Cash deposited out of sale of agricultural land cannot be treated as unexplained

V. Nagarajan Vs ITO (ITAT Chennai)

Facts- The only issue in this appeal of the Assessee is against the order of the CIT(A) confirming the action of the Assessing Officer in making an addition of Rs.2.20 crores as unexplained cash deposits in the Bank account, despite the Assessee giving evidences that the cash deposits are out of sale consideration of agricultural land of assessee’s mother.

Conclusion- The assessee deposited this amount of Rs.2.20 crores in his bank account maintained with Punjab National Bank and the inference in which the normal man will draw is that the amount cannot be from any other source except from the transaction of sale of land because it is common in the transactions of immovable properties that there is under hand transactions. The presumption goes in favour of assessee that the cash deposit in bank account of assessee maintained with PNB on 22.09.2014 amounting to Rs.2.20 crores is coming from the sale transaction of agricultural land by the mother and the legal heirs of the mother including the assessee.

The assessee produced a definite evidence i.e., sale agreement which is entered into for an amount of Rs.2,85,00,000/- on 14.08.2014 for sale of this agricultural land. The assessee has fairly established the fact that the cash deposits are out of sale consideration as recorded in the agreement of sale. In view of the above given facts and circumstances of the case, we are of the view that the cash deposit made by assessee amounting to Rs.2.20 crores are arising out of sale of agricultural land by the assessee’s mother including assessee and hence, this cannot be treated as unexplained cash deposit.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

This appeal by the Assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-1, Trichy in I.T.A. No.158/2017-18/CIT(A)-1/TRY dated 01.02.2019. The Assessment was framed by the Income Tax Officer, Ward-1(1), Trichy for the Assessment Year 2015-2016 u/s.143(3) of the Income Tax Act, 1961, (hereinafter ‘the Act’) vide order dated 28.12.2017.

2. The only issue in this appeal of the Assessee is against the order of the CIT(A) confirming the action of the Assessing Officer in making an addition of Rs.2.20 crores as unexplained cash deposits in the Bank account, despite the Assessee giving evidences that the cash deposits are out of sale consideration of agricultural land of assessee’s mother. For this, the Assessee has raised the following grounds 1 to 9, as under.

1. The order of the Commissioner of Income Tax (Appeals)-1, Trichy is opposed to law, facts and circumstances of the case.

2. The Commissioner of Income Tax (Appeals) erred in not considering the sale agreement signed by the purchaser.

3. The learned Commissioner of Income Tax (Appeals) erred in treating the entire cash deposits were not of the sale consideration, though the Assessee has provided proof for connection between the money deposited in the bank account and the money mentioned in the sale agreement.

4.The total sale consideration was Rs.2,80,75,800/- and because of insistence of the buyer to save the stamp duty, the sale consideration was disclosed in the sale deed as Rs.60,75,800/-

5. The learned Commissioner of Income Tax (Appeals) failed to consider that the Assessee is not having any other sources of income so as to generate undisclosed income of Rs.2.20 crores.

6. Mere rejection by the purchaser regarding the “on-money” though entered into a sale agreement is not the reason for addition as other sources.

7. The Commissioner of Income Tax (Appeals) failed to consider that the entire sale consideration was received and deposited on the same date and there is link between cash deposits and sale of agricultural land, as per the sale agreement.

8. The Commissioner of Income Tax (Appeal) failed to consider that the sale proceeds of the said agricultural land is not a capital asset as per Section 2(14) of the Income Tax Act, 1961.

9. Section 68 has application, when no explanation is offered or the explanation offered is not satisfactory, I have corroborative evidence such as Agreement for sale and deposit of cash on the day of executing the sale deed.

3. The brief facts of the case are that the Assessee is an individual and filed his return of income for the Assessment Year 2015–2016 on 08.09.2015 admitting a total income of Rs.8,00,800/- with an agricultural income of Rs.4,86,740/-. The Assessee’s case was selected for scrutiny assessment under Computer Aided Scrutiny Selection [CASS] for the cash deposits in the savings bank account. Hence, notice u/s.143(2) of the Act was served and the Assessee appeared. The Assessee was to explain the source of cash deposits made in the Savings Bank Account maintain with Punjab National Bank [PNB] bearing ID No.1093000100056467 amounting to Rs.2.20 crores on 22.09.2014. The Assessee, before the Assessing Officer explained that the Assessee’s mother Mrs. V. Dhanalakshmi Ammal had an agricultural land at Pudukudi Village, Lalgudi Taluk, Ariyalur District bearing S.F. No.134/25C measuring 1.78 acres which was acquired by her in inheritance on the death of her mother Mr. Rajamani Ammal on 08.02.1999. The said land was sold by mother of the assessee to SRM Institute of Science and Technology for a sum of Rs.2,80,75,000/- on 22.09.2014 and out of the above consideration, a sum of Rs.2.20 crores received from mother by the assessee in cash, which was deposited on behalf of his mother and the balance consideration was received in favour of his mother, brother and the Assessee by cheque as under:

4. The Assessing Officer after examining Dr. R. Shivakumar the Chairman of SRM Institute of Science and Technology and also examining Smt. V. Dhanalakshmi Ammal, the mother of the Assessee made an addition of this amount Rs.2.20 crores as unexplained cash deposits in the hands of the Assessee. The Assessing Officer has not believed the statement of Smt. V. Dhanalakshmi Ammal, the mother of the Assessee but believed the statement of Dr. R. Sivakumar. Aggrieved, the Assessee preferred an appeal before the CIT(A).

5. The CIT(A) on the same set of facts confirmed the action of the Assessing Officer in making the addition of Rs.2.20 crores as unexplained cash deposits in the bank account but the CIT(A) has not at all gone into the details nor examined the relevant details filed by the Assessee and for confirming the addition, he observed in paragraph nos.3.1 to 5, as under:

“3.1. The assessment was completed u/s.143(3) dated 28.12.2017 against which the Assessee has filed an appeal by Form No.35, dated 31.01.2018. The Assessee had deposited Rs.220 lakhs (Rs.2.20 crores) in Bank accounts in cash for which the case was selected and the Assessee submitted that he had an agreement for sale of the land to M/s. SRM Institute of Science and Technology which had agreed to pay them Rs.2.80 crores. However, the registered value of the land was only Rs.60,75,800/-and only this amount was received by cheque. The land was actually sold by the mother of the Assessee who also claimed before the Assessing Officer that she had received Rs.224.25 lakhs in cash apart from Rs.60.75 lakhs in cheque and that she had given Rs.220 lakhs to Shri V. Nagarajan of the Assessee.

4. S. Keerthirajan, CA/AR appeared on 18.07.2018 and 22.01.2019 and then on 31.01.2019 and he has furnished a copy of the agreement to sell between the Assessee’s mother and M/s. SRM Institute of Science and Technology as per which they have agreed to pay Rs.2.80 crores to the Assessee and this the AR contends was a sufficient proof that the money subsequently was deposited in the Bank emanated from this sale of land transaction.

5. When the final sale amount as before the Stamp Duty Authority is only Rs.60.75 lakhs, this sale agreement cannot be given any major weightage. In a statement recorded by the AO and this has been made a part of the Assessment Order, Dr. R. Sivakumar, Chairman of M/s. SRM Institute of Science and Technology has denied paying any cash to the Assessee. When the payer had denied any cash payment and the statements of both the sisters and the buyers have been recorded by the Assessing Officer, the earlier agreement to sell by M/s. SRM Institute cannot have a conclusive value.”

Aggrieved, the Assessee is now before the Tribunal.

6. We have heard the rival contentions and gone through the facts and circumstances of the case. We have perused the paper-book filed by the Assessee consisting of pages 1 to 45, the bank statement of the Assessee, account maintained with the Punjab National Bank [PNB], the Revenue and other relevant documents including the Assessment Order and the order of the CIT(A).

7. First of all, the facts are to be narrated in detail. The Assessee’s mother, Smt. V. Dhanalakshmi Ammal was having an agricultural land at Pudukudi Village, Lalgudi Taluk, Ariyalur District bearing S.F.No.134/25C admeasuring 1.78 acres which was acquired in inheritance from her mother, Mrs. Rajamani Ammal on 08.02.1999. This land is used for agricultural purposes. Since then, the Assessee’s mother Smt. V. Dhanalakshmi Ammal, the Assessee Mr. V. Nagarajan along with his brother, Mr. V. Mohan are residing in the same house and doing basically agricultural activity and is also engaged in petty electrical repair and plumbing works.

8. Assessee’s mother sold her agricultural land on 22.09.2014 to SRM Institute of Science and Technology represented by its Chairman Dr. R. Sivakumar, residing at Door No.4, Prakasam Street, Janaki Nagar, Valasaravakkam, Chennai–600087 for an agreed consideration as per the agreement to sale dated 14.08.2014 at Rs.2,80,75,800/- as against a total consideration of Rs.60.75 lakhs as per sale deed dated 22.09.2014 and the details are as under:

“1. By the purchaser of you, the 1^st person among us in the name of V. Dhanalakshmi received Cheque No.139586 dated 21.09.2014 of City Union Bank, Chennai, Tambaram Branch for Rs.20,75,800/- (Rupees Twenty Lakhs Seventy Five Thousand and Eight Hundred Only).

2. By the purchaser of you, the 1^st person among us in the name of V. Dhanalakshmi received cheque No.139587 dated 21.09.2014 of City Union Bank, Chennai Tambaram Branch for Rs.20,00,000/- (Rupees Twenty Lakhs Only).

3. By the purchase of you, the 1^st person among us in the name of V. Dhanalakshmi received Cheque No.139588 dated 21.09.2014 of City Union Bank, Chennai Tambaram Branch for Rs.20,00,000/- (Rupees Twenty Lakhs only)”

9. From the perusal of sale agreement dated 14.08.2014 entered for the sale of the above said agricultural land, an advance amount of Rs.1,00,000/- was received by Smt. V. Dhanalakshmi Ammal, wife of Late Shri Venkatesan, Shri V. Mohan and Shri V. Nagarajan, both sons of Late Shri Venkatesan residing at Door No.2/63, South Street, Esanakontru Village, Lalgudi Taluk, Thiruchirappalli District. Two more ladies, i.e. daughters of Shri V. Dhanalakshmi Ammal, Smt. V. Thilagavathy, wife of Shri Vivekanandan residing at Flat No.4, Pillaithottam, Vallalar Nagar, Karaikkal, Pudhucherry State and Smt. M. Bhuvaneswari, wife of Shri Mathiazhagan residing at North Street, Annalai Village, Thirupparayathurai Post, Pettavaithalai Taluk, Karur District were the seller parties, despite the fact that the actual owner of the land is Smt. V. Dhanalakshmi Ammal. The purchaser party was SRM Institute of Science and Technology through Dr. R. Sivakumar, S/o Shri T.V. Rajagopal residing at Prakasam Street, Janaki Nagar, Valasaravakkam, Chennai – 600 087. This agreement for sale, though SRM Institute of Science and Technology, Trichy Campus and as per this sale agreement the total considered fixed was Rs.2,80,75,800/-The relevant recital of the agreement reads as under:

“The properties which belong to the 1^st party, as mentioned above, and which has been described in the schedule of property, is negotiated to be sold and conveyed to the 2^nd party, and fixed for a sale consideration of Rs.2,80,75,800/- (Rupees Two Crores Eighty Lakhs Seventy Five Thousand and Eight Hundred only).”

10. Out of this sale consideration fixed at Rs.2,80,75,800/-, an advance of Rs.1,00,000/- (Rupees One Lakh Only) in cash was received by Smt. V. Dhanalakshmi Ammal. In lieu of this agreement, a sale deed was registered (a copy of the original sale deed which is in Tamil language and a copy of the true translation is filed before us). From the true translation copy of the sale deed, it is noted that the same is executed on 22.09.2014 and as per the sale deed, the Assessee’s mother along with her sons and daughters became party and executants of this sale deed and the land was sold to Dr. R. Sivakumar, vide PAN No. AALPS 4307B, (Cell No.99400- 26012), as purchaser in the capacity of Chairman, SRM Institute of Science and Technology. The total consideration as per the sale deed fixed is Rs.60,75,800/- and the details of the payments are given in the above paragraph no.8. It is seen that the names of the vendors, purchaser and witnesses and drafter is written on the sale deed, as under:

One more unique feature that was found was that the stamp duty paid at R.4,25,310/-(Rupees Four Lakhs Twenty Five Thousand Three Hundred and Ten Only) and this is certified by the Sub-Registrar, Lalgudi vide Registered Document No.3437 of 2014 in Book No.1. Further, the shortage of stamp duty was paid under Section 42 of the Indian Stamp Act amounting to Rs.2,10,830 (Rupees Two Lakhs Ten Thousand Three Hundred and Ten Only) by the Sub-Registrar and District Collector u/s.42 of the Indian Stamp Act on 27.09.2014. The land sold by Smt. V. Dhanalakshmi Ammal as the sole owner of the property but other legal heirs, i.e. two sons and two daughters were made parties to the sale deed as vendors. This land sold by Smt. V. Dhanalakshmi Ammalwas is claimed to be an agricultural land and the complete details of the agricultural land is as under:

“Thiruchirappalli District, Ariyalur Re-District, Lalgudi Sub-District, Lalgudi Taluk, Pudhukudi Village, Ion Nanjai, S.No.134/25C extent 0.72.0 Acres , Ac 1.78, Eastern Side 0.61.0 Acres, Ac.1.50 cents is sold to you and its four boundary details:-

√ For our balance land – East

√ For Harrip Bai Land – West

√ For Irrigation Canal – North

√ For Harrip Bai land – South

within this Ac.1.50.

And for the above land usual pathway, included for this 705400 Sq.ft (00607580) and Patta No.449.”

11. First issue as to what should be the sale consideration.

Now, the first disputed point is what is the actual sale consideration of this land and whether it is sold for Rs.2,80,75,000/- as narrated in the agreement to sale executed on 14.08.2014 or the sale consideration mentioned in the sale deed executed on 22.09.2014 at Rs.60,75,800/-. It is to be mentioned that the Assessee’s mother, Smt. V. Dhanalakshmi Ammal also received Rs.1,00,000/- at the time of execution of the agreement to sell. The Assessing Officer during the course of the scrutiny assessment examined Smt. V. Dhanalakshmi Ammal by summoning u/s.131 of the Act dated 19.12.2017; wherein in her statement while answering Question No.6, she stated that she sold her agricultural land for Rs.2,85,00,000/- and that she received a sum of Rs.2,24,25,000/- in cash apart from Rs.60,75,000/- by way of cheque as mentioned in the sale deed. She also admitted that, out of the sum of Rs.2,24,25,000/-, she had given a sum of Rs.2.20 crores to her son, Shri. V. Nagarajan, the Assessee. However, Dr. R. Sivakumar, was also summoned u/s.131 of the Act on 01.11.2017; wherein he totally denied that the land sold by Smt. V. Dhanalakshmi Ammal was for Rs.2.85 crores, whereas according to him, he has made payment by way of cheque for an amount of Rs.60,75,800/- as mentioned in the sale deed. While giving answer to Question No.12, he stated so and the relevant question No.12 and the answer for it reads as under:

“Q.No.12: During the course of assessment proceedings of Shri V. Nagarajan of Esanakorai for the Assessment Year 2015-2016, it was noticed that an amount of Rs.2,20,00,000/- was deposited in the Savings Bank Account of Shri V. Nagarjan in Punjab National Bank, Pitchandarkoil Branch. In this regard, in the Sworn Statement given by Shri V. Nagarajan on 20.10.2017, while answering to Q.No.7, he stated that out of the total consideration of Rs.2,85,00,000/-, an amount of Rs.60,75,800/-, as per the sale deed was given by cheque and the balance amount of Rs.2,24,24,200/- was given by cash on the day of registration at his home by a person as a representative on behalf of the SRM and a broker from Musiri. Do you agree with the statement of Shri V. Nagarajanof Esanakorai?

A.No.12: I gone through the statement. I don’t agree with the contention of the said Shri V. Nagarajan. Apart from the amount of Rs.60,75,800/- stated in the deed, I have not made any payment of cash or any mode to Shri V. Nagarajan.”

12. The next issue is that, in case the land sold is at a sum of Rs.2.80 crores, the amount of Rs.2.20 crores received by Shri. V. Nagarajan from his mother, Smt. V. Dhanalakshmi Ammal is on account of sale of agricultural land or from any other source of income.

13. We have gone through the submissions of the learned Counsel of the Assessee who mainly relied on the agreement to sell dated 14.08.2014 and the circumstantial evidences that are three Bank accounts of the Assessee, his brother and that of mother maintained with the Punjab National Bank; wherein a sum of Rs.2.20 crores was deposited in cash on 22.09.2014 as against the sale deed registered on 22.09.2014, Bank statement of Shri. V. Mohan, one of the party to the sale deed, maintained with the Indian Bank bearing Account No.542886772 and Smt. V. Dhanalakshmi Ammal maintained with the Indian Bank, Savings Bank Account No.542873842, both maintained at the Lalgudi Taluk Branch of Thiruchirappalli. In these Bank Accounts, a cheque of Smt. V. Dhanalakshmi Ammal was credited on 26.09.2014 for an amount of Rs.20,75,800/- and in the case of Shri V. Mohan, an amount of Rs.20,00,000/- was credited on 26.09.2014.In view of the these facts, we noted that the Assessee could co relate this amount of Rs.2.20 crores directly to the sale of the agricultural land because the from the electrical spare repairs and plumbing works is not enough to earn so much that the assessee can earn this amount of Rs2.20 crores. Ld Counsel’s argument that, from these petty jobs on that very same day, the Assessee cannot earn this huge amount of Rs.2.20 crores and that there is a direct and clear evidence of sale of the agricultural land by the mother, where the Assessee is one of the party. The Assessee received this amount of Rs.2.20 crores given by way of cash by Dr. R. Sivakumar, that is on account of sale of the agricultural land. Hence, according to Assessee, circumstantial evidences clearly indicates that this amount is out of the sale of the agricultural land and for this he relied on the decisions of the Hon’ble Supreme Court in the case of Sumathi Dayal Vs. Commissioner of Income Tax reported in [1995] 214 ITR 801 and in the case of Commissioner of Income Tax Vs. Durga Prasad More (1971) 82 ITR 540 (SC)].

14. We noted the arguments of the learned Senior Departmental Representative, Shri Sajit Kumar that, although the Assessee is one of the vendor impleaded in the sale deed as well as the agreement to sell, Smt. V. Dhanalakshmi Ammal is the sole and absolute owner of the property under transaction. Further, he argued that this is an un­registered sale agreement and it is not an admissible evidence and for this he argued that even then the money should have been paid to the Assessee’s mother and it could have been deposited into her Bank account. The learned Senior Departmental Representative argued that the Assessee’s mother did held a Bank account on the date of transfer of land because she accepted from the seller a sum of Rs.20,75,800/-by way of account payee cheque. The he also argued that the land registration deed dated 22.09.2014 clearly reflects the fair market value of the land under sale as Rs.60,75,000/-. Therefore, any consideration received over and above the fair market value, prevailing on the date of sale of the land, the same cannot be attributable to be paid for the land value. He argued that the sum of Rs.2.20 crores received by the Assessee in cash could be for some other services or consideration other than the consideration payable directly towards the land costs. The learned Senior Departmental Representative stated that he has verified the Assessee’s Bank account and noticed that the Assessee has various debit amounts out of this Rs.2.20 crores on various dates to various persons and this indicates that this sum has not been received by the Assessee on behalf of the Assessee’s mother. Therefore, the learned Senior Departmental Representative requested the Bench to uphold the order of the Assessing Officer and that of the CIT(A).

15. We have discussed the facts and circumstances and the details as noted above and the arguments of both the sides. We again repeat the same questions raised, as under:

1) The first question is that, what is the actual sale consideration of this land and whether it is sold for Rs.2,80,75,000/- as narrated in the agreement to sale executed on 14.08.2014 or the sale consideration mentioned in the sale deed executed on 22.09.2014 at Rs.60,75,800/-.

2) The next question is that, in case the land sold is at a sum of Rs.2.80 crores, the amount of Rs.2.20 crores received by Shri. V. Nagarajan from his mother, Smt. V. Dhanalakshmi Ammal is on account of sale of agricultural land or from any other source of income

First of all, we noted that neither the Assessing Officer nor the CIT(A) has at all examined the parties to the transactions in full. He examined Dr. R. Sivakumar on behalf of the SRM Institute of Science and Technology and Smt. V. Dhanalakshmi Ammal. All other parties, namely sons and daughters including the Assessee who were parties to the sale deed were not examined, except the Assessee. Further, there are other parties, namely witnesses, i.e. Shri. Parthasarathy and Shri. Muthusamy. We noted that the agreement to sell executed on 14.08.2014 was not before the Assessing Officer. Further, this agreement was produced before the CIT(A) for the first time but the CIT(A) simply brushed aside the agreement to sell without even examining the veracity of the same. Hence, definitely the CIT(A)’s order suffers from infirmity and even the Assessing Officer has not applied his mind to the facts of the case.

16. The circumstantial evidences clearly indicates that the sum of Rs.2.20 crores deposited in the Assessee’s PNB account on 22.09.2014 seems to be relatable to the same transaction towards the sale of the agricultural land. The circumstances and human probabilities indicate so. The Hon’ble Supreme Court in the case of Sumathi Dayal (supra) has held that the dispute was whether the receipts were really the winnings of the Assessee from the races and as the Assessee was booking the receipts regularly from her winnings from races and the Hon’ble Supreme Court that has raised the question whether the apparent can be considered as real. In the present case before us also the facts indicate so. Similarly, the Hon’ble Supreme Court in the case of Durga Prasad More(supra) has held that the apparent must be considered real until it is shown that there are reasons to disbelieve that the apparent is not real and that the taxing authorities are entitled to look into the surrounding circumstances and find out the reality and the matter has to be considered by applying the test of human probabilities. It has been held by the Supreme Court that having regard to the conduct of the appellant as disclosed in her sworn statement as well as other material on the record, an inference can reasonably be drawn that the winning tickets were purchased by the appellant after the event. Therefore, the majority opinion of the Settlement Commission after considering surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant’s claim about the amounts being her winnings from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably and that the finding that the said amounts are income of the appellant from other sources is not based on evidence. As in the present case, either there is a co-incidence or this is a reality that the Assessee deposited the cash of Rs.2.20 crores out of the transaction of sale of land or there is a windfall or he has earned this huge amount from meager sources of income, i.e. electrical repairs and plumbing works.

17. The Hon’ble Supreme Court in the case of CIT vs. Daulat Ram Rawatmull, (1973) 87 ITR 349 (SC), held that in every case where person is sought to be taxed for something which, he claims, does not belong to him, the findings of fact and the material on record must support the claim of the department. Moreover, there should be some direct nexus between the conclusion of fact arrived at by the authority concerned and the primary facts upon which that conclusion is based.

Before dealing with the facts of this case, we may advert to the principles which should govern the decisions of the court in such like cases. Findings on questions of pure fact arrived at by the Tribunal are not to be disturbed by the High Court on a reference unless it appears that there was no evidence before the Tribunal upon which they, as reasonable men, could come to the conclusion to which they have come; and this is so, even though the High Court would on the evidence have come to a conclusion entirely different from that of the Tribunal. In other words, such a finding can be reviewed only on the ground that there is no evidence to support it or that it is perverse. Further, when a conclusion has been reached on an appreciation of a number of facts, whether that is sound or not must be determined, not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting as a whole [Sree Meenakshi Mills Ltd. v. Commissioner of Income Tax, Madras].

When a court of fact acts on material partly relevant and partly irrelevant, it is impossible to say to what extent the mind of the court was affected by the irrelevant material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material and thereby an issue of law arises. Likewise, if the court of fact bases its decision partly on conjectures, surmises and suspicions and partly on evidence, in such a situation an issue of law arises [see Dhirajlal Girdharlal v. Commissioner of Income Tax, Bombay]

In the case of Edwards (Inspector of Taxes) v. Bairstow and Another, the House of Lords dealt with this aspect of the matter. Viscount Simonds, in that case observed :

“For it is universally conceded that, though it is a pure finding of fact, it may be set aside on grounds which have been stated in various ways but are, I think, fairly summarised by saying that the court should take that course if it appears that the Commissioners have acted without any evidence or upon a view of the facts which could not reasonably be entertained.”

Lord Radcliffee expressed himself in the following words

“If the case contains anything ex facie which is bad law and which bears upon the determination, it is obviously erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. In those circumstances, too, the court must intervene.”

The above observations were relied upon by Bhagwati J. (speaking for the majority) in the case of Mehta Parikh & Co. v. Commissioner of Income Tax, Bombay. The following proposition was laid down in that case :

“It follows, therefore, that facts proved or admitted may provide evidence to support further conclusions to be deduced from them, which conclusions may themselves be conclusions of fact and such inferences from facts proved or admitted could be matters of law. The Court would be entitled to intervene if it appears that the fact finding authority has acted without any evidence or upon a view of the facts, which could not reasonably be entertained or the facts found are such that no person acting judicially and properly instructed as to the relevant law would have come to the determination in question.”

…………………..

…………………..

…………………..

The onus to prove that the apparent is not the real is on the party who claims it to be so. As it was the department which claimed that the amount of fixed deposit receipt belonged to the respondent firm even though the receipt had been issued in the name of Biswanath, the burden lay on the department to prove that the respondent was the owner of the amount despite the fact that the receipt was in the name of Biswanath. A simple way of discharging the onus and resolving the controversy was to trace the source and origin of the amount and find out its ultimate destination. So far as the source is concerned, there is no material on the record to show that the amount came from the coffers of the respondent firm or that it was tendered in Burrabazar Calcutta branch of the Central Bank on November 15, 1944 on behalf of the respondent. As regards the destination of the amount, it has already been mentioned that there is nothing to show that it went to the coffers of the respondent. On the contrary, there is positive evidence that the amount was received by Biswanath on January 22, 1946. It would thus follow that both as regards the source as well as the destination of the amount, the material on the record gives no support to the claim of the department.

The Hon’ble Supreme Court has given a simple example and held that “from the simple fact that the explanation regarding the source of money furnished by A, in whose name the money is lying in deposit, has been found to be false, it would be a remote and far-fetched conclusion to hold that the money belongs to B. There would be in such a case no direct nexus between the facts found and the conclusion drawn therefrom.

18. If we apply the principle laid down by Hon’ble Supreme Court in the case of Daulat Ram Rawatmull, supra, and Durga Prasad More, supra, the consistent principle is that there should be direct nexus with the money deposited by the assessee. In the present case before us, the source of money cannot be out of assessee’s meagre source of income i.e., agricultural income out of agricultural activity carried out, electrical repairs or plumbing works. Admittedly the sale agreement, although not registered and assessee one of the party to agreement to sell, the total sale consideration fixed at Rs.2,80,75,800/- which is dated 14.08.2014. The sale deed of this agricultural land was executed on 22.09.2014 and as per sale deed, the assessee’s mother along with her other son and two daughters executed the sale deed in favour of SRM Institute of Science and Technology, Trichy Campus through Dr.R. Sivakumar. But sale consideration as per cheque received by the vendors was Rs.60,75,800/- on that very date i.e., 22.09.2014. The assessee deposited this amount of Rs.2.20 crores in his bank account maintained with Punjab National Bank and the inference in which the normal man will draw is that the amount cannot be from any other source except from the transaction of sale of land because it is common in the transactions of immovable properties that there is under hand transactions. The presumption goes in favour of assessee that the cash deposit in bank account of assessee maintained with PNB on 22.09.2014 amounting to Rs.2.20 crores is coming from the sale transaction of agricultural land by the mother and the legal heirs of the mother including the assessee. The assessee produced a definite evidence i.e., sale agreement which is entered into for an amount of Rs.2,85,00,000/- on 14.08.2014 for sale of this agricultural land. The assessee has fairly established the fact that the cash deposits are out of sale consideration as recorded in the agreement of sale. In view of the above given facts and circumstances of the case, we are of the view that the cash deposit made by assessee amounting to Rs.2.20 crores are arising out of sale of agricultural land by the assessee’s mother including assessee and hence, this cannot be treated as unexplained cash deposit. This issue, we concluded.

19. The next issue is whether the land sold by assessee’s mother is agricultural land or not. The Revenue has raised no objection on the same rather accepted that the land sold is agricultural land and once it establishes that the land sold is agricultural land, no dispute remains. The amount deposited by assessee in PNB account is out of sale of agricultural land and source is established. Hence, the same cannot be assessed in the hands of the assessee as unexplained cash deposit. We reverse the orders of lower authorities and delete the addition.

20. In the result, the appeal of the Assessee is allowed.

Order pronounced in the court on 18^th May, 2022 at Chennai.