2020 (5) TMI 161 - AT - Income Tax

Addition u/s. 69B - unexplained source of deposit - HELD THAT - It is not known how one could establish the agricultural income. In this country agriculture is an unorganized sector. Expecting evidence from the agriculturist for their agriculture income is something impossible one. So long as the agriculture activity in this country is un-organized and it is sold in the un-regulated market, no one could establish the agriculture income. Moreover, the investment is only 22.50 lakhs. In the present economic scenario, which prevails in our country even a small agricultural labour would earn ₹ 500 to ₹ 1,000/- in day. A person employed in hair cutting shop or in road side restaurant also earn ₹ 1,000/- to 2,000/- per day. This economic factor cannot be doubted by anyone in this country. Taking into consideration of the economic situation prevails in the country, this Tribunal is of the considered opinion that there is no justification for making addition of ₹ 22.50 lakhs. Accordingly, the orders of both the lower authorities are set aside and the addition of ₹ 22.50 lakhs is deleted - Appeal filed by the assessee stands allowed

Summary

Issues:
Confirmation of addition under section 69B of the Income Tax Act, 1961.

Analysis:
The appeal was against an order confirming the addition of ?22,50,000 under section 69B of the Income Tax Act, 1961 for the assessment year 2007-08. The assessee explained that the source of the payment was from various legitimate sources, including business income, HUF income, and wife's income. However, the Assessing Officer doubted the genuineness of the transaction, leading to the addition. The Departmental Representative argued that while the identity of creditors was established, the genuineness of the transaction was not proven as the assessee failed to provide the address of the creditors, despite claiming they were close relatives. The Commissioner of Income Tax (Appeals) upheld the addition.

Upon review, the Tribunal found that the assessee had adequately explained the source of the deposit of ?22,50,000. The Tribunal noted that the agricultural income, being from an unorganized sector, was difficult to establish with concrete evidence. Considering the prevailing economic conditions in the country, the Tribunal opined that the addition of ?22,50,000 was unjustified. The Tribunal highlighted that even small-scale laborers or individuals in certain professions could earn significant amounts daily, making the addition unreasonable. Consequently, the Tribunal set aside the orders of the lower authorities and deleted the addition of ?22,50,000.

In conclusion, the appeal filed by the assessee was allowed, and the addition under section 69B of the Income Tax Act, 1961 was deleted. The Tribunal's decision was based on the lack of justification for the addition, considering the nature of agricultural income and prevailing economic circumstances in the country.