The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) has recently held that no addition could be made under Section 69 of Income Tax Act 1961, on cash received on sale of ancestral agricultural land.
Section 69A of Income Tax Act states that in any financial year the assessee is found to be the owner of any valuable things such as bullion, money, jewelry, etc. and the assessee offer no any explanation relating to such things, the assessing officer considered it as the deemed income of assessee.
Assessee Mujtaba Hussain Ahmed is an individual running proprietary business in the name and style of Numaan Medical and General Stores, apart from having agricultural income.
Assessee has filed the return of income For the Assessment Year 2019-20 declaring total income of Rs.1,00,800/- apart from declaring agricultural income of Rs.50,000/- and other exempt income in the form of sale of agricultural land of Rs.26,00,000/-.
The assessee was intercepted by the Static Surveillance Team and found a cash of Rs.25,81,250/- carried by the assessee. The police seized the same under Section 132A of the Income Tax Act.
Accordingly, the case was centralized and the assessment was completed and under Section 69A of the Income Tax Act, the impugned addition was made. Aggrieved with the order of Assessing Officer, assessee filed an appeal before the CIT(A) who dismissed the appeal of assessee. Feeling aggrieved with the order of CIT(A), assessee approached this Tribunal.
Samuel Nagadesi counsel for the assessee submitted that the agricultural land had been sold by the assessee along with his siblings and it was their ancestral property.
The assessee was intercepted by the Static Surveillance Team (SST) while carrying the said amount to the home after getting documents registered with the Sub-Registrar.
It was further submitted that he produced all the evidence and documents related to cash recovered from his possession. The addition was made on the basis of the first sale deed dated.22.03.2019 which was registered only for a consideration of Rs.1,60,000/-.
Since the assessee was able to demonstrate the source of the cash in the possession of the assessee, the addition made by the Assessing Officer was bad in law.
A. Sitarama Rao, counsel for the revenue supported the addition made by the assessing officer and CIT(A).
The tribunal observed that once the assessee has disclosed the source of the cash on account of sale of agricultural land, then it is the bounden duty of the lower authorities to examine the purchaser and ask the purchaser to disclose the source of the cash. So, the AO violated the provisions of section 269SS/269ST against the seller and purchaser.
By considering the above facts tribunal of Laliet Kumar, Judicial Member deleted the addition made by the Assessing Officer along with the confirmation made by the CIT(A).
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