Mohan Yadav Vs ITO (ITAT Raipur)
Agricultural Land Records Alone Do Not Explain Bank Deposits: ITAT Grants Final Opportunity to Establish Source Under Section 69A
Background of the Case
The assessee, an individual claiming to be an agriculturist, had not filed his return of income under Section 139(1) for Assessment Year 2013-14.
On receiving information that he had deposited ₹25,01,360 in a bank account during Financial Year 2012-13, the Assessing Officer initiated reassessment proceedings by issuing a notice under Section 148 on 20 February 2020.
Following a subsequent notice under Section 142(1), the assessee filed his return on 22 October 2020, declaring taxable income of ₹10,596 and agricultural income of ₹12,74,840.
The dispute concerned whether the cash deposits represented receipts from agricultural operations or unexplained money assessable under Section 69A.
Agricultural Operations and Supporting Documents
The assessee explained that he cultivated 28.37 acres of agricultural land held in his own name and in the names of family members, besides another 22.50 acres taken on lease.
He principally cultivated tomatoes and gram on land irrigated through tubewells. According to him, brokers purchased the produce at the farm, arranged transportation to markets outside the State and deposited the sale proceeds in his bank accounts from different cities.
To substantiate the agricultural activity, he furnished a lease deed, panchsala khasra records, electricity connection certificates and bills relating to fertilisers, seeds and pesticides. Affidavits from brokers were also placed on record.
However, the Department considered that these documents established cultivation activity without establishing the source of the particular bank deposits.
Assessing Officer Finds Sale Evidence Missing
The Assessing Officer repeatedly sought evidence of actual sales, including mandi receipts, transport receipts, warehouse or cold-storage receipts and other supporting documents.
The assessee explained that the brokers took delivery directly from the farm and arranged transport at their own expense. Consequently, he had no mandi receipts or transport documents. He also stated that no warehouse or cold-storage facility had been used.
Nevertheless, no documentary evidence identifying the quantity of produce sold, the sale price or its connection with particular deposits was furnished. The brokers’ affidavits also did not disclose the volume or price of the crops allegedly purchased.
The Assessing Officer further observed that cash transactions occurred throughout the year rather than being concentrated around the expected harvesting and sale periods.
Instead of adding the entire deposits, the officer computed peak credit of ₹7,92,326 and added that amount under Section 69A. Total income was consequently assessed at ₹8,02,922.
First Appellate Authority Upholds the Addition
The CIT(A)/NFAC distinguished between capacity to earn agricultural income and proof that particular deposits originated from agricultural sales.
Land records and cultivation expenditure could establish the former. For the latter, the authority considered that a satisfactory connection between agricultural activity, actual sales and the money deposited remained necessary.
The CIT(A) also examined decisions cited by the assessee, including Madhusudan Dhakad, Annakkalanjiam Mathivanan and Shahnaj Bano. It acknowledged the principle that agriculturists should not suffer additions merely because formal sale documentation, often absent in the unorganised agricultural trade, was unavailable.
However, it distinguished those decisions on their facts. In particular, it noted that substantial deposits in Madhusudan Dhakad were supported by bills and vouchers, alongside other corroborative circumstances. Comparable support was considered absent in the present case.
Acceptance in an Earlier Year Considered Insufficient
The assessee relied on the acceptance of a comparable pattern of agricultural income and cash deposits in his scrutiny assessment for Assessment Year 2011-12.
The CIT(A) held that acceptance in an earlier year did not independently establish the source of deposits in the year under appeal. Each assessment year required examination of its own facts.
Accordingly, the addition of ₹7,92,326 was upheld.
Tribunal Grants One Final Opportunity
Before the Tribunal, the assessee’s counsel maintained that the necessary documents had been submitted to the Revenue authorities. However, he could not demonstrate that the relevant evidence had actually been filed.
The Tribunal noted that agricultural landholding and expenditure consistent with cultivation were accepted. The unresolved issue was the absence of independent evidence connecting the agricultural sale proceeds with the bank deposits for AY 2013-14.
The Departmental Representative did not object to a remand granting one final opportunity.
Considering counsel’s assurance that the necessary documents would be furnished, the Tribunal set aside the CIT(A)’s order and restored the matter to the CIT(A)/NFAC for fresh consideration. The assessee was directed to produce relevant documents establishing the nature and source of the deposits, and the appellate authority was directed to observe natural justice.
Decision and Significance
The appeal was allowed for statistical purposes.
The Tribunal did not delete the addition on merits or finally accept the deposits as agricultural receipts. It granted a final opportunity to substantiate their source.
The order highlights the evidentiary distinction between proving agricultural operations and explaining specific cash deposits. Where conventional sale receipts are unavailable, the assessee’s explanation still requires supporting material capable of connecting the claimed agricultural receipts with the money deposited
List of Cases Discussed:
1. Madhusudan Dhakad. Distinguished by the CIT(A)/NFAC. In that case, a substantial portion of cash deposits was supported by bills and vouchers, independent evidence of agricultural activity and identifiable patterns of cash withdrawals and redeposits. Comparable corroboration was considered absent in the present case.
2. Annakkalanjiam Mathivanan. Distinguished by the CIT(A)/NFAC. The decision was considered in relation to agricultural receipts arising from unorganised agricultural trade and the absence of conventional sale documentation.
3. Shahnaj Bano. Distinguished by the CIT(A)/NFAC. The authority accepted the general principle that genuine agriculturists should not automatically suffer additions merely because formal agricultural sale records are unavailable, but found the present explanation insufficiently corroborated.
4. Durga Prasad More Vs CIT (Supreme Court). Referred to by the CIT(A)/NFAC for the principle that the doctrines of res judicata and estoppel do not ordinarily govern income-tax assessment proceedings. Acceptance of an explanation in an earlier assessment year does not conclusively establish the source of money deposited in another year.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 23.07.2026 for the assessment year 2013-14 as per the grounds of appeal on record.
2. Brief facts in this case are as follows:
“1.1 The assessee MOHAN YADAV having PAN AETPY9420R is an individual assessed to income tax for Assessment Year 2013-14. No return of income under section 139(1) of the Act was furnished for the year. On the basis of information available with the Department that the assessee had deposited Rs.25,01,360/- in a bank account during the financial year 2012-13, the Assessing Officer formed the reason to believe that income chargeable to tax had escaped assessment, and issued notice under section 148 of the Act dated 20.02.2020.
1.2 The assessee did not comply with the notice under section 148. A notice under section 142(1) of the Act dated 28.09.2020 was thereupon issued, in response to which the assessee filed a return of income on 22.10.2020 declaring total income of Rs.10,596/-, along with agricultural income of Rs.12,74,840/-.
1.3 Notice under section 143(2) of the Act dated 04.03.2021 was issued and served. In response, the assessee submitted that he is an agriculturist holding 28.37 acres of agricultural land in his own name and in the names of family members, and cultivating a further 22.50 acres taken on lease, growing principally tomato and gram (chana) on land irrigated by tubewells, and that produce was sold to brokers who transported it to mandis outside the State and deposited the sale proceeds in cash across the assessee’s bank accounts in various cities. In support, the assessee filed a copy of the lease deed, copies of panchsala khasra nakal, copies of electricity connection certificates, and bills for fertilisers, seeds and pesticides.
1.4 By notice under section 142(1) dated 18.03.2021, the assessee was called upon to furnish documentary evidence of the sale of agricultural produce, including any contract and any godown or warehouse receipt. No such evidence was furnished; the assessee instead furnished a rough, self-computed break-up of the value of crops said to have been grown, unsupported by any document.
1.5 By a further notice under section 142(1) dated 09.08.2021, the assessee was specifically called upon to furnish (a) copies of mandi receipts, if any; (b) copies of transport receipts for carriage of produce to mandi; (c) copies of warehousing or cold-storage receipts, if any; and (d) any other document or receipt capable of substantiating the agricultural income claimed. No response was filed. Reminder letters followed on 16.08.2021 and 24.08.2021, again without compliance, and a further reminder dated 27.08.2021 fixed 31.08.2021 as the last date for compliance. On 31.08.2021, the assessee responded that produce was sold in the open market through brokers who took delivery at the farm itself and arranged transport on their own account, that no mandi sale had taken place and hence no mandi receipt existed, that no transport receipts were maintained since the assessee bore no transport cost, and that no warehouse or cold-storage facility had been used at any stage. The assessee thus expressed his inability to produce any documentary evidence linking the bank deposits to the sale of any specific quantity of produce at any specific price.
1.6 On examination of the bank statements, the Assessing Officer noted that cash transactions occurred continuously through the year rather than being concentrated around the periods when agricultural produce would ordinarily be harvested and sold. The peak credit for year was computed at 7,92,326/-, and this sum was treated as the assessee’s income and added under section 69A of the Act.
1.7 A show-cause notice dated 15.09.2021 was issued, to which the assessee responded on 20.09.2021 raising objections on both legal and merit grounds—namely, that the notice under section 148 was issued without independent enquiry into the source of the of the cash deposits, and that the sanction accorded under section 151 of the Act was granted without proper application of mind. The Assessing Officer disposed of these objections, recording that the reasons for reopening had been duly recorded by the Jurisdictional Assessing Officer, that no objection to those reasons had been raised by the assessee at any earlier stage, that the sanction under section 151 had been granted after verification and recording of satisfaction on file, and that the case law relied upon by the assessee was not applicable on the facts. On merits, it was recorded that none of the material filed by the assessee, including the affidavits of brokers, disclosed the volume or price of any crop said to have been sold.
1.8 By order dated 21.09.2021 passed under section 143(3) read with section 147 and section 144B of the Act, the total income of the assessee was determined at Rs.8,02,922/-, being the returned income of Rs.10,596/- plus the addition of Rs.7,92,326/- under section 69A. Penalty proceedings under section 274 read with section 271(1)(c) of the Act were separately initiated.”
3. In this backdrop, the Ld. CIT(Appeals)/NFAC has held and observed as follows:
“………….The assessee has furnished proof of land holding and of expenditure consistent with cultivation, which establishes capacity to grow a crop. Ownership or cultivation of agricultural land establishes only the capacity to generate agricultural income; it does not, by itself, establish that the particular cash found credited in the bank accounts represents the sale proceeds of agricultural produce. The crucial requirement is a satisfactory nexus between the agricultural activity and the specific deposits under consideration.; what is missing, entirely, is any proof of realization-that any specific quantity of produce was in fact sold, to whom, and for what price, so as to connect the claimed agricultural activity to the specific sum of Rs. 7,92,326/- found credited in the bank accounts. The brokers’ affidavits filed o not state the volume or price of any crop sold, a deficiency specifically noted in the assessment order and not answered in any of the submissions filed before me. The pattern of cash deposits through the year, continuous rather than concentrated around the harvest and sale of a seasonal crop, remains unexplained and unrebutted. The burden of proving that income otherwise assessable is, in truth, exempt agricultural income lies squarely on the assessee; this is well settled, and I find the burden has not been discharged on the facts of this case. The explanation offered is therefore not merely unsupported but remains incapable of verification from any contemporaneous third-party evidence, rendering it unsatisfactory within the meaning of section 69A of the Act.
3.8 I have given careful consideration to Madhusudan Dhakad, Annakkalanjiam Mathivanan, and Shahnaj Bano, each of which I have independently verified, and each of which does support the general proposition that an assessee whose sole source of income is agriculture ought not to suffer an addition merely because formal sale documentation, of a kind rarely generated in the unorganised agricultural trade, is unavailable. I am, however, unable to apply that principle to the facts before me, for the following reasons. In Madhusudan Dhakad, the assessee had furnished Bills and Vouchers substantiating Rs.24,49,148/- of the Rs.33,91,841/- in cash deposits for that year — 72 per cent of the sum in question — and the addition sustained by the Assessing Officer, which the Tribunal went on to delete, was confined to the unsubstantiated residue of 28 per cent. That assessee also placed on record independent, third-party recognition of his standing as a genuine cultivator — government certificates for highest per-acre yield, a certificate of participation in a Global Agriculture Summit, and media coverage of his agricultural work — and demonstrated a specific, date-matched pattern of cash withdrawals from, and re-deposits into, the very same bank accounts. None of these features is present here. The addition in the present case is not a residual shortfall against a substantially documented claim; it is the entirety of the peak credit, against which not a single voucher or receipt evidencing an actual sale has been produced. There is no independent third-party recognition of the assessee’s agricultural standing on record, and no cash-withdrawal pattern has been demonstrated or even canvassed. The ratio of Shahnaj Bano, which Madhusudan Dhakad applies only after considering these features, and which Annakkalanjiam Mathivanan supports on its own facts of unorganised agricultural trade, was not, in either case, treated as a licence to accept an otherwise wholly uncorroborated claim of exempt agricultural income. I accordingly adopt the principle of these decisions but find them distinguishable on facts, and decline to extend their benefit to the assessee on the record before me.
3.9 I am also unable to accord decisive weight to the acceptance of a comparable pattern in the assessee’s scrutiny assessment for Assessment Year 2011-12. Each assessment year is a separate and independent unit of assessment; the acceptance of an explanation in one year does not, by itself, establish the source of a distinct sum of money credited in a different year, particularly where, as here, no sale-side documentation for the year under appeal has been placed on record at all. This accords with the settled position, affirmed in Durga Prasad More v. CIT (supra), that “neither the principle of res judicata nor the rule of estoppel is applicable to assessment proceedings.”
3.10 In view of the foregoing, I am of the considered opinion that the assessee has failed to discharge the burden cast upon him to satisfactorily explain the nature and source of the sum of Rs.7,92,326/-found credited in his bank accounts. The addition made by the Assessing Officer under section 69A of the Act is, accordingly, upheld in full.
3.11 Order: For the reasons recorded above, Ground No. 3 is DISMISSED. Ground No. 4 is DISMISSED. Ground No. 5 is DISMISSED.
E. GROUND NO. 6
4.1 Ground No. 6 is general in nature, seeking leave to add, amend, alter or withdraw the grounds of appeal. No specific submission was advanced in respect of this ground, and no separate adjudication is called for. This ground is DISMISSED.
F. RESULT OF APPEAL
5.1 In the result, the appeal is DISMISSED.
4. That as per records, admittedly, the A.O had accepted that the assessee holds agricultural land and incurred expenditure consistent with cultivation and found that not a single document has been furnished by the assesse evidencing actual sale proceeds despite five opportunities provided to the assessee. No evidence providing proof of sale of produces so to link with the deposits made in the bank account of the assessee was submitted before the Department i.e. mandi receipt, transport receipt, warehouse receipt etc. The assessee had only submitted copy of the lease deed, copies of panchsala khasra nakal, copies of electricity bill and affidavits of the brokers through whom agricultural produce was sold and that comparable pattern of cash deposits and agricultural income was accepted in assessee’s scrutiny assessment for Assessment Year 2011-12. However, no independent evidence for this A.Y. i.e. 2013-14 linking sale proceeds and cash deposits were furnished by the assessee. It has been categorically observed by the Ld.CIT(Appeals)/NFAC that crucial requirement is a satisfactory nexus between the agricultural activity and the specific deposits under consideration and that is entirely missing.
5. The Ld. Counsel for the assessee submitted vehemently that the assessee had submitted all these documents before the Revenue authorities but could not demonstrate through any proof that such evidences were ever filed before the said authorities.
6. The Ld. Sr. DR did not raise any objection if the matter would be remanded to the file of the Ld. CIT(Appeals)/NFAC providing one final opportunity to the assessee.
7. Having heard the submissions of the parties, considering the facts and circumstances in this case, in the interest of substantive justice when the Ld. Counsel for the assessee submitted that he would provide all the documents before the Revenue Authority justifying cash deposits, therefore, I set aside the order of the Ld. CIT(Appeals)/NFAC and remand the matter back to its file with a final opportunity to the assessee to represent his case on merits by filing relevant documents to establish the nature and source of the cash deposits. Needless to say the Ld. CIT(Appeals)/NFAC shall comply with the principles of natural justice.
8. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in open court on 12th day of October, 2026.
