Kishana Ram Vs ITO (ITAT Jodhpur)
Income Tax Appellate Tribunal (ITAT), Jodhpur, has partly allowed the appeal of Kishana Ram against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], pertaining to an addition of ₹18,45,000 to his capital account and a smaller disallowance. The assessee had filed the appeal feeling dissatisfied with the CIT(A)’s partial upholding of the Assessing Officer’s (AO) assessment.
During the proceedings, the assessee’s representative argued that the ₹18,45,000 credited to the capital account of his proprietary concern originated from his savings bank account, which primarily held income from agricultural activities. It was pointed out that while the CIT(A) had deleted the initial addition made by the AO concerning the agricultural income itself (₹22,01,479), the subsequent credit of ₹18,00,000 into the proprietary concern’s account, sourced from the same agricultural income, was wrongly sustained.
The assessee’s representative presented documentary evidence, including the capital account of the audited accounts, the bank book of his proprietary concern (Krishna Agri Genetics), and his savings bank account statement with Bank of Baroda. These documents purportedly demonstrated that the ₹18,00,000 was transferred from his savings account to the proprietary concern’s account on the same date, March 27, 2017. The argument was that the source of the credit in the business account was clearly explained and derived from agricultural income, which the CIT(A) had already acknowledged as genuine. The representative contended that a mere transfer of funds between the assessee’s own accounts should not be treated as income.
The ITAT bench, after reviewing the evidence and arguments, concurred with the assessee’s contention regarding the ₹18,00,000 addition. The Tribunal noted that the CIT(A) had already accepted the agricultural income as genuine. Consequently, denying the assessee the benefit of the ₹18,00,000 sourced from this very income was deemed unwarranted. Regarding the remaining ₹45,000, which the assessee claimed was also generated from agricultural income and initially deposited in the savings account, the Tribunal found no reason to uphold its addition either, especially since the legitimacy of the agricultural income was not disputed. Based on these observations, Ground No. 1 of the assessee’s appeal was allowed.
However, the Tribunal dismissed Ground No. 2 of the appeal, which pertained to a smaller addition of ₹16,800. This addition arose from a discrepancy in the opening and closing balances of the capital account between the financial years 2015-16 and 2016-17. The AO had noted that the opening balance carried forward was ₹16,799 higher than the previous year’s closing balance and added this difference as income. The CIT(A) had upheld this addition, and the assessee’s representative failed to provide any compelling evidence before the ITAT to warrant a different view. As a result, the ITAT confirmed the ₹16,800 addition.
The remaining grounds raised by the assessee were considered either consequential or technical and did not require specific adjudication by the Tribunal. In conclusion, the ITAT Jodhpur partly allowed Kishana Ram’s appeal, primarily by deleting the addition of ₹18,45,000 to his capital account, while upholding the smaller addition of ₹16,800.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
