The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) deleted an addition of Rs. 8,00,000 made by the Assessing Officer (AO), which was treated as ‘income from other sources’ despite being a cash deposit from the sale of casuarina trees.

T. Radhakrishnan, appellant-assessee, filed his income tax return for the assessment year 2016-17 on 08.07.2016, declaring a total income of Rs.3,23,119/- and agricultural income of Rs.8,00,000/- from the sale of casuarina trees. The case was selected for scrutiny, and a notice under section 143(2) of the Act was issued on 02.08.2017 to verify cash deposits and ensure that income and investments related to properties were properly disclosed.

During the assessment proceedings, the AO noticed a cash deposit of Rs.8,00,000/- in the appellant’s bank account on 03.07.2014 and asked him to explain the source of this deposit. The appellant stated that the amount arose from the sale of casuarina trees, which was already disclosed as agricultural income in the return. He submitted confirmation letters from Shri Selvaraj and Shri Umapathy, who acted as agents in the sale transaction, in support of his claim.

The AO issued summons under section 131 of the Act to Shri Selvaraj and Shri Umapathy. Both deposed that they had not paid any cash to the appellant. Relying on their statements, the AO disbelieved the assessee’s explanation and added Rs.8,00,000/- to his total income as ‘income from other sources’.

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The assessee challenged this addition before the First Appellate Authority (FAA), which dismissed his appeal. Aggrieved by this, the assessee approached the tribunal seeking relief.

A single member bench of George George K( Vice President) reviewed the case and material on record. The assessee owned 23 acres of agricultural land in Tamil Nadu and had disclosed Rs.8,00,000/- as agricultural income from the sale of casuarina trees for the assessment year 2015-16. On 03.07.2014, a cash deposit of Rs.8,00,000/- was made in his bank account, which the AO disbelieved and added to income as ‘income from other sources’.

The assessee submitted confirmation letters from Shri Selvaraj and Shri Umapathy. Their statements clarified that the ultimate purchaser in Mumbai had paid the amount, which was reflected in the assessee’s bank statement.

The appellate tribunal found that the cash deposit matched the sale proceeds of the casuarina trees and the AO had no reason to make the addition. The tribunal deleted the Rs.8,00,000/- addition.

Accordingly the appeal was allowed.

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