MANNAVA RAMARAO,GUNTUR V. INCOME TAX OFFICER, WARD-2(3), GUNTUR

ITA 1/VIZ/2024

AI Insights

The case revolves around an appeal by Mannava Ramarao against the order of the CIT(A)-NFAC, which confirmed the addition of Rs. 16,46,457 as unexplained money under Section 69A of the Income Tax Act, 1961. The assessee, engaged as a commission agent for agricultural produce, faced scrutiny over substantial cash deposits during the demonetization period. The AO initially treated a portion of these deposits as unexplained money after estimating the agricultural income and considering the family size. The Tribunal found that the AO and CIT(A) did not adequately consider the assessee's submissions and evidence, particularly regarding the agricultural loan and the nature of the income from commissions.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 29996 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 01-01-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA VILLURI
• Assessee Lawyers: GVN HARI
• Section: 144; 142(1); 143(2); 69A; 139(4)

Judgement Text

" आयकर अपीलीयअिधकरण, िवशाखापटणम SMC पीठ, िवशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM ᮰ी दु᭪वूᱧ आर एल रे᲻ी, ᭠याियक सद᭭य के समᭃ BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER आयकर अपील सं./ I.T.A. No.01/Viz/2024 (िनधाᭅरण वषᭅ / Assessment Year : 2017-18) Mannava Ramarao, Guntur. PAN: CRIPM6037J Vs. The Income Tax Officer, Ward-2(3), Guntur. (अपीलाथᱮ/ Appellant) (ᮧ᭜यथᱮ/ Respondent) अपीलाथᱮ कᳱ ओर से/ Appellant by : Sri GVN Hari, AR ᮧ᭜याथᱮ कᳱ ओर से / Respondent by : Dr. Aparna Villuri, Sr. AR सुनवाई कᳱ तारीख / Date of Hearing : 17/10/2024 घोषणा कᳱ तारीख/Date of Pronouncement : 30/10/2024 O R D E R PER DUVVURU RL REDDY, Judicial Member : This appeal filed by the assessee is against the order of the Ld. CIT(A)-NFAC in DIN & Order No. ITBA/NFAC/S/250/2023- 24/1057798572(1), dated 08/11/2023 arising out of the order passed U/s. 144 of the Income Tax Act, 1961 [“the Act”] for the AY 2017-18. 2. Briefly stated the facts of the case are that the assessee is an individual engaged as a commission agent for the agricultural 2 produce. During the period under consideration, it was noticed by the Ld. AO that the there was substantial cash deposits to the tune of 31,46,451/- for the AY 2017-18 out of which Rs.13,80,000/- was deposited during demonetization period. The assessee filed his return of income beyond the due date prescribed U/s. 139(4) of the Act and the Ld. AO did not consider the same. The Ld. AO asked the assessee to explain the source of cash deposits during the demonetization period and during the year under consideration. Subsequently, a notice U/s. 142(1) of the Act was issued to the assessee. In response to the notice, the assessee has replied that he and his family members altogether are having agricultural land to an extent of 10.34 Acres and cultivated the commercial crops like Onion, Turmeric, Maize, Banana and Vegetables. The assessee further explained that in addition to agricultural income, he also earned commission from sale of produce grown by other farmers and whatever the commission received by way of cash, that was deposited in his bank account regularly and also during the demonetization period. After considering the submissions of the assessee, the Ld. AO estimated the assessee’s income from agriculture @ Rs. 75,000/- per acre. Accordingly, the total agricultural income derived by the assessee and his family members during the year 3 works out to Rs. 7,75,875/- and also considering the size of the family, an amount of Rs. 3 lakhs was considered as assessee’s net income per year. After considering the facts and circumstances of the case, the Ld.AO considered the deposits of Rs. 15,00,000/- as accumulated agricultural income derived by the assessee and his family members and the balance amount of Rs. 16,46,475/- was treated as unexplained money U/s. 69A of the Act. Accordingly, the assessment was completed U/s. 144 of the Act. On being aggrieved, the assessee preferred an appeal before the Ld. CIT(A)-NFAC. The Ld. CIT(A)-NFAC after considering the submissions of the assessee, confirmed the addition made by the Ld. AO for an amount of Rs. 16,46,457/-. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal: “1. The order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case. 2. The Ld. CIT(A) ought to have quashed the assessment order passed without issue of notice U/s. 143(2) of the Act as invalid. 3. Without prejudice to the above, the Ld. CIT(A) is not justified in sustaining the addition of Rs. 16,46,457/- made by the AO U/s. 69A of the Act towards unexplained cash deposits. 4. Any other grounds may be urged at the time of hearing.” 4 3. Grounds No.1 and 4 are general in nature and need no adjudication. Ground No.2 is not pressed by the assessee. At the outset with respect to the issue involved in Ground No.3, it was the submission of the assessee that the Ld. AO has not properly estimated the income of the assessee. He further submitted that the Ld. AO has not considered the income earned by the assessee from the commission business and also he has not considered the repayment of loan which was taken by the assessee for the agricultural purposes for an amount of Rs.11,26,457/-. The assessee also filed the loan account ledger copies. Therefore, the Ld.AR pleaded to set-aside the orders of the Ld. CIT(A)-NFAC and allow the grounds raised by the assessee. 4. Per contra, the Ld. DR submitted that that the Ld. AO has considered the agricultural income but the assessee has failed to explain the balance cash deposits for an amount of Rs. 16,46,457/- and therefore the Ld. AO made the addition. Further, the Ld. DR submitted that the assessee has not filed any evidence to prove that he was acted as a commission agent for agricultural produce. Therefore, the Ld.AR pleaded to confirm the orders passed by the Ld. Revenue Authorities. 5 5. I have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. There is no dispute that the assessee is having agricultural land for an extent of 10.34 Acres and also cultivated the commercial crops in the said agricultural land. But the Ld. AO estimated the income of the assessee at Rs. 75,000/- per acre. However, the Ld. AO has not given any reason for his estimation and also he has not given any basis for the expenditure incurred by the assessee and his family members. It is also an admitted fact that the assessee has availed agricultural loan for an amount of Rs. 11,26,457/- and incurred expenditure and after receipt of the agricultural income, the assessee has repaid the loan amount. But the Ld. Revenue Authorities have not considered the entire loan amount. The assessee’s loan account copies clearly establish that the assessee has availed an agricultural loan and repaid the same. It is also an admitted fact that the assessee has not filed any proof to establish that he earned agricultural income for the year under consideration but it is a common practice in the villages that they would not maintain any records or books of account for doing some small commission agent business. Therefore, considering the facts and circumstances of the case, I consider the repayment of loan 6 amount of Rs. 11,26,457/- as explained and the balance amount of Rs. 5,20,000/- is earned by the assessee from his commission business. Therefore, I have no hesitation to come to a conclusion that the assessee has properly explained the source of his deposits for an amount of Rs. 16,46,457/- and hence the ground No.3 raised by the assessee is allowed. 6. In the result, appeal filed by the assessee is allowed. Pronounced in the open Court on 30th October, 2024. Sd/- (दु᭪वूᱧ आर.एल रे᲻ी) (DUVVURU RL REDDY) ᭠याियकसद᭭य/JUDICIAL MEMBER Dated :30/10/2024 OKK - SPS आदेश की Ůितिलिप अŤेिषत /Copy of the order forwarded to:- 1. िनधाᭅᳯरती/ The Assessee – Mannava Ramarao, D.No. 1-152, Penumaka Post, Tadepalle Mandal, Guntur, Andhra Pradesh – 522501. 2. राज᭭व/The Revenue – Income Tax Officer, Ward-2(3), O/o. ITO, Lakshmipuram Main Road, Guntur, Andhra Pradesh-522006. 3. The Principal Commissioner of Income Tax, 4.आयकर आयुᲦ (अपील)/ The Commissioner of Income Tax (Appeals), 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, िवशाखापटणम/ DR, ITAT, Visakhapatnam 6.गाडᭅ फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "