Facts of the Case

The assessee, Kanubhai Maganbhai Patel, an agriculturist residing in a remote village in Anand district, was subjected to reassessment for Assessment Year 2012-13 on the basis of information regarding cash deposits of ₹10,66,000 in his bank account maintained with Caira District Co-operative Bank Ltd. A notice under Section 148 dated 27.03.2019 was issued. As the assessee did not respond to statutory notices, the Assessing Officer completed the assessment ex parte and made an addition of ₹11,01,694 under Section 69A treating the cash deposits as unexplained money. The CIT(A), NFAC dismissed the appeal. The assessee filed a second appeal before the Tribunal with a delay of 307 days supported by an affidavit.

Issues Involved

Whether the delay of 307 days in filing the appeal deserved to be condoned, whether addition under Section 69A was sustainable when the assessee explained cash deposits with reference to agricultural income and bank loan, and whether unexplained money addition could survive once the source was duly explained.

Petitioner’s Arguments

The assessee submitted that the delay occurred as he is an agriculturist residing in a remote village and was not aware of electronic notices and appellate procedures. On merits, it was contended that the cash deposits were made out of disclosed agricultural income regularly earned by the assessee, supported by 7/12 land extracts evidencing cultivation. It was further submitted that part of the deposits represented proceeds of a loan taken from Bank of India, which was also reflected in land and bank records. The assessee furnished bank statements and correlation statements explaining each deposit. Alternatively, it was argued that if the addition was not deleted, peak credit should be applied.

Respondent’s Arguments

The Revenue relied on the orders of the Assessing Officer and the CIT(A) and contended that the assessee had failed to furnish explanations during assessment and first appellate proceedings, justifying the addition under Section 69A.

Court Order / Findings

The ITAT Ahmedabad first condoned the delay of 307 days, noting that the assessee was an agriculturist residing in a remote village and had furnished a reasonable explanation supported by affidavit. On merits, the Tribunal observed that although the assessee failed to submit details before the Assessing Officer and CIT(A), he produced comprehensive documentary evidence before the Tribunal, including bank statements and 7/12 land extracts evidencing agricultural activities and loan receipts from Bank of India. The Tribunal noted that the cash deposits were duly correlated with agricultural income and loan receipts and that the source of deposits stood explained. Once the explanation was supported by documentary evidence, the addition under Section 69A could not be sustained. Accordingly, the Tribunal deleted the entire addition.

Important Clarification

The Tribunal clarified that where an assessee explains cash deposits with cogent documentary evidence showing agricultural income and bank loan receipts, addition under Section 69A as unexplained money is not sustainable. The Tribunal also reiterated that reasonable cause and rural background must be considered while condoning delay and adjudicating tax matters.

Final Outcome

The delay in filing the appeal was condoned. The appeal filed by the assessee was allowed in full. The addition of ₹11,01,694 made under Section 69A on account of alleged unexplained cash deposits was deleted.

 Link to download order https://www.mytaxexpert.co.in/uploads/1769063641_DEPUTYCOMMISSIONEROFINCOMETAXCIRCLE211AHMEDABADAHMEDABAD.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.