2022 (6) TMI 241 - AT - Income Tax

Computation of the turnover by AO as the total deposits in the bank accounts as against the turnover declared by the assessee - transaction relating to personal agricultural proceeds of Tomato and Onion not concerned to trading transactions - confirmation of trading transactions instead of declared trading receipt - THAT - Assessee has not produced any documentary evidence to show that certain deposits relate to the agriculture sale proceeds of neighbouring agriculturist and therefore, in the absence of any confirmation or documentary evidence, it is against the preponderance of probability that the sale proceeds of the agriculturists would be deposited in the bank account of the assessee The sale proceeds of the family members of the assessee is also unlikely to be deposited in the bank account of the assessee. Thus the assessee s own sale proceeds of Tomato and Onion as well as the withdrawal of cash which can be utilized for the subsequent deposits in the bank account, the interest on the saving bank account and LIC receipts as claimed by the assessee cannot be treated as part of the turnover of the assessee. The assessee though produce land holding record as well as the affidavit in support of the claim however, neither the Assessing Officer nor the CIT(A) has taken any step to verify these facts or to determine the quantity of the Tomato and Onion production in the land holding of the assessee and sale proceeds of the same. Hence, taking the entire deposits in the bank account without considering the sale proceeds of the assessee s own agriculture produce and the source of deposit representing the interest and LIC receipt is not justified. The impugned order is set aside and the matter is remanded to the record of the Assessing Officer to re-adjudicate the same after considering the quantity and sale proceeds of the Tomato and Onion produced by the assessee from his own land holding as well as the interest income and LIC receipt which cannot be part of the turnover. The record of the land holding and the agriculture produce on the land belonging to the assessee is required to be verified and examined by the Assessing Officer and then to decide the issue afresh. Needless to say an appropriate opportunity of hearing be given to the assessee before passing the fresh order.

Summary

Issues:
Determining turnover for assessment years 2015-16 and 2016-17 based on bank deposits vs. declared income under section 44AD.

Analysis:
*Assessment Year 2015-16:*
The appellant, an agriculturist dealing in wholesale agriculture produce, declared a turnover of Rs. 32,45,900 under section 44AD. However, the Assessing Officer noted bank deposits totaling Rs. 1,19,16,791, leading to an addition of Rs. 7,16,778 to the income. The CIT(A) upheld this decision despite the appellant's explanations regarding the sale proceeds of Tomato and Onion from family members and neighboring farmers. The Tribunal considered the deposits' nature, including cash repetition, interest, and LIC receipts, and remanded the matter to the Assessing Officer for a detailed examination of the agricultural produce and related transactions.

*Assessment Year 2016-17:*
A similar issue arose for this assessment year, and based on the findings for 2015-16, the Tribunal remanded the matter to the Assessing Officer for reevaluation. Both appeals were partly allowed, emphasizing the need for a thorough review of the agricultural transactions and related income sources. The Tribunal stressed the importance of verifying the land holdings, sale proceeds, and other financial aspects before determining the turnover. The decision highlighted the significance of providing the appellant with a fair opportunity to present their case during the reassessment process.

In conclusion, the Tribunal's judgment focused on the proper assessment of turnover by considering all relevant factors, including agricultural proceeds, family transactions, and additional income sources. The decision underscored the necessity of verifying claims and conducting a detailed examination to ensure a fair and accurate determination of income for the appellant.