In a recent case the Income Tax Appellate Tribunal ( ITAT ) of Jaipur ruled in favour of appellant seeking deletion of addition made to his income.
Rajendra Kumar Meena, the appellant/assessee, was found to have deposited Rs. 58,00,000 in cash into his bank account during the financial year 2013-14. This amount was not declared in his income tax return.
In turn, a notice under section 148 of the Income Tax Act was issued upon the assessee by the Assessing Officer (AO) for reassessing the cash deposit as undisclosed income, following approval from the Joint Commissioner of Income Tax (JCIT), Range Sawaimodhopur. Various notices under Section 143(2) and 142(1) of the ITA were issued from time to time.
The AO on perusal of the documents furnished by the assessee found that the assessee has shown Rs. 12,00,000/- received as cash on the sale of two agricultural lands but only deposited 58,00,000/- into his bank account. No proper explanation/reply for remaining Rs. 46,00,000/- (5800000-1200000) was furnished by the assessee. Consequently, AO made an addition of Rs. 46,00,000/- in the hands of the assessee as undisclosed income.
Aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], who dismissed the appeal noting that the assessee failed to comply with the hearing notices issued by the AO, which indicated that the assessee was not interested in completing appeal proceedings, and passed an ex parte order upholding the AO’s decision.
Aggrieved again, the appellant challenged the decision before the Tribunal.
The appellant contended that the cash originated from the sale of agricultural land, which is outside the scope of capital assets under section 2(14) of ITA and hence, exempt from tax, and disputed the addition of Rs. 46,00,000 by the Assessing Officer (AO).
It was further argued that the CIT(A) passed the ex-parte order without providing adequate opportunity to be heard, violating principles of natural justice.
The assessee also challenged the reassessment under sections 147 and 148 of the ITA, claiming they were illegal, barred by limitation, and conducted without proper approval or satisfaction from the competent authority citing the approval from JCIT as insufficient.
The Bench of Dr Seetha Lakshmi JM and Mr Rathod Kamlesh Jayantbhai after examining the contentions concluded that the holding of agricultural land by the assessee is not disputed and that since the payment of money as cash is an unfortunate practice followed, there cannot be any contrary proof of having other income to the extent of Rs.46,00,000/- by the assessee.
It was observed that the surplus money as explained by the assessee is required to be considered out of the agricultural land proceed and since that land proceed has already been considered while assessing the income of the assessee as exempt, the amount of Rs. 46,00,000/- cannot be held as unusual income of the assessee.
The bench also noted while making the addition the AO did not mention any section under which that income is
made chargeable to tax in the hands of the assessee. Therefore, even on that account also, the addition made by the AO is not sustainable.
Based on these observations, the tribunal directed the AO to delete the addition of Rs. 46,00,000/- made in the hands of the assesse. In the result, the appeal of the assessee was allowed.
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