SH. RAJBIR SINGH,CHANDIGARH V. ITO, W-5(3), CHANDIGARH

ITA 576/CHANDI/2019

AI Insights

This case involves an appeal by Shri Rajbir Singh against the order of the CIT(A)-2, Chandigarh, which upheld the addition of Rs. 10,50,000 to the assessee's income for the Assessment Year 2009-10, attributed to unexplained cash deposits in his bank account. The primary contention was the source of Rs. 12,50,000 deposited in the assessee's account, which the Income Tax Officer (ITO) initially assessed as income from undisclosed sources. The assessee argued that these deposits were from legitimate sources including agricultural income, bank withdrawals, and past savings. The CIT(A) and the Tribunal examined the explanations and evidence provided, leading to the partial acceptance of the assessee's appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 107619 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-08-2024
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2019
• Other Referred Cases: CIT Vs. R. Venkataswamy Naidu(1956) 29 ITR 529, Sri Ranganatha Enterprises Vs. CIT (1998) 232 ITR 568, Sharma Tayagi Vs. ITO (in ITA No. 347 to 349/Del/2015 dt. 22/08/2017)
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DHARAMVIR
• Assessee Lawyers: PARIKSHIT AGGARWAL; C.A
• Keywords: Additional evidence; Corroborative evidences
• Section: 144; 142(1); 143(2)

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: HYBRID MODE ŵी िवŢम िसंह यादव, लेखा सद˟ एवं ŵी परेश म. जोशी, Ɋाियक सद˟ BEFORE: SHRI. VIKRAM SINGH YADAV, AM & SHRI. PARESH M. JOSHI, JM आयकर अपील सं./ ITA NO. 576/Chd/2019 िनधाŊरण वषŊ / Assessment Year : 2009-10 Shri Rajbir Singh C/o Parikshit Aggarwal, C.A H.No. 1238, Sector 22B, Chandigarh बनाम The ITO Ward-5(3) Chandigarh ˕ायी लेखा सं./PAN NO: AOIPS8923C अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Parikshit Aggarwal, C.A राजˢ की ओर से/ Revenue by : Shri Dharam Vir, JCIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 21/08/2024 उदघोषणा की तारीख/Date of Pronouncement : 18/11/2024 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A)-2, Chandigarh dt. 28/02/2019 pertaining to Assessment Year 2009-10, wherein the limited issue relates to sustenance of addition of Rs. 10,50,000/- on account of cash deposits in the bank account maintained by the assessee. 2. Briefly the facts of the case are that the assessee had originally filed his return of income on 31/07/2009. Thereafter, basis information that the assessee had deposited cash in his saving bank account maintained with HDFC Bank Ltd., the case of the assessee was selected for scrutiny and notices under section 143(2) and 142(1) were issued. However in absence of any compliance made by the assessee, the assessment was completed under section 144 wherein the AO has brought to tax an amount of Rs. 24,55,000/- as income from undisclosed sources being the amount found deposited in cash in the saving bank account maintained with HDFC Bank Ltd. 2 3. The assessee thereafter carried the matter in appeal before the ld CIT(A) and during the appellate proceedings, the assessee submitted that it has maintained two bank accounts and there were only cash deposit of Rs. 12,50,000/- as against 24,55,000/- held by the AO. It was further submitted that regarding the sources of cash deposit of Rs. 12,50,000/-, the source of the same is out of agriculture income of Rs. 7.50 lakhs, cash withdrawal from the bank account amounting to Rs. 3.45 lacs and the remaining amount of Rs. 1.55 lacs out of his past savings. The additional evidence in the form of details of land holding and the details of cash withdrawal made on the respective dates were submitted before the Ld. CIT(A) and after calling for the Remand Report from the AO, the Ld. CIT(A) has upheld the addition on account of unexplained cash deposit to the tune of Rs. 10,50,000/-. 4. Against the said findings, the assessee is in appeal before us. 5. During the course of hearing, the Ld. AR submitted that it is an admitted fact that the assessee holds 27 acres of agriculture land in his name and Rs. 7.50 lakhs were deposited by him out of sale of agricultural produce. It was submitted that the Ld. CIT(A) has rejected the explanation of the assessee holding that no supporting evidence in the form of ‘J-Forms’ have been brought on record by the assessee that could corroborate the fact that the deposits was made out of the sale proceeds of the agriculture produce. In this regard, it was submitted that the assessee is an agriculturist and given his rural background, he was not in the habit of maintaining the necessary documentation, therefore the same could not be produced before the AO as well as before the Ld. CIT(A). It was however submitted that there is no dispute that the assessee held 27 acres of agriculture land and there have been regular sale proceeds of agriculture produce which have been deposited in the bank account and in this regard, reference was drawn to the bank statement of the assesee for preceding as well as subsequent year. It was accordingly submitted that the 3 explanation so submitted by the assessee be accepted and necessary relief be provided to the assessee. 5.1 Regarding the cash withdrawal amounting to Rs. 3.45 lakhs, it was submitted that the necessary details were duly submitted before the Ld. CIT(A) and the Ld. CIT(A) has merely rejected the said explanation holding that no prudent person would follow the practice of withdrawing money from his bank account to deposit it later. In this regard, it was submitted that it is assessee prerogative as and when he like to withdraw the money and deposit the money back into the bank account and so long as the necessary nexus has been established, the explanation canot be rejected merely on assumption and presumption as so taken by the Ld. CIT(A). 5.2 Regarding past savings of Rs. 1.55 lakhs, it was submitted that the assessee’s earlier bank statement are on record which shows sufficient balance at the beginning of the year and the same has not been disputed by the AO in the remand proceeding as well as by the Ld. CIT(A) hence the said explanation should be accepted. 6. Per contra, the Ld. DR has relied on the findings of the AO as well as that of the Ld. CIT(A). It was submitted that the assessee has failed to furnish any documentary evidence regarding agriculture operation carried out and sale of the agriculture produce and the onus is clearly on the assessee to file necessary documentation in support thereof and in this regard, reliance was placed on the decision of Hon’ble Supreme Court in case of CIT Vs. R. Venkataswamy Naidu(1956) 29 ITR 529 as well as decision of Hon’ble Karnataka High Court in case of Sri Ranganatha Enterprises Vs. CIT (1998) 232 ITR 568 and it was submitted that the Ld. CIT(A) has rightly held that mere ownership of agriculture land is not sufficient to prove that agriculture income has been earned. It was submitted that where the stand of the assessee is accepted, then it will lead to 4 conclusion that all the agriculture land yields profit and no loss is ever incurred by any agriculturalist. Further reliance was placed on the Coordinate Delhi Bench decision in case of Sharma Tayagi Vs. ITO (in ITA No. 347 to 349/Del/2015 dt. 22/08/2017) wherein on identical facts, it was held that mere holding of agriculture land does not prove earning of agriculture income. Regarding deposits out of past savings, it was submitted that the Ld. CIT(A) has rightly held that in absence of any cogent evidences, this plea is not acceptable. He accordingly relied on the findings of the Ld. CIT(A). 7. We have heard the rival contentions and purused the material available on record. The limited issue under consideration relates to nature and source of cash deposit of Rs. 10,50,000/- in the bank account maintained by the assessee. It is a settled legal proposition where the money is found during deposited in the bank account owned and maintained by the assessee, the onus is on the assessee to explain the nature and source of such deposit. 8. In the instant case, the assessee has explained that the source of cash deposit of Rs 12.50 lacs is out of agriculture income of Rs. 7.50 lakhs, out of earlier cash withdrawals from the bank account amounting to Rs. 3.45 lacs and the remaining amount of Rs. 1.55 lacs was out of his past savings. Firstly, regarding the cash withdrawals, on perusal of the bank statement placed as part of the assessee’s paperbook, we find that there were initial withdrawals and subsequent deposit within reasonable period of time, therefore, the explanation of the assessee is found to be reasonable and the same is hereby accepted in absence of any other adverse material or finding on record. Similarly, we find that the assessee has sufficient bank balance at the beginning of the year which explains the source of deposit out of past savings and the same is hereby accepted. 5 9. As far as the source of deposit of Rs 7.50 lakhs as arising out of sale of agriculture produce, we find that the explanation so furnished by the assessee cannot be accepted in absence of necessary corroboraration. Mere landing holding or cultivatable land holding or the fact that the agriculture operations were carried out during the earlier years and there were deposits in the bank account in the earlier years is not sufficient enough to explain the source of deposit for the year under consideration. We accordingly upheld the findings of the ld CIT(A) where he says that no supporting evidence in form of “J forms” or any other material has been brought on record by the assessee which corroborate the contention that Rs 7.50 lakhs were deposited out of sale of agriculture proceeds and mere filing evidence of land holding doesn’t prove that agriculture activities were purused and were the source of cash deposits. In the result, the addition of Rs 7.50 lacs is sustained and remaining addition is hereby directed to be deleted. 10. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on 18/11/2024 Sd/- Sd/- परेश म. जोशी िवŢम िसंह यादव (PARESH M. JOSHI) ( VIKRAM SINGH YADAV) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟/ ACCOUNTANT MEMBER AG आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. आयकर आयुᲦ (अपील)/ The CIT(A) 5. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 6. गाडᭅ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "