2013 (7) TMI 802 - AT - Income Tax

Unexplained cash deposits - income from undisclosed sources - CIT(A) deleted the addition - accumulated savings out of Agriclutural Income - assessee s submission that his 87 years old mother earned and accumulated Rs.10,81,840/- in cash from the agricultural productions from piece of 3.5 bighas of land - Held that - AO s observation is not fair and judicious as on one hand he himself is admitting that the papers of the ownership of the agricultural land has been submitted and on the other hand raising doubt about earning of agricultural income from the same. Moreover A.O. has erred in ignoring the material on record that the savings of the mother of the assessee out of the agricultural income was not from the agricultural income in the year under consideration but are the accumulated savings out of agricultural income over the number of years. He also erred in holding that an old lady of 87 years of age earning and accumulating 20 Lacs in cash appears to be an impossible proposition as first of all the accumulated savings out of agricultural income was stated to be approximately Rs.10,81.4401 and not 20 lacs as mentioned by AO. Secondly it is again reiterated that this was the accumulated savings over the number of years and not the savings out of agricultural income in the year under consideration. AO is not justified in holding that on 3.5 bighas of land one can not even dream to meet both the ends leave aside earning and saving as it is submitted that the land at the above said place is a fertile land and give various crops three times in a year. AO has failed to give any cogent reason why both ends can not be met with 3.5 bighas of land. In favour of assessee. Regarding proceeds out of sale proceeds of ornaments - Held that - It is reiterated that the mother of the assesee was got married about 70 year ago and the ornaments sold were out of her Streedhan . It is submitted that there cannot be any purchase bill for acquisition of such Streedhan of an old hindu lady of 87 years of age and who got married about 70 years ago and belong to a respectable family.The observation of the AO that the evidence are flimsy and non verifiable in nature is, thus, not correct in the facts and circumstances of the case. AO is not justified in rejecting the affidavits of the assessee and of his mother without cross examination and without giving proper and sufficient opportunity in this regard. Thus CIT (A) has directly arrived to a finding that it would be fair and reasonable to Rs.2,00,000/- to the return of income of the assessee as income from other sources but we are unable to see any basis of this segregation and part confirmation of the addition made by AO. Thus it will be appropriate that the issue of cash deposit of Rs.19,55,000/- to the saving bank account of the assessee deserve fresh adjudication by the AO in the light of provisions of u/s 68.

Summary

Issues Involved:
1. Relief of Rs. 17,55,000/- out of the addition of Rs. 19,55,000/- for unexplained cash deposits.
2. Acceptance of the assessee's claim regarding his mother's agricultural income.
3. Validity of jewellery sale bills and the genuineness of the transactions.

Detailed Analysis:

Issue 1: Relief of Rs. 17,55,000/- out of the addition of Rs. 19,55,000/- for unexplained cash deposits

The Revenue contested the CIT (A)'s decision to allow a relief of Rs. 17,55,000/- from the total addition of Rs. 19,55,000/- made by the AO for unexplained cash deposits in the assessee's bank account. The AO had treated these deposits as income from undisclosed sources. The Tribunal noted that the AO had observed that the assessee failed to provide a satisfactory calculation of agricultural income and questioned the mode of cash transactions. The CIT (A), however, found the assessee's explanation reasonable based on the evidence provided, such as affidavits and certificates from local authorities. The Tribunal decided that the issue required fresh adjudication by the AO, directing the AO to reassess the matter by considering the evidence and explanations provided by the assessee, using due and well-accepted procedures.

Issue 2: Acceptance of the assessee's claim regarding his mother's agricultural income

The Revenue argued that the CIT (A) erred in accepting the assessee's claim that his 87-year-old mother accumulated Rs. 10,81,840/- from agricultural income without proper evidence of agricultural sales. The CIT (A) had accepted the explanation based on ownership documents of agricultural land and certificates from local authorities. The Tribunal noted that the CIT (A) had considered these documents and affidavits, but there was no clear basis for the partial acceptance of the assessee's claim. The Tribunal directed the AO to re-examine the issue, considering all the evidence and explanations provided by the assessee.

Issue 3: Validity of jewellery sale bills and the genuineness of the transactions

The Revenue contended that the CIT (A) wrongly accepted the assessee's explanation regarding the sale of jewellery amounting to Rs. 9,18,560/-, despite the sale bills lacking essential details like tax numbers and invoice numbers, and the jewellers not responding to notices. The CIT (A) had accepted the explanation based on affidavits and the nature of the jewellery as 'Streedhan' from the assessee's mother. The Tribunal observed that the CIT (A) had not provided a clear basis for accepting this explanation and directed the AO to reassess the validity of the jewellery sale bills and the genuineness of the transactions by making necessary enquiries.

Conclusion:

The Tribunal restored the issue of the cash deposit of Rs. 19,55,000/- to the AO for fresh adjudication. The AO was directed to reassess the matter, considering the evidence and explanations provided by the assessee. The Tribunal also restored the cross-objection of the assessee to the AO for reconsideration. Both the Revenue's appeal and the assessee's cross-objection were allowed for statistical purposes.