2021 (6) TMI 849 - AT - Income Tax

Unexplained cash deposited in the bank account - source of receipt from sale of agriculture produce or not - sale of agriculture produce to non-existing firm - HELD THAT - Assessee has failed to prove the source of the cash deposits and explanation offered towards cash deposit does not pass the test of human probabilities and surrounding circumstances. On weighing the rival contentions, we find considerable merits in the plea raised on behalf of the assessee. It is noticed that assessee is having sufficient land alongwith other family members to support the case of cultivation of potato sold. CIT(A) has accepted the fact of production of potato and has taken the receipt of cash from one of the parties (Noor Traders) as explained. The CIT(A) has rejected the source of cash from other party (Dariyalal Aloo Bhandar) primarily on the ground of lack of confirmation. The assessee has supported the closure of the business of Dariyalal Aloo Bhandar by way of affidavit from the surrounding farmers who were having the personal knowledge of the fact of the closure of the shop since 2016. The agricultural land of 46 Bigha appears sufficient to support the production of potato as claimed - the benefit of doubt, in our mind, must go to the assessee who happens to be a farmer and from whom the due diligence of highest level for storage of evidence is not necessarily expected - existing in the case to enable us to agree with the contention raised on behalf of the assessee. We thus set aside the order of the CIT(A) and direct the AO to delete the addition in question - Decided in favour of assessee.

Summary

Issues:
Addition of unexplained cash deposited in the bank account.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax(Appeals) concerning the addition of a specific amount in the bank account as unexplained cash deposits. The controversy revolved around the addition of this amount in the assessment order. The assessee, a farmer, sold agricultural produce to two purchasers, and the dispute arose regarding the cash deposits related to one of the purchasers, Dariyalal Aloo Bhandar.

During the assessment, the Assessing Officer added the cash deposit amount as unexplained income. The CIT(A) remanded the matter for verification, and while one party's transactions were accepted as explained, the other party, Dariyalal Aloo Bhandar, did not confirm the transactions. The CIT(A) observed that the individual share of land was insufficient to produce the quantity of potatoes sold to Dariyalal Aloo Bhandar.

The assessee contended that the sales were made in a specific period due to the perishability of the product, and all decisions were made by the assessee despite the land being in the name of family members. The closure of Dariyalal Aloo Bhandar was supported by affidavits and witness statements. The Revenue argued that the explanation offered did not pass the test of human probabilities.

After considering the arguments, the Tribunal found merit in the assessee's plea. The Tribunal noted the sufficient land available for cultivation and the supporting evidence provided. Given the circumstances and the lack of confirmation from Dariyalal Aloo Bhandar, the benefit of doubt was given to the assessee. Consequently, the Tribunal directed the deletion of the addition in question.

In conclusion, the Tribunal allowed the appeal, setting aside the CIT(A)'s order and directing the Assessing Officer to delete the addition of the disputed amount.