2017 (8) TMI 1064 - AT - Income Tax

Unexplained cash deposit in assessee s bank account - proof of primary activities for earning agricultural income - sale proceeds from cutting of poplar trees grown on agricultural land belonging to the assessee - application under rule 46A for admission of additional evidences - Held that - When notice was given by the AO to prove earning of agricultural income of ₹ 78,700/-, the assessee did not even explain the sale of poplar trees through Mr. Salim Hasan at any point of time. Advance against sale of poplar tree is alleged to be recovered in preceding A.Y. No evidence of receipt of any such amount in Assessment Year in appeal has been filed. No evidence of cutting of poplar tree are filed. No income from sale of poplar tree has been disclosed in return of income. Therefore the story set up before the Ld.CIT(A) for selling polar trees is clearly an afterthought and rightly have been rejected. AO and Ld.CIT(A) without any basis accepted the agricultural income of ₹ 78,700/- for which even no ground of appeal has been raised by the assessee before the Ld.CIT(A). The Ld.CIT(A) in his findings has gone through the explanation of the assessee regarding cash deposits in the bank account and receipt of advance from Sri Salim Hasan which did not match with the cash deposited in the bank account of the assessee. In absence of any reliable and cogent material, claim of assessee for sale of poplar tree for exempt agricultural income cannot be accepted. Thus the assessee has not earned any agricultural income of ₹ 78,700/- for which credit has been given by the Ld.CIT(A), the assessee has also not earned any income on sale of poplar trees. - Decided against assessee.

Summary

Issues:
Challenge to addition of cash deposit in bank account as unexplained income.

Analysis:
1. The appellant contested the addition of ?14,48,800 out of a total addition of ?15,23,500 made on account of cash deposit in the bank account. The appellant claimed that the cash was from the sale proceeds of poplar trees grown on agricultural land. The appellant provided evidence, including a certificate and a report, to support the claim that income from cutting poplar trees constitutes agricultural income. However, the AO and CIT(A) found discrepancies in the appellant's explanation and rejected the claim, confirming the addition of ?14,44,800 after giving credit for the declared agricultural income of ?78,700.

2. The appellant failed to provide sufficient evidence to prove the source of the cash deposits in the bank account. The AO issued a notice requesting details and documents to support the agricultural income declared, but the appellant did not submit any evidence. The appellant only provided a copy of an agreement for the sale of poplar trees, which did not establish the basic agricultural operations for earning agricultural income. The appellant's claim was considered an afterthought as no evidence of cultivating poplar trees or primary activities for earning agricultural income was presented.

3. The CIT(A) analyzed the appellant's explanations and found discrepancies between the cash deposits and the receipts from the sale of poplar trees. The CIT(A) applied the test of human probability, as established in previous court judgments, to assess the evidence presented. Ultimately, the CIT(A) concluded that the appellant did not earn the claimed agricultural income or income from the sale of poplar trees due to the lack of credible evidence. The appeal was dismissed, affirming the addition of ?14,44,800 as unexplained cash deposit.

4. The appellant's failure to provide substantial evidence supporting the source of cash deposits and the claimed agricultural income led to the dismissal of the appeal. The CIT(A) and AO found inconsistencies in the appellant's submissions, highlighting the importance of providing concrete evidence to substantiate claims of income sources. The judgment emphasized the need for taxpayers to maintain accurate records and documentation to avoid challenges to their reported income.