Sh. Charanjit Singh, Ludhiana V. ITO, Ward -3(2), Ludhiana

ITA 9/CHANDI/2020

AI Insights

The case involves an appeal by Shri Charanjit Singh against the order of the CIT(A)-1, Ludhiana, which confirmed the addition of Rs. 4,40,000 as unexplained investment under Section 69 of the Income Tax Act, 1961. The AO had reopened the assessment for the year 2011-12 based on information about substantial cash deposits in the assessee's bank account, which were not satisfactorily explained. The assessee, an agriculturist, argued that the deposits were from his agricultural income and rental receipts. The Tribunal, after considering the submissions and evidence, partly accepted the assessee's explanation, leading to a reduction in the unexplained investment amount.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127617 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 08-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 02-01-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 69; 148; 144; 142(1)

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “ए” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH ी आकाश द प जैन, उपा य एवं ी #व$म &संह यादव, लेखा सद+य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM ITA NO. 9/Chd/2020 Assessment Year : 2011-12 Shri Charanjit Singh S/o Shri Mukhtiar Singh House No. 102, VPO-Sarih, Ludhiana-141116 The ITO Ward-3(2), Aaykar Bhawan, Rishi Nagar, Ludhiana PAN NO: DJDPS5248P Appellant Respondent ! " Assessee by : None # ! " Revenue by : Smt. Amanpreet Kaur, Sr. DR $ % ! & Date of Hearing : 09/08/2023 '()* ! & Date of Pronouncement : 14/08/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A)-1, Ludhiana dt. 25/09/2019 pertaining to Assessment Year 2011-12. 2. At the time of hearing none appeared on behalf of the assessee nor was any adjournment application filed. Given that the appeal was filed way back in year 2019 and the matter has been adjourned from time to time, it was decided that no useful purpose would be served in adjourning the matter any further and thus, basis the material available on the record and hearing the Ld. DR, the matter is hereby been decided. 3. At the outset, it is noted that there is delay in filing the appeal as pointed out by the Registry. The ld DR was heard who has not raised any specific 2 objection and hence, the delay is hereby condoned and the appeal is admitted for adjudication. 4. In the present appeal, Assessee has raised the following grounds of appeal: “1. That on the facts and the circumstances of the case, the Order of Learned CIT(A) is bad in law. 2. That the Learned Commissioner of Income Tax (Appeals) has erred in validating the reopening of the case of the Appellant by the AO under section 148 of the Income Tax Act. 1961 3. That the Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs. 4,40,000/- on account of Cash Deposits made by the Assessee in his Savings Bank Account as Unexplained Investment under Section 69 of the Act.. 4. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.” 5. Briefly the facts of the case are that the assessment in this case was completed under section 144 r.w.s 147 vide order dt. 25/12/2018. The case of the assessee was reopened basis information that the assessee has made cash deposits of Rs. 8,00,000/- in his saving bank account maintained with Union Bank of India and as there was no evidence on record to establish the genuineness and source of the cash deposit, reasons for escapement of income were recorded and notice under section 148 was issued. In response to the said notice, there was no compliance on the part of the assessee. Subsequently, notices under section 142(1) were issued and again there was no compliance on part of the assessee, and thereafter after issuing a show cause under section 144, the assessment proceedings were completed based on material available on the record. 3 6. As per the AO, basis review of the bank statement obtained from Union Bank of India under section 133(6), The assessee had made total cash deposit of Rs. 9,50,000/- and had made withdrawal of Rs. 5,00,000/-. Given the fact that the assessee has not able to explain the nature and source of these deposits, an amount of Rs. 4,40,000/- was treated as unexplained investment in the hands of the assessee under Section 69 after giving the credit of earlier cash withdrawal amounting to Rs. 5,10,000/- out of total cash deposits amounting to Rs. 9,50,000/- and the assessed income was determined at Rs. 4,44,950/- including interest on fixed deposits amounting to Rs 4,950/-. 7. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A). It was submitted before the ld CIT(A) that the assessee is an agriculturist who has cultivated 11 acres of agricultural land out of which 5 acres were owned by him and 6 acres were taken on lease from Shri Kulvinder Singh who has confirmed the same by way of an affidavit that he received a lease rental of Rs. 25,000/- per annum per acre in cash from the assessee. The assessee further submitted Girdawari report to demonstrate that he had undertaken agricultural operations on his land and certain Forms –J were also submitted as evidence of earning agriculture income from sale of agriculture produce. It was further submitted that the assessee received rental income from renting out five shops in front of his house @ 3600 per month per shop and in support averment of the tenant to whom the shops were given on rent were submitted. It was further submitted that the assessee had cash in hand amounting to Rs. 1,00,000/- at the beginning of the year. It was accordingly submitted that the assessee had sufficient amount of cash available with him for making the deposit in his bank account. Therefore the addition so made by the AO be directed to be deleted. 8. The submissions so filed by the assessee were considered, remand report from the AO was also called and thereafter, the Ld. CIT(A) has confirmed the 4 action of the AO holding that no fault can be found in bringing to tax the amount of Rs. 4,40,000/- as undisclosed and unexplained investment in the hands of the assessee. 9. During the course of hearing, the Ld. DR has relied on the order of the lower authorities and our reference was also drawn to the findings of the Ld. CIT(A) which are contained in para 7 of the impugned order and the contents thereof read as under: “7. From the factual background obtaining in this case, it is evident that the appellant is, admittedly, an agriculturist having income from agriculture as well as from rent. It has been conceded by the appellant himself that he gets rent of Rs.18,000/- per month from five shops adjoining his residence, which translates to Rs.2,16,000/- per annum. This income cannot possibly be considered to be agricultural and hence not exempt from taxation. Besides, the appellant has not been able to prove before the AO earnings of around Rs.6 lakhs of rupees from agricultural sources. The J-forms given to the AO in the remand proceedings aggregated to Rs.1,35,245/- only. Besides, it has been noted that the appellant has, by his own admission, been paying lease rent of Rs.1,50,000/- for lease of 6 acres of agricultural land. In the circumstances, it is held that the AO has very reasonably given the appellant credit of Rs.5,10,000/- from the total cash deposits of Rs.9,50,000/-, adding back only Rs.4,40,000/- as undisclosed income within the meaning of section 69 of the Act. The appellant has miserably failed to discharge his onus as with regard to the total deposits of Rs.9,50,000/- in his bank account. In the circumstances, no fault can be found in the action of the AO in considering the amount of Rs. 4,40,000/- as undisclosed and unexplained investment of the appellant. It is ordered accordingly.” 10. We have heard the rival contentions and purused the material available on record. Firstly, out of total deposits of Rs 9,50,000/-, the AO has given credit of Rs 5,10,000/- in terms of deposits made from withdrawals during the year and therefore, the limited dispute relates to nature and source of remaining deposits of Rs 4,40,000/-. 11. In this regard, the undisputed facts which are emerging from the records are that the assessee is an agriculturist cultivating his owned land as well as land taken on lease and thus, has agriculture income as his primary source of income. Besides that, he has built certain shops and there are rental receipts during the year. 5 12. As far as rental receipts from shops are concerned, the same have been determined at Rs 2,16,000/- and the nature and source of cash deposits to this extent is thus explained. At the same time, the said receipts are chargeable to tax in the hands of the assessee and form part of total taxable income. 13. As far as receipts from agriculture income is concerned, the assessee has submitted the girdawari reports detailing the crops grown during the year which has not been disputed by either of the authorities below and has also furnished certain Forms J in support of sale of the agriculture produce of Rs 1,35,245/- pertaining to the year under consideration and besides that, there were other Forms J pertaining to other years. Thus, it is established beyond doubt that the assessee is engaged in agriculture activities and major source of his income is from agriculture operations. Merely the fact that whole of Form Js relevant for the year under consideration couldn’t be produced by the assessee for certain unavoidable reasons, on a standalone basis, cannot be reason enough to dispute the explanation of the assessee that source of cash deposits in the bank account is from his agriculture produce more so where the land holding and crop grown during the year are not disputed. The AO has to apply the test of reasonableness and given the size of the land holdings and crop grown could have done certain estimation of his agriculture income which apparently has not happened in the instant case. At the same time, we find that no useful purpose would be served in setting aside the matter and prolonging the present proceedings, and considering the entirety of facts and circumstances of the case in terms of land holding, crops grown during the year, we find the explanation of the assessee towards the remaining source of cash deposits of Rs 2,24,000/- being from sale of agriculture produce as reasonable and addition to that extent is directed to be deleted. 6 14. In the result, out of total additions of Rs 4,40,000/- sustained by the ld CIT(A), the addition to the extent of Rs 2,24,000/- is directed to be deleted and balance addition of Rs 2,16,000/- is sustained. 15. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on 14/08/2023. Sd/- Sd/- आकाश द प जैन #व$म &संह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा य / VICE PRESIDENT लेखा सद+य/ ACCOUNTANT MEMBER AG Date: 14/08/2023 ( + ! , - . - Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. $ / CIT 4. $ / 0 1 The CIT(A) 5. - 2 ग 4 5 & 4 5 678 ग9 DR, ITAT, CHANDIGARH 6. ग 8 : % Guard File ( + $ By order, ; # Assistant Registrar