The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the addition to Income of elderly agriculturist based on adequate justification and proper account maintenance.
The assessee Girdari Lal had challenged the additions of Rs.27,85,000/- on account of cash deposits in the bank. The Assessee was an individual, 92 years old and claimed to have earned income from agriculture and farm business in all his lifetime and continued to earn in this manner.
During the assessment year, the assessee deposited cash of Rs.27,85,000/- in his bank account in question. The cash deposited was claimed to be out of cash in hand whose basic source is sale proceeds from agricultural land sold in Financial Year 2005-06 for an amount of Rs.2,20,36,875/- out of which Rs.2,19,36,875/- had been received by cheque in the bank and remaining Rs.1 lakh was received in cash about the time of sale.
The Assessing Officer based on the cash deposit in his savings bank account invoked the provisions of Section 148 read with Section 147 of the Income Tax Act and made the addition of the aforesaid amount holding the source of cash deposited during the year, had not been proved.
Aggrieved assessee by the rejection order of CIT (A), filed an appeal before the Tribunal. The counsel for the Assessee argued that the assessee, a 92-year-old person, earned income from agricultural activities. In the relevant financial year (F.Y. 2005-06), the assessee sold agricultural land and periodically had withdrawn and deposited funds in their savings bank account as requested by family members for temporary use. The cash withdrawals were also necessary for the Assessee’s own needs and healthcare, as they were dependent on their family at their advanced age.
The counsel further provided a cash summary showing the year-wise withdrawals and deposits after the sale of the agricultural land. He also presented details of fixed deposits made over several years using the proceeds from the land sale. Additionally, a summary of fund utilization was provided to justify the source of cash deposits.
The counsel emphasized that the cash deposit of Rs. 27,85,000/- was directly linked to the sale proceeds of the agricultural land. The assessee had no other source of income and relied on the sale proceeds for their survival and fulfilling family requirements and healthcare needs.
In the relevant financial year (2010-11), the assessee withdrew Rs. 35,75,000/-, but the cash deposit was only Rs. 27,85,000/-. At the beginning of the financial year, the assessee had cash in hand amounting to Rs. 28,09,603/-.
The counsel for the assessee contended that the cash deposit could be easily traced back to the sale proceeds of the land. He added that there was no reason to doubt the veracity of the cash deposits considering the circumstances and the consistent stand of the assessee.
The counsel criticized the revenue authorities for disregarding the humble background of the assessee and making additions to the income without justification merely because the sale of agricultural land had occurred a long time ago.
The counsel for the revenue contended that the burden lying upon the assessee to satisfactorily discharge their onus regarding the source of the cash deposit had not been fulfilled.
The Bench consisting of a Judicial Member Chandra Mohan Garg and an Accountant Member Pradip Kumar Kedia observed that the assessee had provided sufficient evidence and explanation regarding the holding and depositing of cash in the relevant assessment year. Considering the overall context where the assessee was an agriculturist who sold a land parcel, withdrew cash, utilized it partially for property purchases and fixed deposits over time.
The Bench added that it was not uncommon in Indian society, particularly in rural areas, to withdraw cash and hold a portion of it for safety reasons. Considering the socio-economic structure of India, the Assessee’s explanation was understandable. Moreover, the assessee had provided a proper summary of year-wise cash withdrawal, deposit, and utilization, including a cash withdrawal of Rs. 35.75 lakh in the assessment year itself.
The Tribunal held that the burden placed on the assessee to explain the source of cash deposit has been satisfactorily fulfilled. It was important to note that the extent of onus of proof varies from case to case, and the law does not require the assessee to fulfill the burden to the highest degree in every case and found that the Assessee’s explanation to be valid.
In result, the appeal of the assessee was allowed.
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