2022 (5) TMI 899 - AT - Income Tax

Unexplained cash deposits in the Bank account - gain from sale of agricultural land - Assessee giving evidences that the cash deposits are out of sale consideration of agricultural land of assessee s mother - what should be the sale consideration? - HELD THAT - The source of money cannot be out of assessee s meagre source of income i.e. agricultural income out of agricultural activity carried out electrical repairs or plumbing works. Admittedly the sale agreement although not registered and assessee one of the party to agreement to sell the total sale consideration fixed at Rs.2, 80, 75, 800/- which is dated 14.08.2014. The sale deed of this agricultural land was executed on 22.09.2014 and as per sale deed the assessee s mother along with her other son and two daughters executed the sale deed in favour of SRM Institute of Science and Technology Trichy Campus through Dr.R. Sivakumar. But sale consideration as per cheque received by the vendors was Rs.60, 75, 800/- on that very date i.e. 22.09.2014. The assessee deposited this amount of Rs.2.20 crores in his bank account maintained with Punjab National Bank and the inference in which the normal man will draw is that the amount cannot be from any other source except from the transaction of sale of land because it is common in the transactions of immovable properties that there is under hand transactions. The presumption goes in favour of assessee that the cash deposit in bank account of assessee maintained with PNB on 22.09.2014 amounting to Rs.2.20 crores is coming from the sale transaction of agricultural land by the mother and the legal heirs of the mother including the assessee. The assessee produced a definite evidence i.e. sale agreement which is entered into for an amount of Rs.2, 85, 00, 000/- on 14.08.2014 for sale of this agricultural land. The assessee has fairly established the fact that the cash deposits are out of sale consideration as recorded in the agreement of sale. In view of the above given facts and circumstances of the case we are of the view that the cash deposit made by assessee amounting to Rs.2.20 crores are arising out of sale of agricultural land by the assessee s mother including assessee and hence this cannot be treated as unexplained cash deposit. This issue we concluded. Whether the land sold by assessee s mother is agricultural land or not? - The Revenue has raised no objection on the same rather accepted that the land sold is agricultural land and once it establishes that the land sold is agricultural land no dispute remains. The amount deposited by assessee in PNB account is out of sale of agricultural land and source is established. Hence the same cannot be assessed in the hands of the assessee as unexplained cash deposit. We reverse the orders of lower authorities and delete the addition. Appeal of assessee allowed.

Summary

Issues Involved:
1. Legitimacy of the sale consideration of the agricultural land.
2. Source of the cash deposit of Rs.2.20 crores in the Assessee's bank account.
3. Nature of the land sold (agricultural or otherwise).

Detailed Analysis:

1. Legitimacy of the Sale Consideration:
The primary issue was whether the sale consideration of the agricultural land was Rs.2.80 crores as per the sale agreement dated 14.08.2014 or Rs.60.75 lakhs as per the sale deed dated 22.09.2014. The Assessee's mother, Smt. V. Dhanalakshmi Ammal, claimed that the land was sold for Rs.2.85 crores, with Rs.2.24 crores received in cash and Rs.60.75 lakhs by cheque. The Assessing Officer (AO) examined Dr. R. Sivakumar, Chairman of SRM Institute of Science and Technology, who denied any cash payment beyond the cheque amount of Rs.60.75 lakhs. The CIT(A) upheld the AO's decision, dismissing the sale agreement as it was not registered and not giving it significant weightage.

2. Source of the Cash Deposit:
The Assessee deposited Rs.2.20 crores in his Punjab National Bank account on 22.09.2014, claiming it was from the sale proceeds of the agricultural land. The AO added this amount as unexplained cash deposits, doubting the Assessee's explanation. The Tribunal noted that the Assessee's mother and other family members were engaged in agricultural activities and had no other significant sources of income. The Tribunal found circumstantial evidence supporting the Assessee's claim, including the sale agreement and the fact that the Assessee could not have generated such a large sum from his petty jobs. The Tribunal concluded that the cash deposit was indeed from the sale of the agricultural land, relying on the principles laid down by the Supreme Court in the cases of Sumathi Dayal and Durga Prasad More.

3. Nature of the Land Sold:
The Tribunal addressed whether the land sold was agricultural land. The Revenue did not dispute this point and accepted that the land was agricultural. The Tribunal noted that the land was used for agricultural purposes and was inherited by the Assessee's mother. Given this, the Tribunal concluded that the land sold was agricultural, and the proceeds from its sale could not be treated as unexplained income.

Conclusion:
The Tribunal found that the cash deposit of Rs.2.20 crores in the Assessee's bank account was from the sale of agricultural land and not unexplained income. The Tribunal reversed the orders of the lower authorities and deleted the addition of Rs.2.20 crores as unexplained cash deposits. The appeal of the Assessee was allowed.

Order Pronouncement:
The order was pronounced in the court on 18th May 2022 at Chennai.