2024 (5) TMI 289 - AT - Income Tax

Cash deposit in bank account treated as unexplained income - Agricultural income or not? - appellant is an agriculturist and there is nothing on record to show that assessee had earned income from any other source except from agricultural activities - whether the quantum of agricultural income claimed by the assessee is justifiable? - HELD THAT - It is a fact that there are 6 other members in the family of assessee. Therefore, it cannot be said that the assessee was the owner of all the agricultural land of 38 binghas and the entire agricultural income belonged to him. Assessee stated that uncles and cousins of the assessee are staying in USA and only the assessee and his father carried out agricultural activities. Even if uncles and cousins are staying in USA, then also it cannot be accepted that the entire agricultural income was earned only by the assessee and he retained the same. No confirmation or affidavit of his uncles and cousins staying in USA has been given to support the claim of appellant that agricultural income legally earned by them was given up in favour of the appellant. The assessee has also not furnished any details of the ITR and other supporting evidences to show that the income of his father was diverted to him. He has not even given the affidavit or confirmation of his father in support of such claim. Therefore, the explanation of the assessee that the entire agricultural income belongs to him and to none others is not acceptable. Be that as it may, the fact that assessee is an agriculturist and that he was not having any other source of income cannot be denied in the face of various details and evidences given by him. It has accepted the contention of the assessee that he had deposited cash in the bank account out of agricultural income and out of earlier cash withdrawals from the bank (i.e., unused cash out of the cash withdrawn from bank of assessee). The ratio of above decision is applicable to the present case. We have already held that explanation regarding agricultural income of Rs. 2,24,000/- out of claim of Rs. 9,24,000/- is not acceptable. Therefore, addition to the extent of Rs. 2,24,00/- is sustained and remaining amount of Rs. 14,85,000/- is deleted. Accordingly, this ground is partly allowed.

Summary

Issues Involved:
1. Reopening of assessment u/s 147 and issuing notice u/s 148.
2. Addition of Rs. 17,09,000/- as unexplained income.
3. Validity of show cause notice for the addition.
4. Initiation of penalty proceedings u/s 271(1)(c) r.w.s. 274.
5. Deletion of the above addition.

Summary:

Reopening of Assessment u/s 147 and Issuing Notice u/s 148:
At the outset, the assessee did not press ground No. 1, leading to its dismissal as "not pressed."�

Addition of Rs. 17,09,000/- as Unexplained Income:
The assessee failed to file a return for AY 2012-13 but made significant cash deposits totaling Rs. 17,09,000/-. The Assessing Officer (AO) issued notices u/s 133(6) and subsequently u/s 148, leading to the reopening of the case. The assessee claimed the cash deposits were from agricultural income but failed to provide satisfactory evidence. Consequently, the AO added the amount as unexplained income.

Validity of Show Cause Notice for the Addition:
The assessee argued that the deposits were from cash withdrawals and agricultural income. However, the AO and the Commissioner of Income Tax (Appeals) [CIT(A)] found the evidence insufficient. The CIT(A) confirmed the AO's addition, citing the lack of direct or indirect evidence to support the opening cash balance and agricultural income claims.

Initiation of Penalty Proceedings u/s 271(1)(c) r.w.s. 274:
The CIT(A) dismissed the grounds regarding the initiation of penalty proceedings as premature. The Tribunal found no reason to interfere with this decision.

Deletion of the Above Addition:
The Tribunal acknowledged the assessee's status as an agriculturist with no other income sources. However, it did not accept the entire agricultural income claim due to the involvement of other family members. The Tribunal allowed Rs. 7,00,000/- as the assessee's share of agricultural income, rejecting Rs. 2,24,000/-. The remaining cash deposits were accepted as explained by earlier withdrawals. Consequently, Rs. 14,85,000/- of the addition was deleted, and Rs. 2,24,000/- was sustained.

Conclusion:
The appeal was partly allowed, with a significant portion of the addition being deleted based on the acceptance of agricultural income and cash withdrawal explanations. The penalty proceedings were deemed premature and dismissed. The order was pronounced on 02/05/2024.