Cash Deposit from Agriculture Income: ITAT Deletes Demonetization Addition:

Cash Deposit from Agriculture Income: ITAT Deletes Demonetization Addition The assessee is a full-time agriculturist with no other source of income. He and his family own approximately 13 acres of agricultural land, and agricultural income is exempt under the Income Tax Act. During the demonetization period, the assessee deposited Rs. 13,15,000 in cash into his HDFC Bank account. The Assessing Officer (AO) issued notices regarding the source of these deposits, but received no response initially. Consequently, the AO initiated best judgment assessment proceedings under Section 144 of the Income Tax Act, 1961. Although the assessee later submitted explanations, they were not found satisfactory by the AO. Thus, AO made an addition of Rs. 13,15,000 under Section 69A (unexplained money) and taxed the same under Section 115BBE. The addition was upheld by the first appellate authority. Issues Framed

• Whether the cash deposit of ₹13,15,000 during the demonetization period is liable to be treated as unexplained income under Section 69A.
• Whether the provisions of Section 115BBE are applicable to the impugned addition for AY 2017–18.

As per the department, the assessee failed to file returns or substantiate the source of cash deposits during the assessment. The explanation offered was insufficient, and thus addition under Section 69A was justified. The cash deposits were treated as unexplained and liable to tax under Section 115BBE. The Tribunal found neither party's position entirely satisfactory. As per the Tribunal, the assessee did not provide conclusive evidence of the exact source of cash deposits. However, the Revenue also failed to convincingly dismiss the documentary support of agricultural land ownership. ITAT chose a balanced approach in the "interest of justice" by partially confirming the addition. The addition was reduced from Rs. 13,15,000 to Rs. 3,15,000. Citing SMILE Microfinance Ltd, the Tribunal accepted that the amendment to Section 115BBE (applicable from 1 April 2017) is prospective.