Roop Singh Kanwar, Shimla V. ITO, Ward -2, Shimla

ITA 8/CHANDI/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 4797 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 01-11-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 05-01-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Income from undisclosed sources; Source of fund; Set aside
• Section: 147; 148; 44AD; 250

Judgement Text

आयकर अपीलीय अिधकरण,च᭛डीगढ़ ᭠यायपीठ “एस.एम.सी” , च᭛डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, “SMC” CHANDIGARH ᮰ी िवᮓम ᳲसह यादव, लेखा सद᭭य BEFORE: SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ ITA No. 8/Chd/2023 िनधाᭅरण वषᭅ / Assessment Year : 2012-13 Shri Roop Singh Kanwar Village- Imli, PO- Jais, Tehsil Theog Shimla, H.P. 171201 बनाम The ITO Ward-02, Shimla(H.P.) ̾थायी लेखा सं./PAN NO: AJIPK3460B अपीलाथᱮ/Appellant ᮧ᭜यथᱮ/Respondent िनधाᭅᳯरती कᳱ ओर से/Assessee by : Shri Neeraj Sharma, Advocate राज᭭व कᳱ ओर से/ Revenue by : Shri Dharam Vir, JCIT, Sr. DR सुनवाई कᳱ तारीख/Date of Hearing : 02/11/2023 उदघोषणा कᳱ तारीख/Date of Pronouncement : 06/12/2023 आदेश/Order PER VIKRAM SINGH YADAV, AM This is an appeal filed by the Assessee against the order of the Ld. CIT(A), NFAC, Delhi dt. 07/11/2022 pertaining to Assessment Year 2012-13. 2. In the present appeal, the assessee has raised the following grounds of appeal: 1. On the facts and circumstances of the case, the Ld. CIT(A) has grossly erred in upholding the not acceptance of the Agriculture income amounting to Rs. 4,50,000/- by the Ld. A.O. 2. On the facts and circumstances of the case, the Ld. CIT(A) has grossly erred in upholding the addition of Rs. 7,20,000/- made on account of cash deposits and non-appreciation of the fact by the Ld. A.O. that the cash deposits has been made out of cash withdrawals by the appellant. 3. The appellant craves leave to add, amend or delete any of the grounds of the appeal at the time of hearing of the appeal. 3. During the course of hearing, the ld AR submitted that the assessee is an ex-serviceman and for the relevant assessment year i.e. A.Y. 2012-13 has also worked as a contractor with HP Forest Corporation. Proceedings u/s 147 of the 2 Act were initiated against the assessee and notice u/s 148 of the Act was issued on 29/03/2017. In compliance to the said notice, the assessee filed income tax return on 02/11/2017 thereby declaring pension income amounting to Rs. 1,08,993/-, business income u/s 44AD amounting to Rs. 1,80,684/- and agriculture income amounting to Rs.4.50,000/-. 3.1 During the course of assessment proceedings, the assessee was directed to explain the cash deposits of Rs.10 lacs in his bank account. The assessee has filed a reply to the same and has explained the source of cash deposits which is placed on the record. It was submitted that the Ld. A.O. has not appreciated the explanation given by the assessee has made an addition of Rs.7,20,000/- from undisclosed sources of income. 3.2 The assessee preferred an appeal against the said assessment order dated 19/12/2017 before the ld CIT(A) and also filed a detailed written submission before the ld CIT(A). It was submitted that the appeal filed by the assessee was dismissed by the ld CIT(A) and an order dated 07/11/2022 was passed u/s 250 of the Income Tax Act, 1961 which has been assailed in the present appeal. 3.3 It was submitted that the assessee has declared agriculture income amounting to Rs.4,50,000/-in the ITR filed by the assessee. A copy of jamabandhi i.e. agriculture land holding has been also supplied during the course of earlier proceedings, which was completely ignored by the Authorities below without assigning any reasons. The Ld. Authorities below failed to appreciate the fact that the assessee along with his mother are jointly holding agriculture land approx. 38 bighas and agriculture loan (Kisan Cash Credit KCC limit ) amounting to Rs.7,10,000/- was availed by the assessee on the said agriculture land. Since the matter belongs to financial year 2011-12 and the assessment proceedings were conducted during the year 2017, the assessee could not trace the 3 documents pertaining to agriculture income, however, a copy of gidhavari has now been obtained which shows that there was apple production on the land jointly owned by the assessee along with her mother hence, on the parameters of reasonableness, an income of Rs.4,50,000/- can be derived from the agriculture land holding of the assessee. 3.4. It was further submitted that the assessee was suffering from heart disease and was in habit of keeping cash with him, as he may require the same at any time. It is evident from the bank record that the assessee has regularly withdrawn cash. The assessee works and belongs to far-flung/ remote area of HP. and the banking facility was not available in the near vicinity. It is a normal practice of common man in that part to keep cash with time for needy times. The assessee has made sufficient cash withdrawals from bank account to have 4-5 lacs as cash in hand. 3.5 Further, reliance was placed on the written submissions made before the ld CIT(A) and the contents thereof read as under: Sir, regarding cash deposit of Rs. 4,00,000/- on 02/08/2011, we have submitted that Cash deposit was made out of Agricultural sale proceeds of Assesee. Here AO concerned has made addition on the ground that no Agriculture sale proceeds bills produced by the assessee and also recorded that assessee has only 1.5 Bighas of land with him Here it is submitted that Asstt for the said year completed on 19/12/2017 and matter pertain to AY 2011-12. Being a Agriculture income , assesee remain in impression that being exempted income, Bills (Purcha's) not required to be kept for long as such destroyed the same within 2-3 years. For your kind perusal, Assesee has also availed cash credit limit alongwith his mother of Rs. 7,10,000/- each dated 10/01/2011 ( Relevant revenue papers enclosed) against Agriculture land holding of Approx 38 Bighas (19 Bigha each in name of Roop Singh and Smt Durgi Devi,Mother). Against the cash credit limit of Rs. 7,10,000/- availed by Asseee, Rs 6,00,000/- tfd to his saving account dated 18/01/2011. This amount was used by him for 4 agricultural operation on his land by frequent withdrawals between 18/01/2011 to 20/02/2011. As mentioned above in addition to agricultural income, Assesee is also working as petty contractor for HP Forest corporation and reed few payment i.e Rs. 128740/- dt 30/04/2011, Rs. 66,293/- dated 03/05/2011, Rs. 1,26,228/ dated 01/06/2011, rs. 102763 dated 23/06/2011 and Rs. 84,107/- dated 25/07/2011. Total amount reed from HP forest corporation during this period was Rs. 5,08,131/-. As assesee's belong to rural Area having Agricultural income and also having contractual works in far flung forests areas, it was never feasible/possible to make payments through Cheques or banking channels to unorganised Labour class. As such all withdrawals Apprx.ll Lakhs made in cash for payments to labour working in orchard as well as for labour deployed for forest corporation works. Usually any cash left with Assesee after making payments to labour, re-deposited into bank. Further it is submitted that duirng the period Apple sale proceeds of Rs. 4,50,000/- also reed by Assesse in cash and same were deposited into bank dated 02/08/2011. In view of above facts it is submitted that addition for Rs. 4,00,000/- of agriculture income treating it as unexplained is not correct. It is therefore preyed that addition may kindly be deleted. Regarding addition for cash deposit of Rs.3,20,000/-, it is submitted that worthy AO has made addition simply on the basis of presumption that there was considerable time gap between the Cash withdrawals of Rs. 5,25,000/-dated 08/11/2011 and date of Cash deposit of Rs. 3,20,000/- dated 14/01/2012. Sir As already explained above, Assesee carried out contractual works for HP Forest corporation in remote areas of Distt Shimla and has to mandatorily keep cash with him to meet out any emergencies/ exigencies as there were virtually no banking facilities in remote areas during period under consideration. Regarding other petty withdrawals subsequently to Cash withdrawal of Rs. 5,25,000/-as pointed by AO, It is submitted that Assesee has not kept any books of accounts for the said Financial year(return field u/s 44AD) and it is again submitted that cash deposit of Rs. 3,20,000/- made out of earlier withdrawals only after completion of work i particulars working site. (Copies of KCC Bank statement, Saving Bank account and Mother bank Account enclosed) It is further submitted that during the continuation of Asstt proceedings, Assesee suffered severe Heart attack and unable to attend the proceedings and some of relevant information could not be shared with Assessing authority at that time ( Documentary proofs as to hospitalisation Enclosed) In view of above said facts, it is submitted that there was no instance of unexplained cash deposit and addition made thereto may kindly be deleted. 5 3.6 Therefore in view of the submissions made above, it was submitted that the present appeal may kindly be allowed and the impugned orders dated 19/12/2017 and 07/11/2022 may be quashed and set aside in the interest of justice. 4. The Ld. DR has relied on the order of the Ld. AO and the ld CIT(A) and our reference was drawn to the findings of the AO which are contained in para 4 to 4.2 of the assessment order and the same reads as under: “4. The assessee has made cash deposits of Rs. 10 lakh in his SBI account on the following dates: 02.08.2011 Rs. 4,00,000/- 09.12.2011 Rs. 1,00,000/- 20.12.2011 Rs. 5,000/- 14.01.2012 Rs. 3,20,000/- 24.01.2012 Rs. 25,000/- 16.02.2012 Rs. 50,000/- 07.03.2012 Rs. 1,00,000/- 4.1. The assessee was asked to explain the source of above cash deposits in his bank account. The assessee has sought to explain cash deposit of Rs. 4,00,000/- made on 02.08.2011 out of agricultural income of Rs. 4,50,000/- declared in the ITR. However, no proof of sale of agricultural produce has been furnished by the assessee during the course of assessment proceedings. Jamabandi filed by the assessee, though, shows orchard land but it is only 00-11- 35 hect. (approx.1.5 bigha only). In any case, any proof of sale proceeds received by the assessee in cash or otherwise needs to be correlated with the cash deposit of Rs. 4 lakh made on 02.08.2011. But there is no proof whatsoever in support of his claim. Therefore, source of cash deposit of Rs. 4,00,000/-made on 02.08.2011 remains unexplained. 4.2 Further, the assessee has sought to explain all other cash deposits out of withdrawals made from the same bank account. The bank account was being routinely credited by the payments transferred by H.P. Forest Corporation and the regular withdrawals were being made apparently to meet the labour charges and other expenses of forest contract. A sum of Rs, 7 lakh was credited by transfer on 08.11.2011 in the bank account of the assessee from the bank account of assessee's mother out of which an amount of Rs. 5,25,000/- was withdrawn by the assessee on 08.11.2011. The assessee has sought to explain cash deposit of Rs. 1,00,000/- made on 09.12.2011 and Rs. 3,20,000/- on 14.01.2012 out of cash withdrawal of Rs. 5,25,000/- made on 08.11.2011. There is, however, a considerable gap in withdrawal and re-deposits. It seems illogical to withdraw cash, keep it idle only to redeposit the same after a period of more than two 6 months. Moreover, when Rs. 5,25,000/- were withdrawn by the assessee on 08.11.2011, why did he need to withdraw regularly Rs. 10,000/-, Rs. 15,000/- and Rs. 20,000/- from 09.11.2011 to 29.11.2011. He could have used the cash Rs. 5,25,000/- available with him. It means the amount of Rs. 5,25,000/- had been utilized by the assessee somewhere else and was not available with him for re-deposits on later dates. Benefit of cash availability of Rs. 1,00,000/- for re-deposit on 09.12.2011 can, however, be given because the assessee had sufficient withdrawals made preceding the date. However, cash deposit of Rs. 3,20,000/-made on 14.01.2012 cannot be given advantage of redeposit out of withdrawal of Rs. 5,25,000/- as there is considerable gap of more than two months when Rs. 5,25,000/-were withdrawn and also for the other reasons discussed above. Therefore, source of cash deposit of Rs. 3,20,000/- also remains unexplained. The balance cash deposits of Rs. 2,80,000/- are considered as explained out of regular withdrawals made by the assessee preceding the date of cash deposits. In view of above discussion/ analysis, source of cash deposits of Rs. 7,20,000/- has not been explained by the assessee with documentary evidence and therefore an addition of Rs. 7,20,000/- is made to the total income of die assessee from undisclosed sources of income. The assessee has concealed the particulars of his income. Therefore, penalty proceedings u/s 271(l)(c) of the Act are being initiated separately.” 5. Heard the rival contentions and purused the material available on record. It is not in dispute that the assessee along with his mother owns agriculture land measuring 38 bighas where apple orchards are grown and cultivated by the assessee. The land holdings records have been submitted before the lower authorities. Further, agriculture produce records have now been submitted which shows production of apples. The assessee has also availed cash credit limit from the bank based on joint land holding and the amount has been transferred in his bank account. It is the claim of the assessee that all expenditure and receipts from agriculture operations are undertaken through his bank account. Therefore, taking into consideration the land holding and apples production and the fact that all transactions are routed through the assessee’s bank account, the explanation so submitted by the assessee in support of source of cash deposit of Rs 4 lacs out of agriculture produce is accepted. 7 6. Further, it is also not in dispute that the assessee has worked as a contractor for HP Forest Corporation and has reported gross receipts of Rs 22,58,545/- u/s 44AD of the Act and which has been accepted by the AO. All the transactions in terms of receipts of money from HP Forest Corporation are credited in the assessee’s bank account and corresponding expenditure are undertaken by way of withdrawals from time to time by way of cash and cheque payments. It has been submitted by the assessee that the work is being undertaken in remote far flung areas and given the nature of work, it is essential to keep certain cash in hand which is withdrawn from the bank from time to time and where certain cash so withdrawn is not required, the same is deposited back in the bank account. It has thus been submitted that source of cash deposit of Rs 3.20 lacs is out of earlier withdrawals and which has not been accepted by the AO merely for the reason that there is a time gap of two months in terms of withdrawal and subsequent deposits. In our view, the nature of assessee’s activities and the business exigency of keeping cash in hand has to be considered instead of just looking at the entries in the bank account on a standalone basis. The entries in the bank account are reflection of the business activities so undertaken by the assessee and unless the nature of the business is considered, the entries on standalone basis won’t provide a realistic picture of the transactions so undertaken by the assessee. Further, where the revenues from contract activities and corresponding expenditure are not disputed and there are regular deposits and withdrawals from the same bank account, the explanation of the assessee is found to be reasonable and merely for the reason that there is time gap of two months, the explanation so furnished cannot be rejected. 7. In light of aforesaid discussions and considering the facts and circumstances of the present case, I am of the considered view that the assessee has duly explained the nature and source of cash deposits of Rs 7.20 8 lacs in his bank account. The addition so made by the AO and confirmed by the ld CIT(A) is hereby set-aside. 8. In the result, the appeal of the assessee is allowed. (Order pronounced in the open Court on 06/12/2023 ) Sd/- िवᮓम ᳲसह यादव (VIKRAM SINGH YADAV) लेखा सद᭭य / ACCOUNTANT MEMBER AG Date: 06/12/2023 आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 5. गाडᭅ फाईल/ Guard File