2021 (3) TMI 1161 - AT - Income Tax

Addition of unexplained cash credit - Addition u/s 68 r.w.s. 115BBE - AO did not believe the sources of agricultural income in the absence of corroborative evidence - HELD THAT - In this case, the assessee submitted before the AO, that the assessee is looking after the entire agricultural operations and managing the agricultural operations, which was not disputed by the AO. There is no dispute that the assessee along with his family members own more than 16 acres of agricultural land, where the mango crop was grown . The AO also did not dispute that 16 acres of agricultural land yield the crop worth ₹ 5,00,000/-. AO did not examine the family members with regard to deposit of sale proceeds of mango garden in his account, though assessee had furnished the details of land owned along with pattadar passbooks copies of which are furnished in page No.3 of the paper book. The assessee had explained the source of deposits of cash and the AO did not discharge the burden by examining the family members. Since the assessee stated that he looks after the entire agricultural operations which is common in joint families, we, do not find any reason to suspect the source of cash deposits in the bank account and the same stands explained, hence, we set aside the orders of the lower authorities and delete the addition made by the AO. Assessee s appeal on this ground is allowed. Unexplained deposits in the bank account - AO found mismatch of dates mentioned in the sale deed and withdrawals made by the vendor from his bank account and disbelieved the payment to the assessee and accordingly made the addition - HELD THAT - In the instant case, the vendor has confirmed the payment of ₹ 37,50,000/- on various dates and also filed rectification deed before the Ld.CIT(A). The AO and the Ld.CIT(A) were of the view that it was an afterthought. However, the rectification deed was registered before the SRO which is a valid piece of evidence. AO landed in a wrong confusion without considering the rectification deed. In the rectified deed, the vendor has clearly mentioned that a sum of ₹ 30,75,000/- was paid on 26.12.2013 and ₹ 6,75,000/- was paid on 13.1.2014 and the balance amount was paid on date of registration. The total sum paid by the vendor to the assessee was ₹ 49,47,000/- for sale of land. AO did not examine the vendor and made the addition brushing aside the explanation offered by the assessee. Since, the assessee has admitted the total sale consideration for capital gains and paid the taxes and furnished the evidence with regard to receipt of the amount by confirmation as well as rectification deed, we find no reason to disbelieve the contention of the assessee that a sum of ₹ 30,75,000/- was paid to the assessee on 26.12.2013 and ₹ 6,75,000/- was paid on 01.01.2014. In the instant case, though the assessee has discharged his burden, the AO did not make any enquiry and bring evidence to controvert the submission of the assessee. Therefore, we set aside the orders of the lower authorities and delete the addition made by the AO and allow the appeal of the assessee.

Issues Involved:
1. Condonation of Delay
2. Addition of ?5,00,000
3. Addition of ?30,75,000
4. Addition of ?6,75,000
5. Legal ground regarding Section 68

Condonation of Delay:
This appeal was filed with a delay of 36 days due to the sickness of the authorized representative. The tribunal heard both parties and found no malafide intention behind the delay. Consequently, the delay was condoned, and the appeal was admitted.

Addition of ?5,00,000:
The assessee deposited ?5,00,000 in cash on 13.07.2013. The source was claimed to be agricultural income from a mango garden of 16 acres, owned by the assessee and family members. The assessee provided pattadar passbooks as evidence. The AO did not accept the explanation due to the absence of corroborative evidence and the fact that the amount was not transferred back to the family members. The CIT(A) upheld the AO's decision. However, the tribunal found that the AO did not dispute the ownership of the agricultural land or the potential income from it. The AO also failed to examine the family members. The tribunal concluded that the source of the cash deposit was adequately explained and deleted the addition.

Addition of ?30,75,000 and ?6,75,000:
The assessee deposited ?30,75,000 on 28.12.2013 and ?6,75,000 on 13.01.2014, claimed to be from the sale proceeds of land. The AO found discrepancies in the dates of payment and deposit as per the sale deed and vendor's bank account withdrawals. The AO disbelieved the receipts and added the amounts as unexplained cash credits under Section 68. The CIT(A) confirmed this, viewing the rectification deed provided by the assessee as an afterthought. The tribunal noted that the vendor confirmed the payments and a rectification deed was registered, which is a valid piece of evidence. The tribunal found no reason to disbelieve the assessee's explanation, especially since the AO did not examine the vendor. The tribunal deleted the additions.

Legal Ground Regarding Section 68:
The assessee argued that the AO erred in invoking Section 68 for unexplained cash deposits. Since the tribunal deleted the additions on merits, it did not find it necessary to adjudicate this legal ground.

Conclusion:
The tribunal allowed the appeal, deleting all the additions made by the AO and confirmed by the CIT(A). The decision was pronounced in open court on 26th March 2021.

← Previous Next →