2024 (7) TMI 574

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....A) was not justified in confirming the addition of Rs. 11,46,500/- against cash deposits during demonetization period. (4) The Ld. CIT(A) was not justified in confirming the application of section 68 and moreover adopting section 115BBE. 2. The background facts leading to present appeal are such that the assessee-individual is a farmer having sole source of income as agriculture. The revenue, from an information available in AIMS/ITBA module that the assessee has made cash deposits of Rs. 11,46,500/- in an a/c with Indusind Bank during demonetization period from 08.11.2016 to 30.12.2016, issued notice dated 14.03.2018 u/s 142(1) requiring the assessee to file return by 31.03.2018. In response, the assessee filed a belated return on 20.05.2019 declaring interest income of Rs. 4,537/- and agricultural income of Rs. 21,20,298/-. Although in Para No. 2 and 3 of assessment-order, the AO has noted that the assessee did not file any return, subsequently in Para No. 4.3 of same order the AO has accepted filing of belated return on 20.05.2019 declaring aforesaid incomes. The AO issued notices dated 13.08.2019 and 18.09.2019 u/s 142(1) requiring the assessee to explain the sources of ca....

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....s, Sugarcane were grown and the produce was sold. The Written-Submission filed by assessee is re-produced below for an immediate reference: 5. Drawing us to the documents filed in Paper-Book and referred in the above Written-Submission at different places, Ld. AR submitted that the assessee is holding sufficient land for earning agricultural income; that the assessee has also availed KCC loan for the purpose of cultivation on lands; that the assessee has sold agriculture produce in market which is evident from sample bills. He submitted that the assessee is an agriculturist and has not kept complete record and all sale bills though enough sale was in fact made. He submitted that the assessee has declared agricultural income of Rs. 21,10,298/- out of which the AO has accepted only agricultural income of Rs. 9,63,798/- without any basis. Ld. AR submitted that the AO has picked figure of Rs. 9,63,798/- just to leave approximate amount to treat the cash deposit of Rs. 11,46,500/- as unexplained to enable him to make addition u/s 69A. Ld. AR strongly contended that the assessee's full time occupation is agricultural activities and nothing else. He submitted that the assessee has alread....

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....directly sold to the customers. We also find that the assessee is having agriculture as sole source of income and there is no other source of income brought on record by Ld. AO. The assessee has also filed a solemnized affidavit to CIT(A) making averment that he has no income except agriculture. Since agricultural income is fully exempt, the assessee does not have any taxable income and therefore the addition u/s 69A cannot be made. These aspects get full support from direct decision by Co-ordinate Bench of ITAT, Indore in Madhusudan Dhakkad (supra); we extract below a few paras of decision relevant to present case of assessee: "6......Ld. AR submitted that the agricultural sector in our country is not fully organized. It is a known fact that the agriculturists are selling part of their crop to the established dealers and part of their crop directly to consumers. This fact is very much accepted by Hon'ble ITAT, Chennai in Smt. Annakkalanjiam Mathivanan ITA No. 2451/Chny/2018 order dated 22.01.2019: "5. The Assessing Officer as well as the CIT(Appeals) have to appreciate the fact that the agricultural products in this country are traded in unorganized sector. The workforce in t....

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....urce of income except agricultural income, it is but natural that the assessee has made cash-deposits in the bank account out of agricultural income only. According to Ld. AR, agricultural income is non-taxable and hence there cannot be any addition on account of taxable income u/s 69A. Ld. AR relied upon the decision of Indore Bench in ITO Vs. Smt. Shahnaj Bano, ITA No. 443/Ind/04 order dated 07.01.2005 and claimed it to be directly applicable to the assessee: "8. As regards investment in flat, the AO has not brought on record any source of income except the income from agriculture claimed by the assessee. If a person has only agricultural income and no other income, then no addition can be made to the total income unless and until the AO proves that the assessee has any other source of income which is taxable under the Income-tax Act. The AO has not brought on record any material or evidence to show that the assessee was having any other source of income except agricultural income which is not taxable. CIT(A) was, therefore, justified in deleting the addition of Rs. 3,45,356/- to the total income made by the AO because the assessee has no income taxable and agricultural income....