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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
ORDER Per Dr. M. L. Meena, AM:
The appeal has been filed by the assessee against the impugned order dated 14.08.2019 passed by the Ld. Commissioner of Income Tax (Appeals)-1, Jalandhar in respect of the Assessment Year 2012-13, challenging the action of the Ld. CIT(A) in confirming the addition of Rs.3,05,000/- being made vaguely by the ITO without considering the fact that the assessee’s main source of income was agricultural income.
Jagtar Singh v. ITO 2. At the outset, the Ld. counsel for the assessee submitted that the authorities below have not disputed the fact that the assessee has been cultivating 32 acres of agricultural land. Thus, the assessee has agricultural income besides minor rental and interest income as declared in the return and therefore, he was not required to file the return of income in the normal course, a fact on record which is not disputed by either of the lower authorities, the AO or the Ld. CIT(A).
The Ld. AR contended that the appellant assessee being an agriculturist, he was not required to maintain the books of account of his agricultural receipt and corresponding expenditure; and that whatever funds deposited in the bank a/c and withdrawn from the bank were related to his agricultural activities. The Ld. AR further submitted that the assessee was not engaged in any business activity and that neither the AO nor the Ld. CIT(A) had established as to how the figure of Rs.3,05,000/- was arrived by them, for such addition to the income of the assessee and this is being never confronted to the appellant assessee, to take his rebuttal in view of the principle of natural justice. The counsel has argued that there was withdrawals of Rs.13.98 lacs (APB page nos. 21 to 22) made from the same bank, mostly prior to the date of redeposit in the bank a/c, how the benefit thereof, to the extent of Rs.3,05,000/- could be denied to the assessee, when it was so claimed before the CIT(A). He, thus argued that the impugned order is too arbitrary, irrational and unjustified require to be quashed. In support, the Ld. counsel placed reliance on the following synopsis which reads as under:
Jagtar Singh v. ITO “Brief submission The assessee is an agriculturist cultivating over 32 acres of agriculture land in vill. Tatomazara. During the year, he made cash deposits aggregating to Rs. 10,82,500/- in his SB with SBI Tuto Mazara, Tehsil Garshankar, Distt Hoshiarpur. Based on AIR information, assessee received enquiry letter dated 30.4.2015 (copy at pg. 1-2 of PB) seeking on-line reply which was uploaded on 12.5.2015 (copy at pg.3 of PB) intimating that assessee was irrigating about 44 acres of agriculture land in vill Tutomazara and had no taxable non-agri income and all deposits were made from sale of agriculture produce. Again a verification notices dated 19/25.9.2018 and dated 15.01.2019 (copies at pg.4-5 of PB) were received from ITO W-2 Hoshiarpur, to which a proper reply was filed on 21.1.2019 (copy at pg.6 of PB) explaining the cash deposits in bank made from agriculture receipts. Some J Forms were also filed. But still, a notice u/s.148 was issued by ITO W-2 Hoshiarpur on 25.03.2019 (copy at pg.7 of PB) to verify the cash deposits, alleging that the reply filed was self serving and not satisfactory.
During assessment, after filing of ITR against 148 notice on 22.4.2019 (copy at pg.8-10 of PB) declaring total income of Rs. 1,15,240/- plus agri income Rs.5 lacs, assessee filed complete reply (copy at pg.15 of PB) against 142(1) notice dt.29.04.2019( Copy at page 13-14 of PB). In para 2 of the order, the Id.AO while accepting that assessee filed complete reply, also accepted, based on copy of Zamabandi and land holding proof, that assessee was cultivating 32 acres of agriculture land owned by him and his brother. However, while partly accepting the assessee’s contention that deposits in bank were made from agriculture receipts, arbitrarily held Rs.3,05,000/- from undisclosed sources, alleging that when asked, assessee could not file satisfactory reply. Aggrieved, assessee disputed the above addition in first appeal. Findings of Id. CIT(A)
Before CIT(A), the assessee, besides stating the above facts, reiterated that when the AO had himself accepted that assessee was cultivating 32 acres of agriculture land and had no other source, but for minor rental and interest income as declared in return filed and accepted by him, he was not justified in making the impugned addition of Rs.3,05,000/-. It was also contended that the AO had never confronted the assessee with his conclusion of making the above addition when there was no specific cash deposit of Rs.3,05,000 in bank. It was further contended that against total cash deposits of Rs. 10,82,500/- there were cash withdrawls of Rs. 13,98,000 for redeposit and also the assessee had declared
Jagtar Singh v. ITO agriculture income of Rs.5 lacs in the return filed. Therefore, in the entirety of facts, the impugned addition was not warranted and was sought to be deleted.
However, in para 4 of the impugned order, the Id.CIT(A), while taking note of all the above contentions of assessee, upheld the addition by way of a short and cryptic order that the assessee did not file cash flow chart and all the cash withdrawn from the bank cannot be for the purpose of re-deposit in bank.
Submissions befor the Hon’ble Bench Neither the Id.AO nor the Id. CIT(A) has disputed the fact that the assessee had been cultivating 32 acres of agriculture land. But for minor rental and interest income, declared in return, the assessee had no other source of income, nor it has been so held by the AO/CIT(A) and hence he was not liable to file his return in normal course. Thus being a non-assessee, he was not liable to maintain any accounts to keep track of all his receipts and outgoings. Whatever funds were parked or re-deposited in bank account, or withdrawn from the bank, were relatable to his agricultural activities. Nonetheless, the fact remains that the assessee, right from the first notice dated 30.4.2015 had been intimating that but for agriculture he had no other income liable to tax. This stand of assessee, taken throughout the proceedings, till the passing of appeal order 14.08.2019, has remained un-impeached as neither the Id.AO nor the Id.CIT(A) could pin point any such unknown source wherefrom the impugned deposits in bank could be generated.
On the contrary, being an agriculturist, the entire funds were generated from agriculture activities, (but for rental income of Rs. 156000/- declared in return), whether deposited in bank or retained in person. The assessee was not engaged in any other business or non business activity and therefore, his explanation ought to have been accepted by the AO and also by the Id. CIT(A).
Moreover, neither the Id.AO. nor for that matter the Id.CIT(A) could elaborate as to how the figure of Rs.3.05.000/- was arrived at for addition, when it was never confronted to assessee. This plea taken before the Id. CIT(A) has been ignored without comment. Moreover, when withdrawals of Rs. 13.98 lacs made from the same bank, mostly prior to date of re-deposit, how the benefit thereof, to the extent of Rs.3,0,5000/- could be denied to assessee, when it was so claimed before CIT(A). By any reckoning, the order of Id. CIT(A) is too arbitrary, irrational and unjustified to be sustained.
Jagtar Singh v. ITO It is contextually relevant to invite attention to the decision of Hon’ble Supreme court in the case of CIT vs P.K Noorjahan 237 ITR 570(1999), holding thus (head note):
“Income from undisclosed sources—Addition under s. 69—Discretion of AO— Intention of Parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the unexplained source of investment as income of assessee—ITO is not obliged to treat such source of investment as income in every case—Whether it has to be treated as income or not has to be considered in the light of facts of each case— Assessee, a young lady, could not explain satisfactorily her source of investment in lands—Tribunal held that it was not possible for her to earn the amount even during a decade and that the source of investments could not be treated as income of assessee—No error in the finding of the Tribunal”. In the case of Naim AM Khan vs ACIT, the ITAT Bench of Agra(2004) 86 TTJ 0721, addition made u/s.69 for the alleged unexplained investments in purchase of five bank drafts by assessee in the sum of Rs. 2,29,625, having no source of income, but for agriculture income, was deleted by the Bench following the above decision of Hon’be Apex Court in CIT vs. Smt. P.K. Nooriahan (1999) 237 ITR 570 (SC)
Also, Hon’ble Chandigarh Bench of ITAT in Madan Mohan Singh vs. ITO (2017) TR(A)158 (Chd ITAT) dt.29.11.2016 the case of an agriculturist, where addition of Rs.18 lacs had been made rejecting the assessee’s claim that it represented sale of safada trees, inter alia held as under:
Further, it is a fact that assessee has merely small interest income on savings. The assessee has no other income except agriculture income. Therefore, there is no material on record to show any vested interest or motive with the assessee to declare agriculture income higher than the actual amount. The authorities below have made and confirmed the addition of Rs. 18 Ics on account of 'income from other sources' under section 68/69 of the Act but authorities below have failed to point out as to what income is earned by assessee from “other sources” because assessee has no other source of income except the agriculture income. The interest is from specified source and ascertained. Therefore, in the absence of any material on record that what is the ‘other income’ of the assessee except that of agriculture income, I am of the view the decision
Jagtar Singh v. ITO in the case of Shri Jarnail Singh (Karta)316 ITR 160(P&H), clearly applies in favour of the assessee. This fact is further strengthened by the fact that even in earlier years, assessee has shown the agriculture income. Therefore, there is no question of assessee earning any 'income from other sources' other than the agriculture income.
In view of above submissions, assessee pray’s his appeal to be allowed.”
The ld. DR stands by the impugned order.
We have heard both the sides and perused the material on record and written submissions. Admittedly, assessee has been cultivating 32 acres of agriculture land and had no other source, except minor rental and interest income as declared in return filed and these facts were not disputed by either of the authorities below. Thus, the AO was not justified in making the impugned addition of Rs.3,05,000/-, without confronting the assessee with his intention of making the addition when there was no specific cash deposit of Rs.3,05,000 was pointed out in his bank account. The Ld. AR, further contended that against total cash deposits of Rs. 10,82,500/-, there were cash withdrawals of Rs. 13,98,000 for redeposit of the same and that the assessee had declared agriculture income of Rs.5 lacs in the return filed. It is seen that neither the AO nor the Id. CIT(A) could establish as to how the figure of Rs.3,05,000/- was arrived at for making such addition, in arbitrary and mechanical manner. In our view, the action of the Ld. CIT(A) is illogical, and highly maintainable in brushing aside the bare facts of agricultural activities, consequential income therefrom and sequential trends of bank deposit and withdrawals of Rs. 13.98 lacs made from the same bank, mostly prior to date of re-deposit. Thus, the benefit thereof, to the extent of Rs.3,0,5000/- could not be denied to assessee.
Jagtar Singh v. ITO 6. In the above view, we hold that the order of Id. CIT(A) is an arbitrary, irrational and unjustified and as such, the impugned order is hereby quashed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 11.08.2022