2023 (2) TMI 194 - AT - Income Tax

Unexplained cash deposit - agricultural income or not - genuineness of receipt of cash on sale of Popular tree - as submitted that the necessary confirmations of the persons who have purchased the popular trees from the assessee have been submitted during the course of assessment proceedings and which have not been disputed by the Revenue - HELD THAT - We have gone through the submissions filed by the assessee before the ld. CIT(A) wherein the assessee has submitted the joint affidavit/confirmation from Shri Harchand Khan and Gurinder wherein they have categorically stated that they have purchased popular trees from the assessee for further sale and have made payment in cash totaling to Rs. 9,00,000/- besides photocopies of popular trees grown and sold by the assessee, cash flow statement of his agricultural activities have also been submitted. Nothing has been stated as to what further explanation or documentation is required from the assessee especially given the fact that he is not mandated under law to maintain any regular books of accounts. In my view, the assessee has discharged the initial onus cast on him explaining the nature and source of cash deposit being proceeds of sale of popular trees. Where the Revenue authorities disbelief the contents of the affidavit/confirmation, merely stating so and expressing such disbelief is not sufficient. The PAN number cannot be held to be proof of identity of the buyer. What was stopping the Revenue authorities in calling these persons whose name, address and Aadhar number are on record and recording their statement. There is nothing on record in respect of any steps taken in this regard including any direction to the assessee to produce these persons. There is nothing on record that the assessee was involved in any other activities other than agriculture activities. Revenue has to bring some positive evidence rebutting the explanation so furnished and the contents of the affidavit from the buyers so placed on record. In absence thereof, the explanation of the assessee which is duly corroborated cannot be negated and the onus cannot be shifted back on the assessee. Similar findings have been recorded by the Co-ordinate Chandigarh Benches in the case of Shri Mahavir Singh 2019 (8) TMI 1854 - ITAT CHANDIGARH which supports the case of the assessee. Addition so confirmed by the ld. CIT(A) amounting to Rs. 9 lacs is hereby directed to be deleted. Appeal of the assessee is allowed.

Summary

Issues Involved:
1. Legality of reassessment proceedings under section 147 of the Income Tax Act, 1961.
2. Addition of Rs. 9,00,000/- to the assessee's income despite submitted documents.
3. Non-reduction of agricultural income disclosed in the return.

Issue-wise Detailed Analysis:

1. Legality of Reassessment Proceedings:
The appeal challenged the reassessment proceedings initiated under section 147 of the Income Tax Act, 1961. The Tribunal noted that the assessee's challenge to the reassessment proceedings became academic in nature due to the findings on the merits of the case. Consequently, Ground no. 1 was dismissed as infructuous.

2. Addition of Rs. 9,00,000/- to Assessee's Income:
The primary contention was the addition of Rs. 9,00,000/- to the assessee's income by the AO, upheld by CIT(A), despite the assessee providing documents and reasons for the cash deposits. The Tribunal examined the evidence provided by the assessee, including J forms and a joint confirmation from purchasers of poplar trees. The CIT(A) had accepted Rs. 4.90 lakhs of cash deposits as explained but disallowed Rs. 9 lakhs due to insufficient evidence regarding the sale of poplar trees.

The Tribunal noted that the assessee had submitted a joint affidavit/confirmation from the purchasers, stating they bought poplar trees and paid Rs. 9,00,000/- in cash. The Tribunal found that the Revenue did not take sufficient steps to verify the affidavit or call the purchasers for statements. The Tribunal held that the assessee had discharged the initial onus of explaining the cash deposits, and the Revenue failed to rebut the explanation with positive evidence. Thus, the addition of Rs. 9,00,000/- was directed to be deleted, allowing Ground no. 2 in favor of the assessee.

3. Non-reduction of Agricultural Income:
The assessee contended that the AO did not reduce the agricultural income of Rs. 5,56,000/- disclosed in the return. However, during the hearing, Ground no. 3 was not pressed by the assessee's representative and was thus dismissed as not pressed.

Conclusion:
The Tribunal allowed the appeal of the assessee, directing the deletion of the Rs. 9,00,000/- addition and dismissing the other grounds as either infructuous or not pressed. The order was pronounced in the Open Court on 18th January 2023.