2023 (3) TMI 356 - AT - Income Tax

Unexplained cash deposits - Addition u/s 68 - HELD THAT - The asseessee is an agriculturist. The assessee owns more than 20 acres of land individually and jointly with his family at village Bhangala. The copy of Jamabandi mentioning the khasara number and shareholding details. The summary of Landholding details is enclosed separately - That the appellant has filed the returns for subsequent years in which agriculture income has been declared and accepted by the department. The copy of return for A.Y. 2012-13 - The nature of income of the assessee is properly depicted which is from agriculture. The evidence was submitted before the ld. CIT(A) by the assessee by a letter dated 13/02/2021. Jamabandi/Girdawari represents the nature of income of assessee as agriculturist. Assessee properly raised the ground related addition U/s 68 of the Act without maintaining the books of accounts. The assessee confirmed that as an agriculturist is not maintain books of accounts for the impugned year. We fully relied on the order of Smt. Ramilaben B. Patel 2018 (12) TMI 1064 - ITAT AHMEDABAD Mere possession of pass book cannot be treated as books of accounts. We respectfully relied on the order of CIT vs Bhaichand H. Gandhi, 1982 (2) TMI 28 - BOMBAY HIGH COURT - The application of Section 68 is uncalled for the assessee. In our considered view the cash deposited by assessee is income from agriculture which is not come under purview of the taxable income. The opening balance of cash was also not considered during determination of peak by the ld. AO. We set aside the order of revenue authorities. So, the entire addition is quashed.

Issues Involved:
1. Delay in filing the appeal.
2. Reopening of the assessment under Section 148.
3. Addition of Rs. 737,948 under Section 68 for cash deposits in the bank.
4. Benefit of opening cash in hand and agricultural income.
5. Proof of agricultural income and land ownership.
6. Applicability of Section 68 to bank passbooks.

Detailed Analysis:

1. Delay in Filing the Appeal:
The appeal was filed with a delay of 441 days. The assessee provided a medical certificate from a hospital to justify the delay. The Senior Departmental Representative (DR) did not contest this submission. Considering the medical exigency, the delay was condoned.

2. Reopening of the Assessment Under Section 148:
The assessee's case was reopened under Section 148 based on AIR information about cash deposits of Rs. 10,46,000 in the ICICI Bank account. The assessment was completed under Section 147 read with Section 144, resulting in an addition of Rs. 737,948 based on peak cash deposits.

3. Addition of Rs. 737,948 Under Section 68 for Cash Deposits in the Bank:
The assessee argued that the cash deposits were from agricultural income, cash withdrawals, and opening cash in hand. The assessee provided details of land holdings and agricultural operations. The assessee contended that bank passbooks or statements are not books of accounts, and thus, Section 68 should not apply. The tribunal relied on several case laws, including Smt. Ramilaben B. Patel v. ITO and CIT vs. Bhaichand H. Gandhi, to support the argument that bank passbooks are not considered books of accounts under Section 68.

4. Benefit of Opening Cash in Hand and Agricultural Income:
The assessee argued that the peak cash deposit calculated by the AO did not consider the opening cash in hand and agricultural income. The tribunal noted that the AO did not provide tangible reasons for not allowing the benefit of cash withdrawals and agricultural income. The tribunal referred to case laws such as Shivcharan Dass vs. CIT and LATE SH. PARVEEN KOCHHAR, LEGAL HEIR KAMINI CHOUDHARY VERSUS ITO to support the argument that the benefit of cash withdrawals should be given.

5. Proof of Agricultural Income and Land Ownership:
The assessee provided evidence of owning more than 20 acres of land and submitted copies of 'Jamabandi' and 'Girdawari' to substantiate agricultural operations. The tribunal found that the assessee had consistently declared agricultural income in subsequent years, which was accepted by the department. The tribunal concluded that the assessee's agricultural income was not taxable and should not be added under Section 68.

6. Applicability of Section 68 to Bank Passbooks:
The tribunal emphasized that Section 68 applies to credits in books of accounts maintained by the assessee, not to bank passbooks. Several case laws were cited to support this interpretation, including Smt. Manasi Mahendra Pitkar v. ITO and Roopak Jain v. ITO.

Conclusion:
The tribunal set aside the orders of the revenue authorities and quashed the addition of Rs. 737,948. Grounds No. 1 and 2 were not pressed, Grounds No. 3, 5, 6, and 7 were allowed, Ground No. 4 was considered for academic purposes, and Ground No. 8 was general in nature. The appeal was allowed.

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