In a recent ruling the Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs. 4.76 lakhs after the taxpayer, an agriculturalist, presented evidence of land ownership by their wife and children.
The brief facts of the case are that as per the information available in the AIMS module of ITBA, cash deposits of Rs.11, 08,310/- were made by Venugopal Rao in the bank accounts during the demonetization period.
On the basis of such information, a notice under Section 142(1) dated 12.03.2018 was issued and was duly served. Vide the notice under Section 142(1), the assessee was asked to file the return of income for the AY 2017-18. However, the assessee failed to file the return of income. Thereafter, the case was taken up for scrutiny by initiating proceedings under Section 144 of the Income Tax Act 1961.
During assessment, the assessee was prompted to justify the cash deposits, which they attempted to do by submitting self-made sale bills of paddy. However, these documents were deemed insufficient to substantiate their claims.
Due to the failure to provide compelling evidence and clarify the source of the cash deposits, the Assessing Officer treated all deposits as unexplained money under Section 69A of the Income Tax Act, taxing them as income for the assessment year 2017-18 under Section 115BBE. Consequently, the assessment was finalized under Section 144, with the assessment order issued on 02.12.2019.
Mr. Phanindra, representing the assessee submitted that the cash deposits in question pertains to sale proceeds of agricultural land belonging to him and his family and to substantiate the same he has also filed pattadar pass books and other relevant documents as required by the Assessing Officer. He submitted that the source of the cash deposits was well-documented and readily available on record. Further pleaded that the addition of unexplained income was unwarranted and should be deleted.
A single member bench of the tribunal comprising Laliet Kumar (Judicial member) noted that the assessee was an agriculturist having source of income from agricultural produce and he has furnished the document showing the agriculture holding of 20 acres of land belonging to his wife and children. The assessee deposited the amount during the demonetization period, which included proceeds from the sale of agricultural produce from his agricultural land and also from the agricultural land belonging to the family and also some deposits from past savings in the bank account.
The tribunal, acknowledging the taxpayer’s agricultural background and provided evidence of land ownership, noted that the deposits during demonetization likely included proceeds from agricultural produce sales and past savings. However, the Assessing Officer had not adequately considered these facts. Given the permissible limit for cash deposits during demonetization and the likelihood of agricultural income, the tribunal restricted the addition to Rs. 2,00,000, thereby granting relief of Rs. 4,76,000 to the taxpayer.
Accordingly, ITAT deleted the addition of Rs. 4,76,000/- and confirmed the addition of Rs.2,00,000/-. Thus, the appeal of the assessee was partly allowed.
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