Validity of Cash Deposits as Agricultural Income u/s 68: ITAT Finds Addition Unjustifiable [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT )  found validity of cash deposits as agricultural income under Section 68 of Income Tax Act,1961 unjustifiable, as the Assessing Officer (AO) and Commissioner of Income Tax(Appeals) [CIT(A)] failed to properly consider the evidence of agricultural income provided by the assessee.

Kamleshbhai Vinodbhai Patel,appellant-assessee,did not file his income tax return. The AO found cash deposits totaling Rs. 10,80,000 in his savings bank account and issued a notice under Section 148 of the Act on March 28, 2016. Despite further notices and a questionnaire, the assessee neither filed his return nor attended the assessment proceedings.

The AO obtained information from Kotak Mahindra Bank, which revealed two accounts—one jointly held with the assessee’s spouse and another solely in his name. The assessee’s counsel informed the AO that he was in the USA, but the counsel was allowed to represent him.

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The AO found deposits ranging from Rs. 15,000 to Rs. 7,70,000 made regularly and treated the total amount of Rs. 17,94,872 as unexplained cash credits under Section 68, adding it to the assessee's income.

Aggrieved by the order of AO the assessee appealed before the CIT(A) which later dismissed the appeal. The assessee again appealed before the tribunal.

During the hearing, no one appeared, but a written submission was filed requesting deletion of the addition. The Revenue counsel argued that the cash deposits remained unexplained and supported the addition of Rs. 17,94,872, relying on the CIT(A)'s order.

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The two member bench comprising Suchitra Kamble(Judicial Member) and Makrand Vasnat Mahadeokar(Accountant Member) examined the submissions and evidence on record. It noted that the assessee, through his advocate, provided affidavits and certificates, including a Talati certificate, confirming agricultural income from family-owned land.

The evidence submitted demonstrated that the cash deposits and credit entries were linked to agricultural income. However, both the AO and CIT(A) failed to correlate these deposits with the documented agricultural income and unjustly made the addition. Consequently, the tribunal allowed the appeal.

To Read the full text of the Order CLICK HERE

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