2020 (12) TMI 545 - AT - Income Tax

Unexplained cash deposits in the specific bank account - as claimed that it was sourced from the sale proceeds of rural agricultural land measuring 14 Kanal 15 Marla situated in village Fatehgarh Channa - HELD THAT - Tax Authorities have taken an easy route and have placed an impossible burden upon the assessee. As has been noted earlier, it is the duty of the tax authorities to assist tax compliance which means giving correct advice and following best practices. To attempt collecting tax on the basis of ignorance of the citizenry is not expected from a tax administration in a developed economy. In the facts of the present case, the assessee has consistently claimed to be illiterate evidenced by the fact that the relevant documents are carrying a thumb impression. The assessee claimed to be a purely an agriculturist having no other source of income. These facts remain unrebutted on record. Accordingly, considering the principle as laid down in the case of Shri Mangat Singh 2019 (1) TMI 1836 - ITAT CHANDIGARH namely the value of the land at the relevant point of time, the issue is restored back to the file of the CIT(A) with direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Appeal of the assessee is allowed for statistical purposes.

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Justification of the assessment of ?26,71,080/- as taxable income.
3. Applicability of the jurisdictional ITAT Chandigarh bench order in a different case.
4. Classification of the sold agricultural land as a rural agricultural land under Section 2(14) of the Income Tax Act, 1961.
5. Consideration of the assessee's sole source of income being agricultural.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The assessee filed an application for condonation of a 58-day delay in filing the appeal, citing reasons such as illiteracy, physical disability, and lack of funds. The application was supported by an affidavit. The Revenue raised no objections to this application. The tribunal accepted the explanation provided by the assessee, noting that no advantage was derived from the delay, and no vested interest of the Revenue was upset. Consequently, the delay was condoned, and the appeal was treated as filed within the allowed time.

2. Justification of the Assessment of ?26,71,080/- as Taxable Income:
The assessee contested the addition of ?26,71,080/- to his income, arguing that it was sourced from the sale of rural agricultural land and thus not taxable. The AO had made the addition on the grounds that the assessee failed to produce the original sale agreement and the purchaser, and could not explain the source of cash deposits. The tribunal noted that the tax authorities had placed an unreasonable burden on the assessee and had not adequately considered the actual value of the land at the relevant time. The tribunal directed the CIT(A) to reassess the issue, considering the specific value of the land at the time of sale.

3. Applicability of the Jurisdictional ITAT Chandigarh Bench Order:
The CIT(A) had relied on the ITAT Chandigarh bench order in the case of Mohinder Singh vs. Malkit Singh to justify the addition. The assessee argued that the facts of his case were different and that the decision was not applicable. The tribunal agreed with the assessee, noting that the decision in Mohinder Singh’s case pertained to Section 54B benefits, which was not relevant to the present case. The tribunal found that the CIT(A) had incorrectly applied this decision.

4. Classification of the Sold Agricultural Land:
The assessee argued that the land sold was rural agricultural land and thus not a capital asset under Section 2(14) of the Income Tax Act, 1961. The tribunal found that the tax authorities had not provided sufficient evidence to dispute this classification. The tribunal directed the CIT(A) to reassess the classification of the land, taking into account its specific value and nature at the time of sale.

5. Consideration of the Assessee's Sole Source of Income:
The assessee claimed that his sole source of income was from agricultural activities and that the amount deposited in the bank represented proceeds from the sale of rural agricultural land. The tribunal noted that the tax authorities had not adequately considered this claim and had instead made assumptions based on general trends. The tribunal emphasized the need for the tax authorities to assist in tax compliance and not to place unreasonable burdens on taxpayers. The tribunal directed the CIT(A) to reassess the case, considering the assessee's claim of agricultural income and the specific value of the land.

Conclusion:
The tribunal allowed the appeal for statistical purposes, directing the CIT(A) to pass a speaking order in accordance with the law after giving the assessee a reasonable opportunity to be heard. The order was pronounced on 21st September 2020.

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