2025 (5) TMI 1478 - AT - Income Tax

Unexplained cash deposit - assessee stated that the assessee and his family members owned agricultural land and the assessee declared agricultural income and also declared business income from sale of fertilizers - HELD THAT - Upon perusal of documents on record it could be ascertained that the assessee held license from District Agricultural Officer since July 2010 for sale and purchase of seeds. The substantial cash deposited in the bank account has apparently been utilized towards purchase of seeds / fertilizers. Under these circumstances entire deposits could not be added to the income of the assessee. We estimate business income of 8% on cash deposit of Rs. 12.08 Lacs and direct Ld. AO to re-compute the income of the assessee. Facts in AY 2012-13 are quite similar. AO made similar addition which was confirmed by Ld. CIT(A) against which the assessee is in further appeal before us. Facts being parimateria the same we estimate business income of 8% against the same and direct Ld. AO to re-compute the income of the assessee.

Summary

The Appellate Tribunal (ITAT Agra) heard appeals by the assessee for AY 2011-12 and AY 2012-13 against orders of the CIT(A) confirming additions of cash deposits (Rs. 12.08 Lacs and Rs. 24.09 Lacs respectively) to income under best judgment assessment u/s 144 r.w.s. 147 of the Income Tax Act. The AO added unexplained cash deposits to income due to lack of satisfactory explanation. The assessee claimed the deposits arose from agricultural income and fertilizer trading, supported by a license from the District Agricultural Officer since July 2010. The CIT(A) rejected these claims for want of documentary evidence.The Tribunal found that since the assessee held a valid license and the cash was used for purchase of seeds/fertilizers, the entire deposits could not be treated as unexplained income. The Tribunal held that "entire deposits could not be added to the income of the assessee" and directed the AO to estimate business income at 8% of the cash deposits and re-compute income accordingly for both years. Appeals were partly allowed.