Vasudhevan Muralidharan Vs ITO (ITAT Chennai)
₹3.79 Cr Addition u/s 68 Remanded – ITAT Allows Assessee to Prove Sale of Agri Lands with Fresh Evidence
The appeal concerned, an individual engaged in the bakery business, for AY 2018-19. The dispute arose from an addition of ₹3.79 crore u/s 68 made by AO, treating the capital introduced in Assessee’s books as unexplained cash credit.
During scrutiny, AO noted that Assessee had introduced capital of ₹3.85 crore in his business. Assessee explained that the funds were sourced from the sale of two agricultural lands & two vacant plots. It was contended that the agricultural lands were situated beyond 7 km from municipal limits & hence did not fall within the definition of “capital asset,” making the income exempt. Assessee also claimed deduction u/s 54F in respect of ₹68.50 lakh invested in a residential property.
AO, however, rejected this explanation, stating that Assessee failed to substantiate the agricultural nature of the land. The only evidence filed was an illegible Village Administrative Officer’s certificate in vernacular language, without supporting records such as distance certificate, population certificate, or proof of agricultural activity. Consequently, AO treated ₹3.79 crore as unexplained cash credit u/s 68, taxed it u/s 115BBE, & also initiated penalty proceedings u/s 271AAC.
