee to buttress his argument has also submitted that the assessee along with family members was owing 42 vigha of land. Likewise, the assessee has borrowed crop loan as evident from the bank statement of Bank of India. Thus, it was pleased by the Ld. AR that the agricultural activities carried out by the assessee cannot be doubted.

The Ld. AR further submitted that the copy of the bank statement was also filed before the AO wherein the cash withdrawal from the bank was very much reflected. As such the Ld. AR contended that the revenue authorities have considered the cash deposits as income without taking a note of cash withdrawal which was used for such cash deposits during demonetization period. The Ld. AR to this effect has filed a brief note running into 2 pages justifying the source of cash deposits in the bank account. Accordingly, the Ld. AR contended that there cannot be any addition u/s 69A of the Act, on account of unexplained money.

On the other hand, the Ld. DR vehemently supported the order of the authorities below.

We have heard the rival contentions of both the parties and perused the materials available on record. On perusal of the pages 3 to 40 of the paper book we note that the assesee has submitted the details of land holding and bank statement vide letter dated 11/10/2019 to the AO to justify the source of cash deposit in the bank from agricultural operation and out of cash withdrawal in the earlier year. However, we note that none of the authorities below has considered the reply of the assessee dated 11/10/2019 whereas the assessment was framed dated 30/11/2019. As there is no fault on the part of the assesee, having not considered the submission filed by the assessee, accordingly, we are not inclined to set aside the issue to the file of the AO to avoid multiple proceedings.

In the result, the appeal filed by the assessee is allowed.