2023 (6) TMI 1129 - AT - Income Tax

Cash deposits during the demonetization period - CIT-A confirmed part addition - Sale of car - HELD THAT - It is not in dispute that the assessee owns a car which was sold during the year on 05.06.2016. This sale has happened 5 months prior to the announcement of the demonetization by the Government. The assessee sold his car and that sum is available as a cash source for the assessee explaining the cash deposit. Sale of Poplar Trees - whether the assessee had sold Poplar trees or not? - Assessee claimed that he had sold 727 Poplar trees to Sh. Prakash for Rs. 6 lakhs for which photocopy of the receipt was filed before AO. Assessee had indeed sold poplar trees. Merely because the assessee is not able to produce Sh. Prakash (buyer of the Popular trees), transaction carried out by the assessee cannot be disputed or suspected. It is a fact that the assessee has declared 9,50,000/- as agricultural income in the return of income and these are also reflected in the affidavit furnished by him before the CIT(A). Hence, the cash source disclosed by the assessee for the sum of Rs. 6 lakhs towards sale of poplar trees is to be accepted as the source available for explaining the cash deposit. Sale proceeds of Crop sold in October 2016 - As on a conservative basis, even if this sum of Rs. 2 lakhs is taken together with the aforesaid two receipts of on sale of car and sale of Poplar trees, this would explain the entire cash deposits made by the assessee, which is the subject matter of dispute. Old Personal Savings - The assessee claimed old personal savings of Rs. 1,17,500/- as a cash source available for explaining the cash deposit, which was accepted by learned CIT(A) to the extent of Rs. 1 lakh. Even, this is taken together with the aforesaid three receipts it would explain the entire cash deposits by the assessee during the demonetization period. Hence, on merits, the entire cash deposits stands proved with proper source. Thus preponderance of probability theory would go in favour of the assessee in the instant case. The predominant income available with the assessee is only the agricultural income. No other source of income is brought on record by AO and it is not in dispute that the assessee is not engaged in any business or profession. The source of income in any manner whatsoever could only emanate from agricultural income. We direct the learned Assessing Officer to delete the addition made in respect of cash deposits made during the demonetization period in demonetized currency - Decided in favour of assessee.

Summary

Issues involved:
The only effective issue in this appeal is whether the Commissioner of Income Tax was justified in partially confirming the addition made on account of cash deposits during the demonetization period.

Details of Judgment:

Cash Deposits during Demonetization Period:
The appellant, an agriculturist, deposited Rs. 13,17,500 in cash in a bank account during demonetization. The Assessing Officer treated this deposit as unexplained money under section 69A of the Act. The Commissioner partially confirmed the addition but restricted it to Rs. 7,67,000 after considering various sources provided by the appellant.

Sale of Car:
The appellant sold a car for Rs. 6,50,000 five months before demonetization, providing a cash source to explain the deposit.

Sale of Poplar Trees:
The appellant claimed to have sold 727 Poplar trees for Rs. 6 lakhs. Despite not being able to produce the buyer, the appellant provided evidence such as a receipt, affidavit, and correspondence with the Tahsildar, proving the sale. The cash source from this sale was accepted.

Sale proceeds of Crop:
The appellant received Rs. 3.5 lakhs from selling agricultural crops in October 2016, which, along with other sources, explained the cash deposits.

Old Personal Savings:
The appellant claimed old personal savings of Rs. 1,17,500, which was partially accepted by the Commissioner. When combined with other receipts, this explained the entire cash deposits during demonetization.

Conclusion:
The Tribunal directed the Assessing Officer to delete the addition made on cash deposits during demonetization, as the appellant provided sufficient evidence to explain the sources of income. The appeal of the appellant was allowed.

Separate Judgement:
No separate judgment was delivered by the judges in this case.