2022 (10) TMI 761 - AT - Income Tax

Tribunal quashes Rs. 10,65,000 addition in favor of appellant

The Tribunal allowed the appellant's grounds 1, 3, 4, 5, and 6, quashing the addition of Rs. 10,65,000. The appeal was allowed, and the order was ... Addition u/s 69 - deposit in the bank and the calculation of the tax by utilising the provision u/s 115BBE - HELD THAT:- As explained the deposit of cash in four stage was deposited as per the instruction of the CBDT which the assessee is eligible to retain cash for her own purpose. Related to deposit of agricultural income, the assessee in both the stages submitted the Khasra Girdawari and copy of Jamabandi of agricultural land. Related to withdrawals from Bank of India, the copy of the bank statement also attached - The assessee had also taken the gold loan and reflected in the bank account - So, the entire amount was duly explained at source for depositing the cash in the bank account. The ld. Sr. DR was not strongly made any objection in relation to the fact of the cases which was duly explained by the assessee. As relying on Gandhi Ram case [2022 (8) TMI 377 - ITAT CHANDIGARH] the implication of Section 115BBE is not relevant for the assessee. Assessee appeal allowed. Issues Involved:1. Confirmation of income assessment by CIT(A) despite adjournment request.2. Prevention from compliance due to COVID-19 and technical issues.3. Non-acceptance of agricultural income evidence.4. Non-mentioning of cultivation evidence by CIT(A).5. Non-application of CBDT Instruction No. 03/2017 for cash deposits during demonetization.6. Treatment of bank deposits as deemed income under Section 69A and application of Section 115BBE.Detailed Analysis:Issue 1: Confirmation of Income Assessment by CIT(A) Despite Adjournment RequestThe appellant argued that the CIT(A) erred in confirming the Assessing Officer's (AO) action of assessing the income at Rs. 10,65,000 + 3,00,000, despite the appellant's request for adjournment until June 30, 2022, due to the submission of an adjournment letter on May 30, 2022. The Tribunal noted that the CIT(A) upheld the AO's order without considering the adjournment request.Issue 2: Prevention from Compliance Due to COVID-19 and Technical IssuesThe appellant contended that they were prevented from complying with the requirements due to sufficient and reasonable causes, including COVID-19 and the husband's illness, as well as technical glitches with the new e-portal. The Tribunal acknowledged these reasons but focused on the evidence provided for the cash deposits.Issue 3: Non-Acceptance of Agricultural Income EvidenceThe appellant claimed that the amount deposited in the bank account was from agricultural income, supported by Jamabandi and Girdawari documents. The CIT(A) did not accept this evidence, stating that the appellant only owned 6 acres of agricultural land, not 12.5 acres as claimed, and lacked evidence of crop sales. The Tribunal reviewed the evidence and found that the appellant had provided sufficient documentation to explain the source of cash deposits.Issue 4: Non-Mentioning of Cultivation Evidence by CIT(A)The appellant argued that the CIT(A) failed to mention the evidence of land cultivation submitted in the form of Girdawari. The Tribunal found that the appellant had indeed submitted the necessary evidence, which was overlooked by the CIT(A).Issue 5: Non-Application of CBDT Instruction No. 03/2017 for Cash Deposits During DemonetizationThe appellant contended that the CIT(A) did not apply the CBDT Instruction No. 03/2017, which allows individuals to retain cash deposits up to Rs. 2,50,000 during the demonetization period without verification. The Tribunal agreed with the appellant, noting that the instruction was binding on all government officers under the CBDT's charge.Issue 6: Treatment of Bank Deposits as Deemed Income Under Section 69A and Application of Section 115BBEThe appellant challenged the AO's treatment of Rs. 10,65,000 as deemed income under Section 69A and the application of Section 115BBE for charging tax. The Tribunal referenced the ITAT Chandigarh's decision in Gandhi Ram Vs. PCIT, emphasizing that the applicability of deeming provisions must be clearly established with specific findings. The Tribunal concluded that the AO and CIT(A) did not provide sufficient justification for invoking Section 69A and Section 115BBE.Conclusion:The Tribunal allowed the appellant's grounds 1, 3, 4, 5, and 6, quashing the addition of Rs. 10,65,000. The appeal was allowed, and the order was pronounced in the open court on October 12, 2022.