2023 (3) TMI 351 - AT - Income Tax

Reopening of assessment u/s 147 - Unexplained cash deposits in his bank account - reliance on AIR information - As per assessee it is advance received against sale of another piece of agriculture land - HELD THAT - We find that there was deposit of cash of Rs. 79,00,000/- on 07/07/2009 the very same day on which the sale deed was executed and Rs. 2,00,000/- was deposited on the next day, therefore a clear nexus has been established between source of such cash deposit and sale transaction so executed by the assessee. In absence of any contrary evidence brought on record in terms of statement of witnesses and comparative sale data of similar transaction undertaken at same/nearby location at a value different from what has been claimed by the assessee, the explanation so furnished by the assessee cannot be disputed. We are conscious of the fact that though the sale deed shows lower sale consideration which is also the Stamp Duty Valuation however, once the assessee has brought on record the relevant facts and documentation as well as nexus between transaction of sale and deposit in bank account has been established then in absence of any contrary evidence brought on record, only inference which can be drawn from these facts and circumstances of the case is that the source of deposit is the sale consideration of the agriculture land. No finding has been recorded by the AO as to why the explanation of the assessee regarding other sources of deposits being the advance received against sale of another piece of agriculture land was not found acceptable - In absence of any contrary evidence brought on record by the Revenue, the explanation of the assessee duly corroborated by the affidavit from the buyer and the bank statements reflecting the receipts and refund of Rs. 7,00,000/- is found acceptable and the source of such deposits thus stand explained and no adverse view is warranted in this regard. Regarding explanation of the assessee that there were cash withdrawals earlier made from the bank accounts and which were re-deposited during the year, we have gone through the assessee's bank statements and the cash flow statement and find that there were withdrawals and deposits during the year in the two bank accounts maintained by the assessee and the deposits so made duly stand explained by the earlier withdrawals during the year and no adverse view is warranted in this regard. We find that the assessee has duly explained the nature and source of cash deposits during the year and the initial onus on the assessee duly stand discharged. - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of reopening the assessment under Section 148.
2. Explanation and acceptance of cash deposits in the assessee's bank account.
3. Validity of the sale agreement and the actual sale consideration.
4. Credibility of the purchaser's statement.
5. Explanation of other sources of cash deposits.

Detailed Analysis:

1. Legality of Reopening the Assessment under Section 148:
The assessee argued that the case was reopened under Section 148 without the Assessing Officer (AO) having a valid reason to believe that income had escaped assessment. The AO relied solely on AIR information without applying his mind or possessing any other document/information. Despite the assessee explaining the major cash deposits as proceeds from the sale of property, the AO did not properly appreciate the reply.

2. Explanation and Acceptance of Cash Deposits in the Assessee's Bank Account:
The AO received information about cash deposits totaling Rs. 1,02,20,000/- in the assessee's bank account for the FY 2009-10. The assessee explained that the deposits were from the sale of property, agricultural produce, and earlier bank withdrawals. The AO accepted Rs. 52,14,270/- of the deposits but found Rs. 50,05,730/- unexplained, leading to an addition to the assessee's income.

3. Validity of the Sale Agreement and the Actual Sale Consideration:
The assessee claimed that Rs. 82,65,000/- was received from the sale of agricultural land, supported by an agreement to sell and a sale deed. However, the AO only accepted Rs. 42,53,000/- as per the registered sale deed, rejecting the higher amount stated in the agreement to sell. The AO's decision was based on the purchaser's statement, which did not confirm the higher sale consideration.

4. Credibility of the Purchaser's Statement:
The purchaser, Smt. Bohati Devi, in her statement, did not deny the transaction but claimed ignorance of the exact sale consideration, attributing the details to her deceased father-in-law. The AO did not further investigate by summoning her husband, who was present during the sale deed execution. The Tribunal found that the purchaser's statement did not support the Revenue's case against the assessee's claim.

5. Explanation of Other Sources of Cash Deposits:
The assessee provided a cash flow statement and bank statements to explain other deposits, including an advance against another land sale, agricultural income, and cash withdrawals. The AO did not accept these explanations fully, particularly disputing the cash withdrawals from HDFC Bank, which the assessee clarified with bank statements. The Tribunal found the assessee's explanations credible and supported by evidence.

Judgment:
The Tribunal concluded that the assessee had satisfactorily explained the nature and source of cash deposits. The direct nexus between the sale of agricultural land and the cash deposits was established, supported by documentation and bank statements. The Tribunal also accepted the explanations for other deposits and found no contrary evidence from the Revenue. Consequently, the addition of Rs. 50,05,730/- was deleted, and the appeal was allowed in favor of the assessee.