The Surat Bench of the Income Tax Appellate Tribunal ( ITAT ) held that the income obtained from agriculture and reduced additions made by the Assessing officer to 2 Lakhs in order to prevent revenue loss.
Jehan Percy Variava ( assessee ) engaged in agricultural activities and filed his income tax return declaring no income for the assessment year (AY) 2017-2018. However, the assessee declared that every income obtained by him would fall under the domain of agricultural income.
The assessing officer (AO) found cash deposits of Rs. 24 lakhs were deposited by the assessee during demonetisation. The AO issued a notice to the assessee to show the source of cash deposits.
The AO added Rs 24 lakhs as unexplained money under section 69A of the Income Tax Act, 1961. Aggrieved by the order, the assessee filed an appeal before the Commissioner of Tax [Appeals](CIT[A]).
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Before the CIT[A], the assessee filed a statement of fact stating that the assessee holds agricultural land jointly with Percy Variava and Maher Variava (mother and father). The assessee also maintained joint accounts with his mother and father. However, CIT[A] upheld the addition of cash deposits. Aggrieved by the order of the CIT[A], the assessee filed an appeal before ITAT.
The counsel for the assessee argued that there was sufficient agricultural income to substantiate the source of cash deposits during demonetisation. The counsel also submitted that the assessee had joint agricultural land with his mother and father.
The counsel also stated that the assessee and his mother and father had obtained income from the land. Therefore, the counsel for the assessee argued that the cash was deposited during the demonetisation by the assessee and also by his mother and father.
On the other hand, the counsel for the revenue relied on the decisions of the lower authorities and stated that the assessee failed to substantiate the source of cash deposits and no details filed before the AO. Therefore sought to dismiss the appeal.
The single bench member comprising Pawan Singh (Judicial Member) observed that the assessee had sufficient agricultural income to substantiate cash deposits. Therefore, the tribunal held that to delete the addition of Rs. 24 lakhs made by the AO.
However, in order to prevent revenue loss, the tribunal also made an addition of Rs. 2 lakhs and directed the AO to tax at a normal rate. The appeal was partly allowed.
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