2015 (9) TMI 660 - AT - Income Tax

Addition u/s 69 - unaccounted investment - Held that - The authorities below have not disputed the fact that Shri Adisal was owning 8 acres of land jointly with other co-owners. However, the CIT(A) discarded and rejected the explanation of the assessee, affirming the conclusion of the AO that there has been no evidence given by the assessee to substantiate that he had received proceeds from agricultural produce. When we observe the copies of the revenue patwari record column 5, we note that in the details of agriculturists it has been mentioned Khud Kast meaning thereby the owner of the land himself is doing agricultural activities on the said land, therefore, we may safely infer that the father of the assessee was actively doing agricultural activity on the 8 acre of land which was owned by him jointly with other co-owners prior to the relevant financial year 2007-08. In this situation, we are unable to agree with the conclusion of the authorities below that there has been no evidence given by the assessee to substantiate that he (Shri Adisal) received proceeds from agriculture produce which was further given to the assessee towards purchase of steel for construction of assessee s house. In this situation, primary onus lies on the assessee as per requirement of section 69 of the Act and has been discharged by the assessee. In this situation, the onus was shifted on the AO to show that the explanation submitted by the assessee was not sustainable and the father of the assessee Shri Adisal had not earned any agricultural income from agricultural land owned by him. Finally, we reach to a conclusion that the assessee properly explained source of investment of ₹ 2,80,000 which was incurred by him towards purchase of steel towards construction of his house, therefore, no addition u/s 69 of the Act is called for. See CIT vs Lal Transport Corporation (2008 (7) TMI 957 - HIGH COURT OF PUNJAB & HARYANA). - Decided in favour of assessee.

Summary

Issues Involved:
1. Maintainability of the Revenue's appeal based on the monetary limit.
2. Addition of Rs. 2,80,000 as income from undisclosed sources under Section 69 of the Income Tax Act.
3. Rejection of the affidavit of the assessee's father without examination.

Detailed Analysis:

1. Maintainability of the Revenue's Appeal:
The Revenue's appeal was dismissed in limine due to the aggregate tax effect being Rs. 3,36,000, which is below the prescribed limit of Rs. 4 lakh. The assessee's counsel cited the decision in CIT vs M/s P. S. Jain and Co., and the Board Instruction No. 5/2014 issued by CBDT on 10.7.2014, which were applicable to the case. The Tribunal agreed, holding that there was no justification to proceed with cases having a tax effect of less than Rs. 4 lakh, following the precedent set by the Hon'ble Jurisdictional High Court of Delhi.

2. Addition of Rs. 2,80,000 as Income from Undisclosed Sources:
The assessee contested the CIT(A)'s decision to treat Rs. 2,80,000 deposited in his bank account as income from undisclosed sources under Section 69. The assessee claimed the amount was deposited by his father for purchasing steel for house construction, supported by an affidavit and revenue records showing his father owned agricultural land. The AO and CIT(A) rejected this explanation, citing a lack of evidence proving the agricultural income. However, the Tribunal noted that the authorities did not dispute the ownership of the land and inferred that the father was actively engaged in agriculture. The Tribunal concluded that the assessee had discharged his primary burden of proof under Section 69, and the onus shifted to the AO to disprove the explanation, which was not done. Thus, the addition of Rs. 2,80,000 was not justified and was directed to be deleted.

3. Rejection of the Affidavit of the Assessee's Father:
The CIT(A) rejected the affidavit of the assessee's father without examining him, which was contested by the assessee. The Tribunal found that the affidavit, along with the revenue records, was sufficient to establish the source of the Rs. 2,80,000 as agricultural income. The Tribunal emphasized that the authorities failed to provide contrary evidence to disprove the affidavit and the revenue records. Consequently, the rejection of the affidavit without examination was deemed unjustified.

Conclusion:
The Tribunal dismissed the Revenue's appeal due to the low tax effect and allowed the assessee's appeal, directing the deletion of the Rs. 2,80,000 addition under Section 69. The Tribunal found that the assessee had adequately explained the source of the deposit, and the authorities failed to disprove the explanation. The order was pronounced in the open court on 28.8.2015.