2020 (2) TMI 1596 - HC - Income Tax

Addition u/s 68 - Whether Tribunal was legally justified in disbelieving the affidavit filed by the father of the assessee who had testified the availability of money as a result of agriculture produce sold and past savings duly deposited in bank account? - HELD THAT - It is noticed that the assessee has failed to produce material documentary evidence to proof cultivation of agricultural produce by way of Khasra Khatauni, source of irrigation (tube well/canal), evidence on cold storage etc. to justify the cash deposits in the aforesaid joint bank account in which even the cash deposits do not correlate with the proceeds emanating from Mandi Parishad. Therfore, the agricultural income claimed from the sale of accumulated produce of two and a half years in between March 2010 to October, 2010 towards cash deposit in the bank account in anticipation to corresponding withdrawals to the agricultural operations to be carried out for earning such volume of agricultural income is rightly disbelieved by the ld. CIT (A), to demonstrate availability of cash for investment in margin money of share trading business. It is evident from the above that for the purpose of claiming the benefit of the agriculture income, it is necessary to produce the material evidence to substantiate claim of agricultural income for the assessment year under consideration. Further, the assessee should maintain the accounts pertaining to entire agriculture activity. In the instant case, no account was maintained by the assessee. Addition in respect of the accumulated interest on RD A/c assessee failed to demonstrate on the basis of documentary evidence that the said Interest income was related to earlier years either before the authorities below or before us and therefore, we are inclined to appreciate the finding of the CIT (A) on this issue as legal and justified and confirm the addition accordingly. We do not find any merit for the purpose of entertaining this appeal, since no substantial questions of law are involved.

Summary

Issues:
1. Appeal under section 260A of the Income Tax Act, 1961 regarding addition of amounts under section 68
2. Disbelief of affidavit regarding availability of money from agriculture produce and past savings
3. Upholding the order of the CIT (Appeals)

Analysis:

Issue 1:
The appellant raised three substantial questions of law regarding the addition of amounts under section 68 of the Income Tax Act. The Assessing Officer had added a specific amount to the appellant's income as undisclosed income. The Commissioner of Income Tax (Appeals) upheld this addition, and the Tribunal also affirmed this decision. The Tribunal emphasized the necessity of producing material evidence to substantiate claims of agricultural income and the maintenance of accounts related to agricultural activities. The Tribunal found that the appellant failed to provide sufficient evidence to justify the cash deposits in the joint bank account, leading to disbelief in the claimed agricultural income. Consequently, the addition of the undisclosed income was upheld by the Tribunal, and the appeal was dismissed due to lack of substantial legal questions.

Issue 2:
Regarding the disbelief of the affidavit filed by the father of the assessee, who testified about the availability of money from agriculture produce and past savings, the Tribunal noted that the father did not file any income tax returns or provide statements of account or income-expenditure details. The Tribunal highlighted the lack of documentary evidence, such as Khasra Khatauni or evidence of agricultural activities, to support the cash deposits in the bank account. The Tribunal concluded that the claimed agricultural income was rightly disbelieved due to insufficient evidence, leading to the rejection of the appellant's grounds on this issue.

Issue 3:
The Tribunal upheld the order of the CIT (Appeals) regarding the addition of interest on a recurring deposit account. The appellant failed to demonstrate with documentary evidence that the interest income was related to earlier years. As a result, the Tribunal confirmed the addition of the interest amount. The Tribunal found the CIT (Appeals) decision legal and justified, leading to the rejection of this ground of appeal as well. Consequently, the appeal was dismissed based on the concurrent findings and the absence of substantial legal questions.

In conclusion, the High Court dismissed the appeal under section 260A of the Income Tax Act, 1961, as the issues raised were deemed factual rather than substantial questions of law, and the decisions of the lower authorities were upheld based on the lack of sufficient evidence to support the appellant's claims.