SHRI GURMEET SINGH ,BATHINDA vs. INCOME TAX OFFICER WARD-1 (3), BATHINDA
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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
Per Dr. M. L. Meena, AM:
Both the appeals have been filed by the assessee against the separate orders of the ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi dated 22.03.2023 & 24.03.2023 in respect of Assessment Year: 2017-18.
2 ITA Nos. 147 & 148/Asr/2023 Gurmeet Singh v. ITO 2. The assessee has raised the following grounds of appeal in ITA No.
147/Asr/2023:
“1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts by upholding the penalty u/s 271F of the I.T. Act levied at Rs. 5000/- whereas as per explanation furnished and material placed on record, no penalty u/s 271F of the Act is called for. 2. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts by upholding the levy of penalty u/s 271F of the I.T. Act especially when the assessee appellant is having income from agricultural land only and no other source of income as evident from the assessment order itself and as such not liable to file his income tax return.
That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts by upholding the levy of penalty u/s 271F of the I.T. Act without appreciating that the assessee is not liable to file his Income Tax Return as per provisions of Income Tax Act and material placed on record. 4. That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in upholding the penalty u/s 271F of the Act without appreciating the submissions with documentary evidences filed by the assessee appellant during the course of appellate proceedings before him. 5. That the appellant craves leave to add or amend any grounds of appeal before the appeal is finally heard or disposed of.”
The assessee has raised the following grounds of appeal in ITA No.
148/Asr/2023:
“1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts by confirming the addition of Rs. 8,41,500/- whereas as per explanation furnished and material placed on record, no addition is called for.
3 ITA Nos. 147 & 148/Asr/2023 Gurmeet Singh v. ITO 2. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts by confirming addition of Rs. 8,41,500/- as unexplained investment u/s 69 of the Income Tax Act on account of deposits in the bank (agriculture limit account) claimed as made out of agriculture income as the assessee appellant family owned about 80 acres’ agriculture land, evidence of which in the shape of Girdawari and Jamabandi already placed on record, merely on the ground that no evidence of agriculture income from the said land with relevant evidences has been filed.
That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts by confirming addition of Rs. 8,41,500/- as unexplained investment u/s 69 of the Income Tax Act on account of deposits in the bank (agriculture limit account) claimed as made out of the exempt income by ignoring the instructions of Hon'ble CBDT bearing No. 3/ 2017 [F. No. 225 /100/2017/ITA-II] dated 21.02.2017 in respect of transactions, out of receipts exempt from tax, made during the demonetization period (as per Para-2 of the Instructions). 4. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts by deciding the appeal of the assessee in a summary manner stating that grounds of appeal are not maintainable or sustainable without any findings on the ground-wise reply (ground No. 2 to 7) submitted by the assessee as mentioned at Sr. No. 1 to 6 on Page-5 to 9 of the appellate order. The ground No. 2 to 7 of appeal are reproduced below:-
"2. That the learned AO has erred in law and on facts in making assessment in response to illegal and invalid notice issued under section 142(1) of the Act. As such, the assessment framed in response to such a notice under section 144 of the Act is void ab- initio. The same be cancelled. 3. That the learned AO has erred in law and on facts by making an addition of Rs. 16,83,000/- as unexplained income of the assessee whereas as per explanation and material placed on record the assessee appellant has duly explained the source as agricultural income of the family and except the agricultural income no other source of income. As such, assessment framed at Rs. 16,83,000/- as unexplained income of the assessee is unjustified and illegal. The same be deleted.
4 ITA Nos. 147 & 148/Asr/2023 Gurmeet Singh v. ITO 4. That the learned AO has erred in law and on facts by making an addition of Rs. 16,83,000/- as unexplained income of the assessee appellant on the ground that the assessee appellant has claimed the same on account of sale of straw whereas the assessee has never claimed the deposit on account of sale of straw but claimed only out of the agricultural income of the family. As such, addition made on this ground is unjustified and illegal. The same be deleted. 5. That the learned AO has erred in law and on facts by making an addition of Rs. 16,83,000/- as unexplained income of the assessee appellant without affording reasonable and sufficient opportunity to the assessee appellant especially when he was uneducated agriculturist and does not understand the English language. As such, addition made is unjustified and illegal. The same be deleted. 6. Without prejudice to above, the learned AO has erred in law and on facts by treating the cash deposited in bank during demonetization period as unexplained income of the assessee appellant and levying tax at the rate of 60 percent instead of 30 percent as applicable at that time since the amended law came into existence on 15.12.2016 only and applicable for the income earned after 15.12.2016 onwards. Therefore, rate applied at 60 percent is illegal and unjustified. 7. That the learned AO has erred in law and on facts in levying interest under section 234B and 234C of the Income Tax Act whereas as per facts and circumstances of the case, no such interest is leviable. The same be added".
That the appellant craves leave to add or amend any grounds of appeal before the appeal is finally heard or disposed of.”
We are taking up assessee’s appeal in ITA No. 148/Asr/2023 for
adjudication.
Briefly the facts of the case are that the assessee’s case was
selected for scrutiny as per CBDT guidelines based on an information that
5 ITA Nos. 147 & 148/Asr/2023 Gurmeet Singh v. ITO assessee has made cash deposit of Rs. 16,83,000/- in his bank account
No. 14838040000559 maintained with HDFC Bank during the
demonetization period. The AO being not satisfied with the reply of the
assessee regarding the source of cash deposit being claimed to be sale of
extra ‘Toori’ to different persons and treated the said cash deposits as
assessee’s unexplained income and accordingly, the income of the
assessee was assessed at Rs. 16,83,000/- u/s 115BBE of the Act, 1961.
Aggrieved with the assessment order, the assesse filed an appeal
against the assessment order before the ld. CIT(A) who has granted part
relief by observing as under:
“6. In view of the facts recorded in the order of the AO, grounds of appeal Nos. 1 and 2 are not maintainable and hence are dismissed. Regarding the substantive grounds of appeal Nos. 3, 4 and 5, the appellant has not furnished sufficient evidence of the nature and cultivational of crops, expenses on cultivation of crops, harvesting of crops, sale of the crops in a mandi or otherwise and related sales receipts, J - Form, etc. Only jamabandi, girdawari documents/records are not a sufficient proof of actual sale and accrual of agricultural income. Appellant’s claim of sale of straw (toori) is also not tenable as the sale price of straw is very minimal and such a large agricultural income, as in the case of the appellant, cannot accrue from the sale of straw (toori) only.
Therefore, additions made by the AO, in the form of cash deposit of Rs. 16,83,000/- in the bank account of the appellant, remains unexplained to the satisfaction of the AO as well as the undersigned appellate authority. As the bank account with HDFC Bank (Account No. 14838040000559) was jointly operated with the brother of the appellant, therefore, the addition made to the extent of 50% of the cash deposit, i.e. Rs. 8,41,500/- is treated as undisclosed amount in relation to the appellant. Hence, the addition made by the AO is sustained and
6 ITA Nos. 147 & 148/Asr/2023 Gurmeet Singh v. ITO upheld to the extent of Rs. 8,41,500/- only. The grounds of appeal No. 3, 4 and 5, in this regard are partly allowed to the extent of 50% of the addition made by the AO.
Furthermore, the rate of tax on the income of the appellant, as determined by the AO and restricted to Rs. 8,41,500/- only, is liable to tax rates as per the provisions of section 115BBE of the Income tax Act, 1961, as it was applicable during the period of the previous year relevant to the AY 2017-18 under consideration. Hence, the ground of appeal No. 6 of the appellant in this regard is considered and found not sustainable. Hence, the same is dismissed. Ground No. 7 is consequential in nature and therefore is not being adjudicated. In the conclusion, the appeal is partly allowed and the order of the AO is partly confirmed.”
The ld. counsel for the appellant has contended that the ld. CIT(A)
has merely suspected the assets of the land holding used for cultivation of
crop while confirming the addition of Rs. 8,41,500/- without considering the
explanation furnished and material placed on record. He argued that the
Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts
by confirming addition of Rs. 8,41,500/- as unexplained investment u/s 69
of the Income Tax Act on account of deposits in the bank (agriculture limit
account) claimed as made out of agriculture income as the assessee
appellant family owned about 80 acres’ agriculture land, and evidence of
which in the shape of Girdawari and Jamabandi are placed on record, and
therefore, merely on the ground that no evidence of agriculture income
from the said land with relevant evidences has been filed before him per
7 ITA Nos. 147 & 148/Asr/2023 Gurmeet Singh v. ITO se, cannot deny earning of agricultural income. The Ld. AR submitted that
the Ld. Commissioner of Income Tax (Appeals) has erred in law and on
facts by confirming addition of Rs. 8,41,500/- as unexplained investment
u/s 69 of the Income Tax Act on account of deposits in the bank
(agriculture limit account) claimed as made out of the exempt income by
ignoring the instructions of Hon'ble CBDT bearing No. 3/ 2017 [F. No. 225
/100/2017/ITA-II] dated 21.02.2017 in respect of transactions, out of
receipts exempt from tax, made during the demonetization period (as per
Para-2 of the Instructions) and that he decided the appeal of the assessee
in a summary manner stating that grounds of appeal are not maintainable
or sustainable without any findings by addressing the ground-wise reply
submitted by the assessee as mentioned at Sr. No. 1 to 6, on Page-5 to 9
of the appellate order.
Per contra, the Ld DR although supported the impugned order,
however, he failed to rebut the contention of the counsel.
We have heard the rival contentions, perused the material on record,
impugned order, written submission and case law cited before us.
Admittedly, the AO passed the assessment order ex-parte qua the
assessee u/s 144 of the Act where the appellant has challenged the validity
8 ITA Nos. 147 & 148/Asr/2023 Gurmeet Singh v. ITO of the notice issued under 142(1) of the Act before the Ld. CIT(A) which
remained unaddressed. The Ld. AR contended that the CIT(A) has not
appreciated the facts of the case and written submission filed on record to
establish that the learned AO has erred in law and on facts by making an
addition of Rs. 16,83,000/- as unexplained income of the assessee and that
as per explanation and material placed on record, the assessee appellant
has duly explained the source as agricultural income of the family and the
assessee and that except the agricultural income they had no other source
of income. As such, assessment framed at Rs. 16,83,000/- as unexplained
income of the assessee is unjustified and illegal. The counsel further
argued that the ld. CIT(A) has not rebutted the explanation furnished by the
appellant that the learned AO has erred in law and on facts by making an
addition of Rs. 16,83,000/- as unexplained income of the assessee
appellant on the ground that the assessee appellant has claimed the same
on account of sale of straw whereas the assessee has never claimed the
deposit on account of sale of straw but claimed only out of the agricultural
income of the family and that the addition of Rs. 16,83,000/- as
unexplained income of the assesse appellant was made without affording
reasonable and sufficient opportunity to the assesse appellant especially
9 ITA Nos. 147 & 148/Asr/2023 Gurmeet Singh v. ITO when he was uneducated agriculturist and does not understand the English
language.
The Ld. CIT (A) has merely observed that the appellant has not
furnished sufficient evidence of the nature and cultivation of crops,
expenses on cultivation of crops, harvesting of crops, sale of the crops in a
mandi or otherwise and related sales receipts, J - Form, etc. Although, he
has accepted the jamabandi, girdawari documents/records owned by the
appellant but are held it to be an insufficient proof of actual crop production
or sale and accrual of agricultural income without disproving the claim of
the appellant by bringing corroborative documentary evidence on record
such as crop grown, productivity, type of land and report from agriculture
supervisor. The observation of the ld. CIT (A) is factually incorrect as
regards to the appellant’s claim of sale of straw (toori) which is categorically
denied by the appellant and instead claimed sale of agricultural produce.
Thus, the Ld. CIT (A) has failed to appreciate the facts of agricultural
income earned by the appellant being source of cash deposit in its bank
account during the year under consideration. However, neither the AO nor
the Ld. CIT(A) has addressed the relevant matter regarding appellants
claim that he owned agricultural land and he has agricultural income only.
10 ITA Nos. 147 & 148/Asr/2023 Gurmeet Singh v. ITO The lower authorities ought to have disproved the claim of the assesse that
the agricultural land owned was not sufficient to earn the agricultural
income to substantiate the disputed cash deposited in the jointly owned
bank account with corroborative evidence, as per law. In our view, the
authorities below have acted in violation of principles of natural justice.
The Hon’ble Supreme Court of India in the case of Tin Box Company
vs. CIT reported in 249 ITR 216 in which their Lordships of Supreme Court
of India observed as under:
“Assessment - Opportunity of being heard - Setting aside of assessment - Assessment order must be made after the assessee has been given reasonable opportunity of setting out his case - Same not done - Fact that the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is assessment order that counts — Assessment order set aside and matter remanded to assessing authority for fresh consideration.”
In the above view, we consider it deem fit to restore back the matter
to the file of the Ld. AO to pass de novo assessment after considering the
written submission and evidences filed on record and may be filed before
him during the fresh proceedings after granting sufficient opportunity of
being heard to the assesse.
11 ITA Nos. 147 & 148/Asr/2023 Gurmeet Singh v. ITO 13. In ITA 147/Asr/2023 the appellant challenged upholding the levy of
penalty u/s 271F of the I.T. Act, by claiming that the assessee appellant is
having income from agricultural land only and no other source of income as
evident from the assessment order itself and as such he was not liable to
file his income tax return. In ITA No. 148/Asr/2023, the quantum appeal of
the assessee for the same assessment year is restored to the AO to pass
de novo assessment order to examine the source of cash deposit in the
joint bank account in the light of the appellants claim of agricultural income
with the supporting documentary evidences filed on record as admitted by
the CIT(A) but remained unaddressed. If the appellant explained before the
AO that the source of cash deposit in its bank account has been from the
agricultural income out of agriculture produced from the agriculture land
owned by the assessee’s family, then the appellant is not required to file
return of income and No Penalty would be levied under section 271F of the
Income Tax Act. In view of that matter the issue of penalty under section
271F is also restored to the AO to adjudicate while adjudicating the matter
in the quantum appeal on the source of cash deposits in joint bank account
whether it was from agricultural income.
12 ITA Nos. 147 & 148/Asr/2023 Gurmeet Singh v. ITO 14. In the result, both the appeals of the assesse are allowed for
statistical purpose.
Order pronounced in the open court on 23.08.2023
Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order
