[2024] 167 taxmann.

com 320 (Madras)[02-09-2024]

INCOME TAX : Where assessee deposited Rs. 31 lakhs in its bank account during
demonetization period, but assessee could not explain source of deposit of cash,
considering amount of agricultural income declared by assessee for last two
financial years, Tribunal was justified in allowing relief to extent of Rs. 4 lakhs
towards cash deposits into bank account and sustaining addition on account of
balance amount

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[2024] 167 taxmann.com 320 (Madras)

Section 69A of the Income-tax Act, 1961 - Unexplained moneys (Bank deposits) -
Assessment year 2017-18 - Cash deposits of Rs. 31 lakhs was made by assessee during
demonetisation period - Assessing Officer treated said cash deposits as unexplained income
under section 69A - Assessee contended that he had earned agricultural income and it had
certain amount of cash in hand - Tribunal noted that although assessee claimed to have
earned agricultural income, but no evidence had been filed with regard to extent of land
holding, agricultural activities carried out by assessee and income generated from
agricultural activities - Assessee could not furnish sufficient evidences to explain source for
cash deposits, except stating that he was having opening cash in hand at certain amount
and source for cash deposits was out of opening cash in hand and realization of sundry
debtors - Further, assessee had also failed to prove money lending business activities with
necessary evidences - Tribunal further held that considering amount of agricultural income
declared by assessee for last two financial years, only a reasonable amount of Rs. 4 lakhs
could be attributable towards savings, which could be kept in cash balance - Accordingly, it
allowed relief to extent of Rs. 4 lakhs towards cash deposits into bank account and
sustained addition on account of balance amount - Whether there was no infirmity in
impugned order passed by Tribunal - Held, yes [Para 8] [In favour of revenue]
CASE REVIEW

Order of Tribunal in I.T. Appeal No.1312 (CHNY) of 2023, dated 6-3-2024 (para 9) affirmed.
CASES REFERRED TO

CIT v. Purushottam Jhawar [2013] 40 taxmann.com 533/220 Taxman 74 (Andhra Pradesh) (Mag.) (para 7),
CIT (Central) v. Fertilizer Traders [2014] 42 taxmann.com 476/222 Taxman 162 (Allahabad) (Mag) (para 7)
and Pr. CIT (Central) v. A. Anubukkannan [Tax Case No. 216 & 217 of 2019, dated 4-3-2019] (para 7).
I. Dinesh for the Appellant. J. Narayanaswamy, Sr. Standing Counsel for the Respondent.
JUDGMENT
C. Saravanan, J. - This tax appeal is directed against the impugned order dated 06.03.2024 passed by the
Income Tax Appellate Tribunal in ITA.No.1312/CHNY/2023 for the assessment year 2009-10.
2. By the impugned order, the appeal filed by the Appellant in ITA.No.1312/CHNY/2023 has been partly
allowed and partly rejected.
3. Operative Portion of the impugned order reads as under:-
"7. We have heard both the parties, perused materials available on record and gone through orders of the
authorities below. Although, the appellant claims to have earned agricultural income, but no evidence has
been filed before the Assessing Officer and Id. CIT(A). Even before us, the Ld. Counsel for the assessee
has expressed his inability to submit any details with regard to extent of land holding, agricultural
activities carried out by assessee and income generated from agricultural activities. The appellant has also
failed to prove money lending business activities with necessary evidences. Therefore, we are of the
considered view that the assessee could not furnish sufficient evidences before the Assessing Officer and
the Id. CIT(A) to explain source for cash deposits, except stating that he was having opening cash in hand
at Rs. 9,00,000/- and source for cash deposits is out of opening cash in hand and realization of sundry
debtors. At the same time, the Assessing Officer and the Id. CIT(A) could not adduce any reasons for not
considering the explanation of the assessee with regard to opening cash in hand of Rs. 9,00,000/-.
Although, the appellant could not file necessary evidences, the possibility of keeping opening cash in
hand out of agricultural income declared for last two financial years cannot be ruled out. The assessee has
filed ITRs for last two financial years and as per ITRs filed by the assessee, the assessee has declared
about Rs. 6,00,000/- agricultural income for two assessment years. The assessee has not declared any
other income in the return of income filed for last two financial years. ars. Assuming for a moment, the
assessee derives agricultural income at Rs. 6,00,000/-, it cannot be said that the assessee has saved entire
agricultural income without spending for his day-to-day expenses. Therefore, considering the amount of
agricultural income declared by the assessee for last two financial years, we are of the considered view
that a reasonable amount can be attributable towards savings, which can be kept in cash balance.
Therefore, out of total agricultural income declared by the assessee, we consider a Sum of Rs. 2,00,000/-
towards expenses of the assessee for two years and balance sum of Rs. 4,00,000/- is available with the
assessee in the form of cash in hand which can be considered as source for cash deposits. Therefore, we
direct the Assessing Officer to allow relief to the extent of Rs. 4,00,000/-towards cash deposits into bank
account in addition to relief already given by the Id. CIT(A). For balance cash deposits, the assessee
could not adduce any evidence. Therefore, we sustain additions made by the Assessing Officer and
sustained by the Id. CIT(A). To sum up, out of total additions sustained by the Id. CIT(A) of Rs.
31,60,956/-, the assessee gets relief of Rs. 4,00,000/- and balance amount of Rs. 27,60,956/-has been
confirmed".
8. In the result, appeal filed by the assessee is partly allowed.
4. In return of Income filed by the appellant for the assessment year 2017-18 on 06.03.2018, the appellant had
declared an income of Rs.3,75,350/-and an agricultural income of Rs.50,000/-.
5. The assessment for Assessment Year 2017-2018 was completed on 27.12.2019 under Section 143(3) of the
Income Tax Act, 1961 by treating cash deposits of Rs.36,34,071/- was made by the appellant during
demonetisation in 2016 as "unexplained income" under Section 69A of the Income Tax Act, 1961.
6. The case of the appellant is that the proceedings initiated pursuant to the notice under Section 143(2) of the
Income Tax Act, 1961 dated 21.09.2018 and further notice dated 07.08.2019 under Section 142(1) and
11.10.2019 under Section 142(1) of the Income Tax Act, 1961 were confined to source of cash deposits made
during the demonetization period and therefore inclusion of entire cash deposits as "unexplained income" of
the Appellant was unwarranted.
7. The appellant relied on the decision of the Hon'ble Division Bench of the Andhra Pradesh High Court in the
case of CIT v. Purushottam Jhawar [2013] 40 taxmann.com 533/220 Taxman 74 (Andhra Pradesh) (Mag.)
rendered in the context of Section 158 BB of the Income Tax Act, 1961as it stood then the decision of the
Allahabad High Court in CIT (Central) v. Fertilizer Traders [2014] 42 taxmann.com 476/222 Taxman 162
(Allahabad) (Mag) and that of this High Court in Principal Commissioner of Income Tax, Central 1, v. A.
Anbukkannan, [Tax Case Nos. 216 & 217 of 2019, dated 04.03.2019].
8. We have considered the arguments advanced by the learned counsel for the appellant. As such, no questions
of law much-less any substantial questions of law arises for our consideration in this appeal. Therefore, this
tax appeal is without any merits. The dispute relates to cash deposits made by the Assessment during
demonetisation which was treated as "unexplained income" of the appellant. We also do not find any infirmity
in the impugned order passed by the Income Tax Appellate Tribunal.
9. Therefore, this tax appeal is liable to be dismissed. It is accordingly dismissed. No costs.
TANVI

*In favour of revenue.