ITAT Deletes Rs. 13 Lakh Addition Made on Account of Cash Deposits Under Section 69A

On appeal, reassessment proceedings were initiated upon detection by the AIMS module that the assessee had credited over Rs. 10 lakh in different savings bank accounts for FY 2014-15 (AY 2015-16). Notices, including one under Section 133(6), were issued and, as no return of income had been filed, the AO commenced reassessment. The assessee explained that the cash deposits represented consideration received on the sale of agricultural land (sold by the assessee and his father) and included cash gifted by the father, who had realised consideration from another land sale. Documentary evidence, including copies of the agreement(s) to sell, registered sale deed(s), bank statements, and an affidavit, was produced during the assessment. The AO, however, observed a lack of correlation between the dates of cash deposits and the dates of agreement/sale deeds and treated deposits aggregating to Rs. 13,00,000 as unexplained money under Section 69A and the assessment was completed accordingly.

CIT(A) Held: The CIT(A) on appeal sustained the additions. The assessee placed on record that specific deposits of Rs. 7,00,000 on 22/04/2014, Rs. 3,00,000 on 15/10/2014 and Rs. 3,00,000 on 18/10/2014 were made between the date of the agreement to sell (25/04/2014) and the sale deed (25/11/2014), asserting these sums were traceable to the sale transactions and consistent with rural practice of receiving cash consideration for agricultural land. It was also contended that the land was rural agricultural land within the meaning of the Act and that proceeds were therefore not taxable as capital gains under the statutory definitions relied upon.

Issue Raised: Whether the addition of Rs. 13,00,000 made under Section 69A on account of cash deposits could be sustained where the assessee produced agreement(s) to sell, registered sale deed(s), bank statements and affidavit explaining the deposits as sale proceeds of agricultural land.

ITAT’s Decision: The Tribunal went through the documentary evidence and opposite party submissions. Invoking the principle under Section 69A, the Bench said that where an assessee produces a reasonable explanation coupled with credible documentary material, the burden shifted to the Revenue to rebut the same. The assessee had produced agreement(s) to sell, registered sale deed(s), bank statements showing the deposits and an affidavit confirming the transactions.

The Tribunal held there was no opposing material on record to remove the explanation and accepted that deposits were sale consideration of farm land and square with local modes of receiving cash consideration. The Tribunal, therefore, held that addition under Section 69A was not sustainable, set aside the orders of the lower authorities, struck off the addition of Rs.13,00,000 and granted the appeal.

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