2022 (1) TMI 635 - AT - Income Tax

Addition u/s 69A - Unexplained cash deposit in his bank account as well as agriculture income earned during the year - HELD THAT - Assessee has adequate land holding to prove the cash deposit in the bank account. The Ld. Counsel submits before us the land records and the land holding papers - We note that considering the land holding and the fact that some cash was deposited out of past savings, the addition should not be made especially when assessee does not have other income except agricultural income. We note that assessee is doing agricultural activities and her income is only from agricultural activities. If a person has only agricultural income and no other income, then no addition can be made to the total income, unless and until the assessing officer proves that the assessee has any other source of income which is taxable under the Income-tax Act. AO has not brought on record any material or evidence to show that assessee was having any other source of income except agricultural income, which is not taxable. That is why, the assessee has chosen not to file the income tax return, as the agricultural income is exempt from tax. We note that assessee (senior citizen) does not have any other income except from agricultural activities, hence taking into account the principal of natural justice, the addition should not be made, as the assessing officer did not prove other income of the assessee, except agricultural income. That is, assessing officer has failed to point out any other income of assessee - See famous golden words in WISEMAN AND ANOTHER VERSUS BORNEMAN AND OTHERS. 1969 (7) TMI 120 - THE HOUSE OF LORDS as held principles and procedures are to be applied which, in any particular situation or set of circumstances, are right and just and fair. Natural justice, it has been said, is only fair play in action . Nor do we wait for directions from Parliament. - Decided in favour of assessee.

Summary

Issues:
1. Reopening of assessment for AY 2010-11 based on cash deposits in bank account.
2. Addition of unexplained cash credit under section 69A of the Income Tax Act.
3. Addition of alleged bogus agriculture income.

Issue 1: Reopening of Assessment
The appeal challenged the reopening of assessment for AY 2010-11 due to cash deposits in the bank account. The Assessing Officer (AO) reopened the case under section 147, citing cash deposits of ?10,25,000 in the savings account. The appellant contended that being a widow with only agricultural income, the AO's reasons for reopening were unjustified, especially as the AO did not provide reasons within the required timeframe of four years. The appellant argued that the AO's actions were erroneous and lacked legal basis.

Issue 2: Addition of Unexplained Cash Credit
The AO added ?10,25,000 as unexplained cash credit under section 69A of the Act, attributing it to cash deposits made by the appellant during FY 2009-10. The Commissioner of Income Tax (Appeals) upheld this addition. The appellant disputed this addition, claiming the cash deposits were from past savings related to agricultural activities. The appellant argued that the addition was unwarranted given her status as a senior citizen with no other income sources apart from agriculture.

Issue 3: Addition of Alleged Bogus Agriculture Income
Additionally, the AO added ?2,00,000 as bogus agriculture income, which the CIT(A) also affirmed. The appellant contended that this income was genuine agricultural earnings and not unexplained income. The appellant highlighted her submission of land records and past savings to support the agricultural income claim. The appellant emphasized that her agricultural income was exempt from taxation, and the AO failed to establish any taxable income beyond agricultural earnings.

In the detailed analysis, the Tribunal noted the appellant's status as a senior citizen with sole income from agriculture. The appellant provided land records and explanations for cash deposits, asserting they were from previous savings and agricultural activities. The Tribunal emphasized the lack of evidence from the AO to prove additional taxable income beyond agriculture. Citing principles of natural justice, the Tribunal ruled in favor of the appellant, deleting the contested additions. The Tribunal's decision highlighted the importance of fair play in judicial proceedings and the need for just and fair application of legal principles. Ultimately, the appeal was allowed, and the additions made by the AO were overturned.