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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
“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.
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.
3. 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 & 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.
3. 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 & 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.
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".
5. 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 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 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.
6. 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 & 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.”
7. 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 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.
8. 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 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 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. 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. 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 , 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. statistical purpose.
Order pronounced in the open court on 23.08.2023