2023 (8) TMI 35 - AT - Income Tax

Agricultural income - Addition made as no documentary evidence was furnished in support of sale of poplar trees - HELD THAT - We are unable to agree to the addition made on account of agricultural income because the assessee had duly filed the invoices pertaining to sale of poplar trees and had also produced the copy of Kisan Bahi before the AO. Therefore, AO without pointing out specific defects in these invoices or pointing out any reason for which these invoices are not to be taken as genuine could not have made the impugned addition. There is no valid reason for simply ignoring these invoices and rejecting the assessee s claim of agricultural income. Admittedly, the assessee did not have substantial agricultural income in earlier assessment years but without any adverse material being brought on record, the claim of the assessee cannot be simply discarded. Accordingly, set aside the order of the NFAC on the issue and direct the Assessing Officer to delete the addition pertaining to agricultural income. Cash deposited out of past savings - Admittedly and undisputedly, assessee s wife is not a tax payer and, therefore, whatever cash is accumulated out of past savings is out of the earnings of the assessee (her husband) only and, therefore, only the husband i.e. the assessee should get the benefit of this instruction. Accordingly, direct the AO to given benefit of cash deposits of Rs. 2.50 lacs out of total cash deposits of Rs. 3.25 lacs on this account. Accordingly, the difference of Rs. 75,000/- is sustained. The assessee is directed to pass the consequential order giving effect to my directions as aforestated. Appeal of the assessee stands partly allowed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Addition of Rs. 8,20,000/- as income from undisclosed sources.
3. Agricultural income from the sale of poplar trees.
4. Cash deposits from past savings.

Condonation of Delay:
The assessee filed the appeal with a delay of 368 days, citing illness and subsequent transfer as reasons. The Tribunal condoned the delay, considering the illness/hospitalization and transfer as reasonable causes beyond the assessee's control.

Addition of Rs. 8,20,000/- as Income from Undisclosed Sources:
The Assessing Officer (AO) added Rs. 8,20,000/- as income from undisclosed sources after disallowing the assessee's explanations regarding the cash deposits during the demonetization period. The NFAC upheld this addition, noting the lack of substantial evidence provided by the assessee.

Agricultural Income from Sale of Poplar Trees:
The assessee claimed Rs. 4,25,000/- as agricultural income from the sale of poplar trees, supported by invoices and Kisan Bahi. The AO and NFAC rejected this claim, stating no evidence was provided. However, the Tribunal found that the invoices were indeed submitted and not considered by the AO. The Tribunal directed the deletion of the addition related to agricultural income, as the AO had no valid reason to ignore the submitted invoices.

Cash Deposits from Past Savings:
The assessee claimed Rs. 3,95,000/- as cash deposits from past savings. The Tribunal referred to Instruction No.3/2017, which allows up to Rs. 2.5 lakhs cash deposits without further verification for individuals without business income. The Tribunal granted the benefit of Rs. 2.5 lakhs to the assessee but did not extend this benefit to the assessee's wife, as she was not a taxpayer. Consequently, Rs. 75,000/- was sustained as income from undisclosed sources.

Final Decision:
The appeal was partly allowed, with the Tribunal directing the deletion of the addition related to agricultural income and sustaining Rs. 75,000/- as income from undisclosed sources.