2022 (11) TMI 609 - AT - Income Tax

Cash deposits as income u/s 69A and charging special rate of tax - addition of cash deposit as income from other sources u/s.69A and charging under special rate of tax u/s.115BBE - HELD THAT - Village Administrative Officer is not an authority to certify the agricultural income and assessee is unable to correlate these entries with that of the deposits of cash during demonetization period. But undeniable fact is also that the assessee is holding agricultural lands including her husband i.e. 15 acres and for that, we have to give some credit and assessee might have earned agricultural income although he has no definite evidence. It is also a fact that assessee is a pure agriculturist residing in a village and selling agricultural produce in cash to petty traders who are coming to villages to procure the products of coconut. In such circumstances, we have to estimate some agricultural income. If we give credit, the assessee might have earned some Rs.30,000/- per acre. The assessee s income during the year will be around Rs.4.5 lakhs. Giving further credit, the assessee might have accumulated some cash in earlier year also after allowing deduction of personal expenses, the assessee might have saved some cash. Hence, we estimate the availability of cash with the assessee at Rs.5 lakhs and direct the AO to delete this addition to the extent of Rs.5 lakhs and sustain the addition of Rs.2.70 lakhs, which assessee has to pay tax as per the provisions of section 115BBE - Appeal filed by the assessee is partly allowed.

Summary

Issues:
1. Jurisdiction regarding notice u/s 143(2)
2. Addition of cash deposit as income from other sources

Jurisdiction regarding notice u/s 143(2):
The appeal raised concerns about the assessment u/s 144 without issuing notice u/s 143(2) despite the return of income being filed. The appellant did not press these grounds, leading to their dismissal.

Addition of cash deposit as income from other sources:
The dispute revolved around the AO's addition of a cash deposit of Rs.7.70 lakhs as income from other sources u/s.69A and taxing it under special rate of tax u/s.115BBE. The appellant, an agriculturist, presented evidence of land holdings and income certificates to establish agricultural income. The CIT(A) rejected the explanation, citing lack of commercial activity and absence of maintained books of accounts. However, upon review, the ITAT acknowledged the appellant's agricultural activities, estimating an income of Rs.4.5 lakhs per annum. Recognizing the cash accumulation possibility, the ITAT directed the deletion of Rs.5 lakhs from the addition, sustaining Rs.2.70 lakhs for taxation under section 115BBE.

Charging of interest u/s.234A & 234B:
The issue of charging interest u/s.234A & 234B was deemed consequential, with the AO instructed to recompute the interest accordingly.

In conclusion, the ITAT Chennai partially allowed the appeal, directing the deletion of a portion of the cash deposit addition while sustaining the rest for taxation. The interest calculation under sections 234A & 234B was also to be revised by the AO.