IF THE INDIVIDUAL HAS ONLY AGRICULTURAL INCOME AND NO OTHER INCOME, NO ADDITION CAN BE MADE UNLESS IT IS PROVED THAT THE TAXPAYER HAS ANY OTHER SOURCE OF INCOME: ITAT

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IF THE INDIVIDUAL HAS ONLY AGRICULTURAL INCOME AND NO OTHER INCOME, NO ADDITION CAN BE MADE UNLESS IT IS PROVED THAT THE TAXPAYER HAS ANY OTHER SOURCE OF INCOME: ITAT

25/08/2023

IF THE INDIVIDUAL HAS ONLY AGRICULTURAL INCOME AND NO OTHER INCOME, NO ADDITION CAN BE MADE UNLESS IT IS PROVED THAT THE TAXPAYER HAS ANY OTHER SOURCE OF INCOME: ITAT

A taxpayer is a person earning income from agriculture. The revenue department received information that the taxpayer had deposited Rs 15,06,678 in cash in bank accounts during the demonetisation period. Therefore, the notice was issued under Section 142(1) which required the taxpayer to file the return.

In response, the taxpayer did not file returns.

Following this, the revenue department issued repeated notices under Section 142(1) asking the taxpayer to explain the sources of cash deposits.

In response, the taxpayer said that the only source of income he has is agricultural income, from which the said deposit has been made. The taxpayer also submitted documentary evidence in the form of bills and vouchers, documents of holding of agricultural land, KCC loan details, certificates from the state government which had a lot of agricultural income earned by the taxpayer.

Though the AO found that the taxpayer had made a total cash-deposit of Rs 33,91,841 in various bank accounts during the entire year, the taxpayer could only submit bills/vouchers in support of agricultural income up to a limit of Rs 24,49,778.

Therefore, LD AO considered the remaining amount of Rs 9,42,063 as unexplained deposits in bank accounts and completed the assessment on the total income of Rs 9,42,063 after making additions under Section 69A.

We have considered the rival arguments of both sides, gone through the material placed on record and considered the legal precedents mentioned before us. Initially, we saw that AO has not increased by Rs.9,42,063/- due to unverified agricultural income, this increase is due to unexplained cash deposits in bank accounts.

So we have to see whether the taxpayer had enough sources to prove the cash deposited in the bank accounts or not.

In this regard, first of all we see that the taxpayer is a well-known and dedicated agriculturist.

We also found that the taxpayer has submitted bills/vouchers worth Rs.24,49,148/- and also submitted that he had sold the crops directly to the end consumers, for which evidence could not be maintained. We get a lot of importance in believing the fact of the taxpayer.

Secondly, we also see that the taxpayer has made a total cash withdrawal of Rs 33,86,980 from his bank accounts from time to time during the year and hence the money was available with the taxpayer to deposit the cash.
Thirdly, we also find that the only source of income the taxpayer has is agriculture and there is no other source of income brought on record by the AO. Since agricultural income is fully exempt, the taxpayer has no taxable income and hence additional income cannot be made under Section 69A.

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