ITAT Allows Appeal, Deletes Unexplained Cash Addition of Rs.3.45 Lakh Citing Agricultural Income & Bank Withdrawal Proof [Read Order]

The Income Tax Appellate Tribunal (ITAT) Surat Bench has deleted an addition of Rs.3,45,000 made towards unexplained cash deposits, accepting the assessee’s explanation supported by agricultural income documents and proof of earlier bank withdrawals.

The appellant, Asifiqbal Ismail Jangda, had filed his return of income for Assessment Year 2017-18 declaring Rs.2,71,610. The case was selected for limited scrutiny to verify cash deposits during the demonetisation period amounting to Rs.3,45,000. The Assessing Officer noted that the assessee had deposited Rs.1,45,000 in his HDFC Bank account and Rs.2,00,000 in his Indian Bank account. Since no agricultural income was declared in the return for the year, the Assessing Officer treated the deposits as unexplained under Section 69A of the Income Tax Act and added them to the total income.

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In appeal before the Commissioner of Income Tax (Appeals), the assessee submitted supporting documents including agricultural income account, agricultural expenses account, sales bills of agricultural produce, Form 7/12 extracts showing crop and land details, and a cash book reflecting daily cash transactions. It was also submitted that there was a withdrawal of Rs.1,00,000 from the HDFC Bank account on 4 July 2016, which formed part of the cash available before the deposits. The CIT(A), however, dismissed the claim, holding that the documents were self-serving and unverifiable, and relied on Roshan Di Hatti v. CIT and Kale Khan Mohammad Hanif v. CIT to support the view that the onus of proving the source of cash lies entirely on the assessee.

Challenging the findings, the assessee approached the Tribunal. During the hearing, the assessee’s counsel pointed out that none of the documents produced had been specifically disputed by the Tax Authorities and demonstrated that the cash deposits were adequately backed by agricultural income and cash withdrawals.

The division bench comprising Siddhartha Nautiyal (Judicial Member) and Bijayananda Pruseth (Accountant Member) after considering the submissions and documents on record, observed that the assessee had sufficiently discharged the primary onus of establishing the source of cash deposits. The Tribunal held that the CIT(A) had erred in summarily rejecting the evidence without assigning specific reasons and deleted the entire addition of Rs.3,45,000 made under Section 69A.

To Read the full text of the Order CLICK HERE

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