2021 (4) TMI 1188 - AT - Income Tax

Addition on account of the amount deposited in the saving bank account of the assessee maintained with Punjab National Bank - as per CIT-A substantial deposits both in cash and cheque and the agriculture income had been found to be deposited in the assessee's bank account by means of account payee cheques, in these circumstances, there was an onus on the assessee to explain the sources of deposits in cash which had not been cogently done. He therefore sustained the addition - HELD THAT - As the assessee was an aged person who was an agriculturist at the relevant time and was selling the agriculture produce therefore his source of income was only the agricultural income which has been accepted by the Department. The assessee was not having any other source of income or doing any other business/profession, therefore the explanation given by the assessee for depositing the amount of ₹ 48,56,000/- out of withdrawals of ₹ 68,00,000/- appears to be plausible. In that view of the matter the impugned addition made by the A.O. and sustained by the Ld. CIT(A) is deleted. Appeal of the Assessee is allowed.

Issues Involved:

1. Validity of initiation of proceedings under section 147.
2. Justification of the assessment order computing total income at ?50,45,365 against the returned income of ?1,89,365.
3. Legitimacy of the addition of ?48,56,000 due to bank deposits.

Issue-wise Detailed Analysis:

1. Validity of initiation of proceedings under section 147:

The assessee challenged the initiation of proceedings under section 147 as "bad in law." The Assessing Officer (A.O.) initiated the assessment proceedings based on information that the assessee had deposited ?48,56,000 in his savings bank account. The A.O. recorded reasons under section 147 of the Income Tax Act, 1961, and issued notice under section 148, believing there was a prima facie case of income escaping assessment. The Ld. CIT(A) upheld the initiation, noting that the A.O. followed due procedure based on substantial cash deposits in the assessee's bank account.

2. Justification of the assessment order computing total income at ?50,45,365 against the returned income of ?1,89,365:

The A.O. computed the total income at ?50,45,365, significantly higher than the returned income of ?1,89,365. The primary contention was the unexplained cash deposit of ?48,56,000 in the assessee's bank account. The A.O. observed that the assessee failed to provide satisfactory information regarding the source of these deposits, leading to the assessment under section 144 of the Act. The Ld. CIT(A) supported this computation, emphasizing the unexplained nature of the cash deposits and the lack of a cogent explanation from the assessee.

3. Legitimacy of the addition of ?48,56,000 due to bank deposits:

The main grievance of the assessee was the addition of ?48,56,000 made by the A.O. due to deposits in the savings bank account. The A.O. noted that the assessee claimed the deposits were from agricultural income earned in earlier years, but failed to provide satisfactory evidence. The A.O. highlighted discrepancies, such as the assessee receiving payments through account payee cheques, contradicting the claim of cash deposits from agricultural sales. The Ld. CIT(A) sustained the addition, noting the unexplained nature of the cash deposits and the lack of a plausible explanation for retaining large cash amounts for extended periods.

Upon appeal, the Tribunal considered the assessee's explanation that the deposits were from previous withdrawals of ?68,00,000 (?30,00,000 on 25/10/2010 and ?38,00,000 on 26/10/2010). The Tribunal found the explanation plausible, given the assessee's status as a senior citizen with no other income source than agriculture. The Tribunal noted that the Department did not provide evidence that the withdrawn amount was used elsewhere. Consequently, the Tribunal deleted the addition of ?48,56,000, finding the explanation reasonable in the context of the assessee's circumstances.

Conclusion:

The Tribunal allowed the appeal, deleting the addition of ?48,56,000 and accepting the assessee's explanation regarding the source of the deposits. The decision emphasized the assessee's status as an agriculturist with no other income sources and the lack of contrary evidence from the Department. The appeal was pronounced in the open Court on 12/04/2021.

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