Ajay Kumar Shrotriya, Bareily V. Income Tax Officer Range-1(1), Bareilly

ITA 148/LKW/2023

AI Insights

The case involves Ajay Kumar Shrotriya, a government servant, who appealed against the order of the National Faceless Appeal Centre (NFAC) which upheld the addition of Rs.8,20,000 to his income for the Assessment Year 2017-18. The addition was initially made by the Assessing Officer, suspecting the deposits were from undisclosed sources during the demonetization period. The Tribunal found that the assessee had provided credible evidence for the agricultural income and partially allowed the appeal by deleting the addition related to agricultural income while sustaining a smaller addition related to unexplained cash deposits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123047 (ITAT-LUCKNOW)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 24-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 11-05-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Business income; Principle of natural justice; Reasonable cause; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘SMC’, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.148/Lkw/2023 Assessment Year:2017-18 Ajay Kumar Shrotriya, 9-Civil Lines, Near Kachehri, Bareilly-243001 (U.P.) PAN: AZAPS 8702J Vs. The Income Tax Officer, Range-1(1), Bareilly (New). (Appellant) (Respondent) O R D E R PER SUDHANSHU SRIVASTAVA, J.M.: 1. This appeal is preferred by the assessee against the order dated 11.03.2022 passed by the National Faceless Appeal Centre (NFAC), Delhi for Assessment Year (AY) 2017-18. 2. The brief facts of the case are that the assessee is a U.P. Government Servant employed with the U.P. Police. At the time of relevant assessment proceedings, he was posted at Bareilly. The return of income for the captioned year was filed declaring a total income of Rs.4,73,070/-. The case was selected for Appellant by Shri Shubham Rastogi, CA Respondent by Shri Sanjeev Krishna Sharma, Addl. CIT (DR) Date of hearing 25/07/2023 Date of pronouncement 27/07/2023 I.T.A. No.148/Lkw/2023 2 limited scrutiny through CASS to examine “large value cash deposits during demonetization period as compared to returned income” because as per the data available with the Income Tax Department, the assessee had deposited cash of Rs.9,00,000/- in the Bank account being maintained with the Nainital Bank Ltd., Bareilly during the demonetization period. In response to the query raised by the Assessing Officer, it was submitted by the assessee that out of Rs.9,00,000/- deposited, Rs.4,25,000/- pertained to agricultural income received through sale of poplar trees and Rs.3,95,000/- were out of cash in hand from past savings, whereas Rs.80,000/- related to savings and gullak of children received by them as gifts from relatives on their birthdays etc. However, the explanation of the assessee did not find favour with the Assessing Officer and after giving benefit of Rs.80,000/- claimed to have been deposited out of children’s savings, an addition of Rs.8,20,000/- was made by treating the same as income from undisclosed sources. The provisions of Section 115BBE of the Income Tax Act, 1961 (hereinafter called the ‘Act’) were also invoked. 3. Aggrieved, the assessee approached the ld. First Appellate Authority. The NFAC noted that the assessee had not produced I.T.A. No.148/Lkw/2023 3 any considerable material evidence with respect to agricultural income as well as the cash in hand from past savings. The NFAC, accordingly, sustained the entire additions. 4. Now, the assessee has approached this Tribunal, challenging the order of the NFAC and has raised the following grounds of appeal: “1. The Ld. C.I.T.(Appeal), NFAC, Delhi erred on facts and in law in upholding addition of Rs.8,20,000/- being cash Deposited during demonetization period without appreciating that relevant details with evidences regarding availability of Cash has been filed before him as well as before Ld. A.O. 2- The Ld. C.I.T. (A) fails to appreciate that Cash Deposit of Rs. 4,25,000/- was out of Agriculture Income / Receiving being sale of old Popular Trees earlier planted on the Agriculture Land. In support of which copy of Sale Bills and copy of Khasra Khatauni for agriculture land holding has been filed before him as well as before Ld. A.O. 3. The Ld. CIT (A) fails to appreciate that Cash Deposit of Rs. 3,95,000/- during demonetization period out of accumulated cash saving being earlier year withdrawals available in the hand of Assessee and his wife as Stridhan and Assessee's fund. In this regard, an affidavit was also filed which was not prove to be false. 4- The Ld. C.I.T. (A) erred on facts and in law in upholding the additions of Rs. 8,20,000/- on assumptions surmises of Ld. A.O. without going through the relevant evidences filed through e-filing portal before him as well as before Ld. A. O. Further, Cash deposit has also been duly reported as Cash Transaction 2016 vide acknowledgement no. 3638549994 as per Rules. I.T.A. No.148/Lkw/2023 4 5- The Ld. C.I.T. (A) fails to appreciate that the Assessee is an old Income Tax Assessee and Cash Fund of Rs. 3,95,000/- was available in the family out of past saving being withdrawal from bank etc. and as Stridhan kept for medical and safety purpose of the family. 6- The addition upheld is highly excessive, contrary to the facts, law and principle of natural justice and without providing sufficient time and opportunity to have its say on the reasons relied upon by them.” 5. At the outset, the ld. Authorized Representative drew my attention to the delay condonation application filed by the assessee and submitted that the appeal was filed belatedly by 368 days. The ld. Authorized Representative submitted that the assessee was suffering from diabetic gangrene during the period 04.03.2022 to 29.08.2022. My attention was also drawn to the Medical Certificate from Shri Ganga Charan Aryawardhan Hospital, Bareilly in this regard. It was submitted that the order of the NFAC was received on 12.03.2022 on the e-mail I.D. but, since, the assessee was hospitalized, he could not intimate his counsel regarding passing of the order by the NFAC and subsequently, the assessee was transferred to Muzaffarnagar District of Uttar Pradesh and he could not take the required step for filing the appeal before the ITAT. It was submitted that the delay on the part of the assessee in filing the appeal was not intentional, but, was entirely because of circumstances beyond I.T.A. No.148/Lkw/2023 5 the control of the assessee. It was prayed that the delay be condoned so that the assessee’s case be heard on merits. 6. Per contra, the ld. Senior Departmental Representative strongly opposed the assessee’s prayer for condonation of delay and submitted that the delay of 368 days only showed absolute carelessness on the part of the assessee and, therefore, the same should not be condoned. 7. Having heard both the parties on the issue of condonation of delay, I am of the considered view that the assessee’s illness/hospitalization and subsequently his transfer to District Muzaffarnagar are reasonable causes for the assessee’s default in not filing the appeal in time as the assessee would otherwise not stand to benefit in any way by delaying the filing of appeal. Accordingly, I deem it appropriate to condone the delay of 368 days on the peculiar facts of this case and admit the appeal for hearing. 8. The ld. Authorized Representative drew my attention to the paper book filed by the assessee and submitted that the observations of the NFAC as well as the Assessing Officer that no documents have been submitted as a proof of agricultural income was factually incorrect as the assessee had submitted I.T.A. No.148/Lkw/2023 6 copies of invoices pertaining to sale of poplar trees vis-à-vis agricultural income. It was further submitted that the assessee had also submitted copy of Kisan Bahi in this regard and the assessee owned approximately 3.25 hectares of agricultural land and poplar trees had been planted alongside the boundary wall of the agricultural land, which had matured during the year under consideration and were, therefore, cut and sold. It was submitted that even in the computation sheet, the Assessing Officer had shown agricultural income of Rs.4,25,000/- but had, thereafter, treated it as income from undisclosed sources, apparently resulting in double taxation of the amount as the amount of Rs.4,25,000/- was earlier included in the computation of income for rate purposes. The ld. A.R. also submitted that nowhere has the Assessing Officer disputed the assessee’s submission regarding sale of poplar trees and has only harped on the fact that in earlier assessment years, the assessee’s agricultural income was miniscule. It was submitted that the sale of poplar trees does not happen every year but only when the trees have matured and are ready to be cut and, therefore, just because the assessee did not have substantial agricultural income in the past, it would not mean I.T.A. No.148/Lkw/2023 7 that the assessee’s claim of agricultural income in this year was incorrect. The ld. AR submitted that the action of the Assessing Officer was guided by mere suspicion without bringing any adverse material on record and without disputing the genuineness of the invoices of sale of poplar trees filed by the assessee in this regard. 8.1 On the issue of addition of Rs.3,25,000/- being claimed by the assessee as having been deposited from past savings of the assessee, the ld. A.R. placed reliance on Instruction No.3/2017 [F.No.225/100/2017/ITA-II] and it was submitted that as per its Annexure, Para-1 pertaining to Source Specific General Verification Guidelines-1, in case of cash out of earlier income or savings, the Instruction reads as under: “1.1 In case of an individual (other than minors) not having any business income, no further verification is required to be made if total cash deposit is up to Rs 2.5 lakh. In case of taxpayers above 70 years of age, the limit is Rs. 5.0 lakh per person. The source of such amount can be either household savings/ savings from past income or amounts claimed to have been received from any of the sources mentioned in Paras 2 to 6 below. Amounts above this cut-off may require verification to ascertain whether the same is explained or not. The basis for verification can be income earned during post years and its source, filing of ROI and income shown therein, cash withdrawals made from accounts etc.” I.T.A. No.148/Lkw/2023 8 8.2 The ld. Authorized Representative submitted that, thus, as per this Instruction, amount of Rs.5,00,000/- as pertaining to past savings should be accepted without any further explanation for the reason that these savings pertain to the savings of the assessee as well as his wife and Rs.2,50,000/- is to be taken as limit for one person, and for two persons, Rs.5,00,000/- should be accepted. My attention was also drawn to the Chart reproduced in written submissions wherein, the details of theincome shown by the assessee for the past five assessment years have been reproduced. The same is being reproduced hereinunder: Assessment Year Gross Total Income 2011-12 412899.00 2012-13 1016553.00 2015-16 562917.00 2016-17 685448.00 2017-18 652444.00 8.3 It was submitted that the assessee being in Government Service is usually posted at different districts out of his own home town and, therefore, he was in the habit of giving cash to his wife to meet household expenses from time to time as well as to keep cash at home to meet contingencies and I.T.A. No.148/Lkw/2023 9 emergencies. It was submitted that only this accumulated cash from the past savings over a period of several years had been deposited and the same should be accepted. 9.0 Per contra, the ld. Senior D.R. submitted that the Assessing Officer as well as the NFAC had recorded a categorical finding that the assessee had not submitted any proof regarding agricultural income and, therefore, the addition had rightly being made. It was also submitted that the explanation of the assessee regarding cash deposited out of past savings was also a mere after thought to escape the rigors of tax. The ld. Senior Departmental Representative strongly supported the order of the NFAC and also placed reliance on the observation of the Assessing Officer and submitted that the sale of poplar trees as well as the claim of cash deposited from past savings were not verifiable and prayed that the assessee’s appeal be dismissed. 10.0 I have heard both the parties and have also perused the material placed on record. As far as the issue of agricultural income is concerned, it is seen that the assessee had submitted copies of four invoices pertaining to sale of poplar trees before the Assessing Officer as well as the NFAC. These invoices are I.T.A. No.148/Lkw/2023 10 part of the paper book and it has been certified by the assessee that they were produced before the lower authorities. It is also seen that in the submissions before the Assessing Officer, the assessee has specifically stated that the agricultural income was from sale of poplar trees. However, apparently, these invoices were not considered by the Assessing Officer. The Assessing Officer has not discussed these invoices in the body of his order and has simply stated that no evidence was forthcoming from the side of the assessee vis-à-vis agricultural income. It is also seen that the Assessing Officer has made the addition only on the ground that no documentary evidence was furnished in support of sale of poplar trees. Apparently, this statement by the Assessing Officer is factually incorrect and is against the documents on record. In such a situation, I find myself unable to agree to the addition made on account of agricultural income because the assessee had duly filed the invoices pertaining to sale of poplar trees and had also produced the copy of Kisan Bahi before the Assessing Officer. Therefore, the Assessing Officer, without pointing out specific defects in these invoices or pointing out any reason for which these invoices are not to be taken as genuine could not have I.T.A. No.148/Lkw/2023 11 made the impugned addition. There is no valid reason for simply ignoring these invoices and rejecting the assessee’s claim of agricultural income. Admittedly, the assessee did not have substantial agricultural income in earlier assessment years but without any adverse material being brought on record, the claim of the assessee cannot be simply discarded. Accordingly, I set aside the order of the NFAC on the issue and direct the Assessing Officer to delete the addition pertaining to agricultural income. 10.1 As far as the issue of cash deposited out of past savings amounting to Rs.3,25,000/- is concerned, it is my considered view that Instruction No.3/2017 (Supra) states that in case of any individual not having any business income, no further verification is required to be made if the total cash deposits is up to Rs.2.50 lacs. In the present case, the ld. A.R. has argued that the assessee should be given benefit of Rs.5.00 lacs i.e. Rs.2.50 lacs on his account and Rs.2.50 lacs on account of his wife. However, I do not find merit in this contention of the ld. AR that benefit of Rs.2.5 lacs should be given in the case of his wife also. Admittedly and undisputedly, assessee’s wife is not a tax payer and, therefore, whatever cash I.T.A. No.148/Lkw/2023 12 is accumulated out of past savings is out of the earnings of the assessee (her husband) only and, therefore, only the husband i.e. the assessee should get the benefit of this instruction. Accordingly, I direct the Assessing Officer to given benefit of cash deposits of Rs.2.50 lacs out of total cash deposits of Rs.3.25 lacs on this account. Accordingly, the difference of Rs.75,000/- is sustained. The assessee is directed to pass the consequential order giving effect to my directions as aforestated. 11. In the final result, appeal of the assessee stands partly allowed. (Order pronounced in the open court on 27/07/2023) Sd/- (SUDHANSHU SRIVASTAVA) Judicial Member Dated: 27/07/2023 Aks Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow Asstt. Registrar I.T.A. No.148/Lkw/2023 13 I.T.A. No.148/Lkw/2023 14