2024 (3) TMI 518 - AT - Income Tax

Cash deposit into bank during demonetization period u/s 69A - as per revenue documentary evidences furnished by the assessee are not acceptable - As per assessee transaction has recorded in books of accounts with proper source of deposit - HELD THAT - In our considered view, it was wholly erroneous on the part of the authorities below to sustain the addition whereas the assessee has in his possession all the possible evidences to demonstrate that cash was deposited out of known sources. We note that cash was deposited in the bank account out of the assessee s opening cash balance available with the assessee and withdrawal from bank. Apart from this certain amount has been deposited out of agricultural income. The return of Income for AY 2016-17 has already been accepted by the Department wherein the assessee has also shown agricultural income. We note that AO has also accepted the books of account maintained by assessee and no defect in the books has been pointed by AO. We note that assessee has practically submitted all possible evidences in support his claim. When the evidence available with the assessee supports the claim of the assessee, the Assessing Officer was not right in suspecting the same on the basis of mere surmises and conjectures. (Om Prakash K Jain and Ors. 2009 (1) TMI 453 - BOMBAY HIGH COURT AO has not discussed any of the evidences submitted by the assessee in detail. No word as to why these documentary evidences furnished by the assessee are not acceptable to the Assessing Officer. The Assessing Officer has not found any defect / irregularities in the books of accounts. Based on this factual position we delete the addition. Since, we have deleted the entire addition therefore no question arises to tax the income of the assessee u/s 115BBE of the Act. Appeal filed by the assessee is allowed.

Summary

Issues involved:
The issues involved in the judgment are the rejection of Agricultural Income, addition made by the assessing officer of cash deposit during demonetization period, and consideration of additional ground.

Rejection of Agricultural Income:
The appeal was filed against the rejection of agricultural income. The assessee had shown agricultural income in the return of income, but during assessment proceedings, the Assessing Officer raised concerns regarding the genuineness of the agricultural income. The Assessing Officer observed that the cash deposits made during demonetization period were not adequately supported by evidence of agricultural income sources. However, the appellant argued that the cash deposits were made from known sources, including opening cash balance, bank withdrawals, and agricultural income. The Tribunal found that the assessee had provided sufficient evidence to support the cash deposits and that the Assessing Officer had not pointed out any defects in the books of accounts. Therefore, the Tribunal deleted the addition of agricultural income.

Addition of Cash Deposit during Demonetization Period:
The Assessing Officer had made an addition of Rs. 10,61,966 out of a total cash deposit of Rs. 20,50,000 during the demonetization period under section 69A of the Income Tax Act. The appellant contended that the cash deposits were made from legitimate sources, including opening cash balance, bank withdrawals, and agricultural income. The appellant provided detailed explanations and documentary evidence to support the sources of the cash deposits. The Tribunal noted that the Assessing Officer had accepted the books of accounts maintained by the assessee and found no defects. The Tribunal held that the addition made by the Assessing Officer was erroneous as the appellant had substantiated the sources of the cash deposits with adequate evidence. Therefore, the Tribunal deleted the entire addition.

Consideration of Additional Ground:
The appellant also raised an additional ground which was not considered by the lower authorities. However, the Tribunal did not need to address this additional ground as the primary issues of rejection of agricultural income and addition of cash deposit during demonetization period were resolved in favor of the appellant. The Tribunal allowed the appeal filed by the assessee based on the evidence provided and the lack of justification for the additions made by the Assessing Officer.