Varshaben Chauhan Vs ITO (ITAT Rajkot)
Agricultural Cash Deposits Not Entire Income: ITAT Rajkot Restricts Addition to 10%-No 115BBE for Agricultural Cash Flow:
The Rajkot Bench (SMC) of the ITAT, vide order dated 31.12.2025 in Varshaben Chauhan v. ITO, Jamnagar (ITA No. 689/RJT/2025, AY 2020-21), partly allowed the assessee’s appeal and substantially reduced the addition made on account of cash deposits in a bank account.
The assessee, an individual agriculturist, had not filed a return of income as her entire income comprised agricultural income exempt from tax. Based on information received u/s 133(6) from Saurashtra Gramin Bank, the AO noticed cash deposits of ₹18,68,419 (excluding interest) and treated the same as unexplained money u/s 69A, along with addition of bank interest of ₹24,858, aggregating to ₹18,93,277. The assessment was framed ex-parte, despite the assessee having furnished landholding documents (Form 7/12 and Form 8A) and details of agricultural activities. The CIT(A) confirmed the additions.
Before the Tribunal, the assessee demonstrated ownership and cultivation of substantial agricultural land (about 56.41 vighas) held jointly with family members and explained that the cash deposits represented agricultural receipts and past savings. The Tribunal accepted that the assessee was a genuine agriculturist, that cultivation was not in dispute, and that entire cash deposits could not be treated as income, since only the profit element embedded in agricultural sales could at best be brought to tax.
Considering the smallness of the amounts and peculiar facts, the ITAT held that an estimated addition of 10% of total deposits would meet the ends of justice. Accordingly, the AO was directed to restrict the addition to ₹1,89,327 (10% of ₹18,93,277) and to tax the same under normal provisions, not u/s 115BBE. The Tribunal clarified that the decision was fact-specific and not a general precedent.
Thus, the appeal was partly allowed, granting substantial relief to the assessee.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
