Prashant Chandulal Parikh Vs ACIT (ITAT Ahmedabad)
Conclusion: Considering the opening cash balance of Rs.3,04,049/- available with the assessee and also the quantum of agricultural income of Rs.12,53,920/- derived by the assessee during the year, it would be reasonable to treat the cash deposits to the extent of Rs.15.48 Lakhs as explained and the balance addition of Rs.9,00,000/- in respect of unexplained cash deposits in the bank account was confirmed.
Held: Assessee had filed his income tax return for A.Y. 2017-18 declaring ₹20,89,430. The case was scrutinized for capital gains from agricultural land sales and cash deposits during demonetization. AO rejected the declared land valuation of ₹70 per square meter, recalculating it at ₹6.20, and partially disallowed a ₹2.51 crore deduction under Section 54F. Additionally, cash deposits of ₹24,48,000, explained as agricultural income, were treated as unexplained. The assessment concluded with a total income of ₹4,86,05,340. Assessee’s appeal to CIT(A) was dismissed and he subsequently appealed to Tribunal. Assessee contended that assessee had agricultural land and reported agricultural income every year. He showed a chart with the income for different years. AO had not questioned the agricultural income from previous years. However, AO said Rs. 7,32,200/- from firewood sales was not agricultural income. Assessee had cash from agriculture, including old high denomination notes, which was deposited after demonetization. Therefore, AO was wrong to treat the cash deposits as unexplained. On appeal. It was held that AO had treated the entire cash deposits in the bank account of Rs.24,48,000/- as unexplained, which could not be held as correct. There was no denial to the fact that assessee was deriving agricultural income in cash. The net agricultural income disclosed by assessee during the year was Rs.12,53,920/-, which was comparable with agricultural income of Rs.12,26,002/- disclosed in the preceding year. Thus, it was not the case that assessee had inflated its agricultural income during the current year. Even though, AO had disputed the nature of income from sale of firewood, the correctness of the sale transaction had not been challenged. Assessee also had not explained as to why all the cash was kept in the house and why those were deposited in the bank account mostly after demonetization. In fact, the total cash deposit during the demonetization period was to the extent of Rs.23,54,000/-. Apart from the contention that cash was available with the assessee in respect of agricultural income, no explanation had been given in respect of excess cash as deposited in the bank account. Taking into account the opening cash balance of Rs.3,04,049/- available with the assessee as on 01.04.2016 and also the quantum of agricultural income of Rs.12,53,920/-derived by the assessee during the year, it would be reasonable to treat the cash deposits to the extent of Rs.15.48 Lakhs as explained. The balance addition of Rs.9,00,000/- in respect of unexplained cash deposits in the bank account was confirmed.
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