2021 (9) TMI 835 - AT - Income Tax

Unexplained cash credit - addition to 50% of the cash deposits in bank account - CIT(A) deleted the addition to the extent of amount received through cheques and transfers - HELD THAT - CIT(A) has not rebutted the contention of the assessee that estimated income of ₹ 25,000/- per acre rate was the rate of lease of land for agriculture purposes in the year under consideration. CIT(A) has observed that the department has not been able to establish the possible source of cash generated. We further notice that the estimation of income @ 25,000/- per acre by the CIT(A) is not based on evidence on record or report of the authority concerned. CIT(A) not pointed out any reason for rejecting the contents of the affidavit of the father of the assessee submitted by the assessee in support of his claim. CIT(A) has not pointed out any clinching evidence on record to justify his action. In our considered view, the addition of 50% of the cash deposited based on assumption and presumption is not sustainable in law. We accordingly set aside the impugned order passed by the Ld. CIT(A) and direct the AO to deleted the addition sustained by the Ld. CIT(A). - Decided in favour of assessee.

Summary

Issues:
Challenge to assessment order under section 144 r.w.s 147 of the Income Tax Act, 1961 for assessment year 2010-11.

Analysis:
The appeal was filed against the order passed by the Ld. Commissioner of Income Tax (Appeals) for the assessment year 2010-11. The AO initiated proceedings under section 147 of the Act based on information that the assessee had deposited a certain amount in his bank account. The AO passed the assessment order under section 144 r.w.s 147 of the Act, determining the total income of the assessee. The assessee challenged this order before the Ld. CIT(A), who partly allowed the appeal and made certain deletions and reductions in the additions made by the AO. The assessee further appealed to the Tribunal, disputing the sustained addition of 50% of the cash deposits in the bank account.

The main contention of the assessee was that the Ld. CIT(A) wrongly sustained the addition of 50% of the cash deposits in the bank account. The Ld. CIT(A) had estimated the agricultural income of the father of the assessee at a certain rate per acre, which the assessee argued was an underestimation. The Ld. CIT(A) had not provided sufficient justification for this estimation and had not considered the evidence presented by the assessee, including an affidavit from the father in support of the claim. The Tribunal found that the estimation of income per acre was not based on concrete evidence and that the addition based on assumptions and presumptions was not legally sustainable.

The Tribunal noted that the father of the assessee owned 16 acres of cultivable land, and the department did not dispute that the cash received by the assessee was a gift from his father. The Ld. CIT(A) had deleted the addition related to cheques and transfers but sustained the addition of 50% of the cash deposits. The Tribunal found that the Ld. CIT(A) had not adequately justified this decision and had not provided reasons for rejecting the evidence presented by the assessee. Therefore, the Tribunal set aside the order of the Ld. CIT(A) and directed the AO to delete the addition sustained by the Ld. CIT(A).

In conclusion, the appeal filed by the assessee was allowed, and the addition sustained by the Ld. CIT(A) was directed to be deleted.