2021 (9) TMI 990 - AT - Income Tax

Addition u/s 69 - unexplained money invested in purchasing demand draft from Punjab National Bank - Addition u/s 69A as unexplained cash deposit in bank account - HELD THAT - We observe that the assessee referred in this decision is also from the same area near Bhopal and against the estimation of agricultural income of ₹ 15,000/- per acre, this Tribunal estimated it at ₹ 22,000/- per acres. Taking basis from this decision even if we take a conservative figure of ₹ 15,000/- per acres then also the estimated income for 23 acres agricultural and for last 10 years comes to ₹ 34,50,000/- and after reducing 50% for household and other expenses there would still remain a saving of ₹ 17,25,000/-. Even this figure of ₹ 17,25,000/- could be sufficient to explain the source of alleged addition of ₹ 12,50,484/-. Under the given facts and circumstances of the case and the assessee being an owner of 23 Acres of agricultural land being consistently used for agricultural operations, are of the considered view that the accumulated income of past years as discussed above would be sufficient to explain the source of DD purchased in law of ₹ 2,25,000/- and also sufficient to explain the source of alleged cash deposit of ₹ 10,50,484/-. We accordingly set aside the finding of Ld. CIT(A), and delete the impugned addition - Ground no.2 3 of the assessee appeal are allowed.

Summary

Issues:
1. Delay in filing appeal due to illness condonation.
2. Addition of unexplained money invested in purchasing demand draft.
3. Addition of unexplained cash deposit in the bank account.

Analysis:
1. The appellant sought condonation for a three-day delay in filing the appeal due to illness. The Tribunal, considering the circumstances, condoned the delay and admitted the appeal for adjudication on merits.

2. The Assessing Officer made additions to the income of the assessee under section 69 for unexplained money invested in purchasing a demand draft. The appellant contended that the AO did not consider the explanation offered regarding the source of the money. The Tribunal, after considering the submissions and evidence, found that the agricultural income earned by the assessee over the years was sufficient to explain the source of the money invested in purchasing the demand draft. Therefore, the Tribunal set aside the addition of unexplained money invested in purchasing the demand draft.

3. The AO also made an addition for unexplained cash deposit in the bank account. The appellant argued that the agricultural income earned over the years was substantial and could account for the cash deposit. Relying on a previous Tribunal decision, the Tribunal estimated the agricultural income conservatively and found that it was adequate to explain the unexplained cash deposit. Consequently, the Tribunal deleted the addition of the unexplained cash deposit in the bank account.

In conclusion, the Tribunal partly allowed the assessee's appeal, setting aside the additions made by the lower authorities. The Tribunal found that the accumulated income from the agricultural operations of the assessee over the years was sufficient to explain the sources of both the unexplained money invested in purchasing the demand draft and the unexplained cash deposit in the bank account.