Dineshbhai Manibhai Patel Vs ITO (ITAT Ahmedabad)
AO Accepted Agri Income in Next Year but Denied in Earlier Year Without Logic – ITAT Deletes Addition as CIT(A) Adopted “Whims & Fancies”!
Assessee was subjected to reassessment u/s 147 on the ground of unexplained cash deposits of Rs.31.54 Lakhs in his bank account. AO noted that no return was filed & treated Rs.13,52,000 as unexplained money u/s 69A. Assessee explained that he was carrying out agricultural operations on his own land. He produced revenue records (7/12 extracts) proving landholding, sale bills of agricultural produce, and also pointed out that in A.Y. 2013-14, agricultural income of over Rs.10 Lakhs was accepted by AO in scrutiny assessment.
However, AO rejected the explanation, stating that mere ownership of land is not proof of agricultural income & that notices u/s 133(6) to buyers were not responded. CIT(A) accepted part of the agricultural sale bills amounting to Rs.8,62,000 & allowed relief to that extent, but arbitrarily disallowed balance Rs.4,90,000 only because the cash deposit entries did not match exactly with bill amounts.
Tribunal severely criticized this approach. It held that once CIT(A) accepted that Assessee was engaged in agricultural activity & accepted genuineness of sale bills, there was no logic in rejecting the balance merely because bank deposits did not tally bill-to-bill. Tribunal observed that cash accumulation, timing difference, or other reasons could explain variation, & such mismatch cannot be a ground to treat income as unexplained. Tribunal further noted that in the very next year, agricultural income of Rs.10 Lakhs was accepted in scrutiny, which strongly supports Assessee’s claim in the current year.
