2012 (10) TMI 747 - AT - Income Tax

Tribunal upholds deletion of Rs. 30 lacs under Section 68, citing lack of other income sources.

The Tribunal upheld the deletion of the addition of Rs. 30 lacs under section 68 of the Act, emphasizing the absence of any other source of income for the ... Addition under section 68 treated as unexplained cash credit - credibility of explanation where assessee's only source is agricultural income - principle in P.K. Noorjehan regarding deceased transferor and inability of legal heirs to produce primary evidentiary proof - weight of affidavit and absence of rebuttal by assessing officerAddition under section 68 treated as unexplained cash credit - credibility of explanation where assessee's only source is agricultural income - principle in P.K. Noorjehan regarding deceased transferor and inability of legal heirs to produce primary evidentiary proof - Whether the addition of Rs. 30,00,000 made as unexplained cash credit under section 68 is sustainable where the assessee had only agricultural income and the amounts were deposited by the deceased prior to his death - HELD THAT: - The Tribunal noted the finding recorded by the CIT(A) that the assessee had no source of income other than agricultural income and that the deposits in question were made by the deceased (late Hariram) during his lifetime. The CIT(A) relied upon the affidavit of the legal heirs stating that the total amount deposited was out of sale proceeds of agricultural land and explained why the sale deed recorded a lesser amount. The assessing officer did not rebut the contentions made in the affidavit. Applying the ratio of the Apex Court in P.K. Noorjehan and relevant tribunal authority, the CIT(A) held that in the circumstances - where the transaction and deposits were effected by the deceased and the legal heirs could only depose to matters within their knowledge - the explanation given was credible and the addition could not be sustained. The Tribunal agreed with this determinative reasoning and found no reason to disturb the conclusion that the addition was not in order. [Paras 4]The addition of Rs. 30,00,000 as unexplained cash credit under section 68 is deleted and the Revenue's appeal is dismissed.Final Conclusion: The Tribunal upheld the CIT(A)'s deletion of the addition under section 68, accepting the explanation that the bank deposits were sale proceeds of agricultural land effected by the deceased and concluding that, in absence of rebuttal and applying the Noorjehan principle, the addition was not sustainable; Revenue's appeal dismissed. Issues:1. Addition of Rs. 30 lacs under section 68 of the Act.2. Source of deposited amount claimed to be from sale proceeds of agricultural land.3. Deletion of addition by Commissioner of Income Tax (Appeals).4. Challenge before the Tribunal regarding the deletion of addition.Issue 1: Addition of Rs. 30 lacs under section 68 of the ActThe Revenue challenged the deletion of the addition of Rs. 30 lacs made under section 68 of the Act by the first appellate authority. The Assessing Officer added the cash deposit as unexplained cash credit/income of the assessee. The appellant contended that the first appellate authority erred in considering whether the assessee had other sources of income or not, especially when the broker denied the transaction. However, the counsel for the assessee strongly defended the impugned order by emphasizing that there was no other source of income for the assessee except agricultural income.Issue 2: Source of deposited amount claimed to be from sale proceeds of agricultural landThe assessee deposited Rs. 56,30,000/- in his bank account, claiming it to be from the sale proceeds of agricultural land. The Assessing Officer asked for the source of the deposited amount, which the assessee stated was received through a cheque by the father, who had passed away. The legal heir also claimed that the amount was from the sale of agricultural land. The Commissioner of Income Tax (Appeals) deleted the addition, stating that the assessee had no other source of income besides agricultural income. The AR referred to a decision of the Hon'ble Supreme Court and argued that the legal heirs were unable to explain the bank deposits made by the deceased, emphasizing the credibility of the explanation over the materiality of evidence.Issue 3: Deletion of addition by Commissioner of Income Tax (Appeals)The Commissioner of Income Tax (Appeals) deleted the addition after considering the facts and circumstances of the case. The appellant contended that the deposits in the bank account were made by the deceased father, who was engaged in agricultural operations, and the legal heirs stated that there was no other source of income for the family. The affidavit submitted by the legal heirs supported the claim that the deposited amount was from the sale proceeds of agricultural land. The Commissioner found the explanation satisfactory based on the Apex Court's decision and the ITAT's decision, concluding that there was no other source of income for the appellant except agricultural income.Issue 4: Challenge before the Tribunal regarding the deletion of additionUpon analyzing the observations in the assessment order, the conclusion in the impugned order, and the arguments of the counsels, the Tribunal found a categorical finding that there was no other source of income for the assessee except agricultural income. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) based on the legal precedents cited, including the decision in the case of P.K. Noorjahan and Mrs. Malini Ramnath Rele vs. ITO. Consequently, the Tribunal dismissed the appeal of the Revenue, emphasizing that since the assessee had no other sources of income except agricultural income, there was no merit in challenging the deletion of the addition.In conclusion, the Tribunal upheld the deletion of the addition of Rs. 30 lacs, emphasizing the absence of any other source of income for the assessee apart from agricultural income, as supported by legal precedents and the explanation provided by the legal heirs.