2019 (12) TMI 1099 - AT - Income Tax

Addition u/s 69 - unexplained cash deposits - HELD THAT - CIT(A) did not accept opening cash balance on the ground that the assessee is not maintaining books of accounts, however, accepted the factum of sale of land earning of agricultural income and did not accept the contention that the amount so withdrawn was deposited in the bank account. We have considered the material available on record and perused the finding of the Ld. CIT(A) the undisputed fact is that the CIT(A) accepted the fact that assessee was having agricultural income and also sold a piece of agricultural land proceeds whereof was deposited in the bank account of the assessee. It is also not rebutted by the revenue that before making deposits of sum of ₹ 10,65,000/- on 18.07.2005. The assessee had withdrawn sum of ₹ 40,000/-, ₹ 5,000/-, ₹ 7,000/- and ₹ 11,00,000/- on 04.07.2005,09.07.2005, 12.07.2005 and 15.07.2005 from the same bank account. Hence, the cash available with the assessee was higher than the cash deposited on 18.07.2005. The revenue has not placed on record demonstrating that these sums were utilized for any other purpose. Therefore, we are unable to affirm the finding of the Ld. CIT(A) for sustaining this addition as made on the basis that purpose of withdrawal of specific sums was not given. In our view revenue should have brought some material suggesting that the money as withdrawn from the bank account was used somewhere else and it was not available with the assessee for making deposits. In absence of such facts Ld. CIT(A) ought to have accepted the source of deposit of ₹ 10,65,000/- on 18.07.2005. Hence, we direct the AO to delete this addition. In respect of the remaining addition it is noticed that the Ld. CIT(A) has not accepted the opening cash balance of ₹ 5,27,432/-. Looking to the fact that the assessee was having agricultural income and other source of income even if the opening balance is considered to be higher at least the assessee would be having cash on hand a sum of ₹ 3,00,000/- which appears to be reasonable. Hence, the assessing officer is directed to delete the addition of ₹ 3,00,000/- being available as cash in hand. Regarding higher consideration received in cash we are of the considered view that onus was on the assessee to prove that the cash was received in addition to sum mentioned in sale deed. Further, the provisions of section 50C would not help as same operate in the different field. The contention of the assessee is therefore rejected. Hence, out of addition of ₹ 16,04,000/- sustained by the Ld. CIT(A) we direct the AO to delete the addition of ₹ 13,65,000/-, and remaining addition of ₹ 2,39,000/- is sustained. Ground numbers 3 to 6 are partly allowed.

Issues Involved:
1. Validity of assessment under sections 144/147 without service of notice under section 143(2).
2. Addition of ?10,65,000 as unexplained investment.
3. Addition of ?16,04,000 and consideration of deposits and withdrawals in the bank.
4. Disbelief in the sale proceeds of agricultural land amounting to ?18,37,800.
5. Addition of ?29,96,000 in the State Bank of India account.

Issue-wise Detailed Analysis:

1. Validity of Assessment under Sections 144/147:
The appellant initially contested the validity of the assessment completed under sections 144/147, arguing that no notice under section 143(2) was served. However, during the appeal, the appellant's counsel did not press this ground, leading to its dismissal.

2. Addition of ?10,65,000 as Unexplained Investment:
The appellant argued that the authorities failed to appreciate the sources of the deposits in the bank account, which included agricultural income and sale proceeds of agricultural land. The CIT(A) had accepted part of the explanation but sustained the addition of ?10,65,000. The Tribunal found that the appellant had withdrawn sums from the bank before depositing ?10,65,000, and there was no evidence that the withdrawn amounts were used elsewhere. Therefore, the Tribunal directed the deletion of this addition.

3. Addition of ?16,04,000 and Consideration of Deposits and Withdrawals:
The CIT(A) had reduced the initial addition from ?29,96,000 to ?16,04,000, accepting part of the appellant's explanation. The appellant contended that the authorities did not consider the cash withdrawals and redeposits properly. The Tribunal noted that the CIT(A) did not accept the opening cash balance due to the absence of books of accounts but acknowledged agricultural income and sale proceeds. The Tribunal directed the deletion of ?13,65,000 from the sustained addition, considering the cash withdrawals and reasonable opening cash balance, but upheld the remaining ?2,39,000 as the appellant could not substantiate the higher cash consideration claimed.

4. Disbelief in Sale Proceeds of Agricultural Land:
The appellant claimed that the actual consideration received from the sale of agricultural land was ?18,37,800, contrary to the ?11,92,000 recorded in the sale deed. The Tribunal rejected this claim, emphasizing the onus on the appellant to prove the higher consideration and noting that section 50C provisions did not apply in this context.

5. Addition of ?29,96,000 in State Bank of India Account:
The Tribunal addressed the overall issue of ?29,96,000 deposited in the appellant's bank account. After considering the explanations and evidence provided, it directed the deletion of ?13,65,000 from the sustained addition, recognizing the cash withdrawals and reasonable opening cash balance. The remaining addition of ?2,39,000 was upheld due to insufficient evidence supporting the appellant's claims.

Conclusion:
The Tribunal partly allowed the appeal, directing the deletion of significant portions of the additions while upholding a smaller part due to lack of substantiating evidence. The order was pronounced in the open court on 06.09.2019.

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