I am a farmer. Cash deposits in my bank account during demonetisation have been added under s.69A because I could produce bills and vouchers for only part of my crop sales. How much proof of cultivation is enough?
Enough to show that you had sufficient sources for the deposits, not vouchers for every rupee. The Indore Tribunal deleted an addition of Rs 9,42,063 where the assessee produced vouchers covering about 72 per cent of the year's total deposits, held 99.195 acres in the family with 40.90 acres in his own name, was a full-time agriculturist with government awards for yield, had made cash withdrawals of Rs 33,86,980 from the same accounts during the year, and had no other source of income. The Tribunal held the explanation that part of the crop was sold direct to consumers without bills deserved credence.
Decided by the ITAT (Ms. Suchitra Kamble, Judicial Member and Shri B.M. Biyani, Accountant Member (Indore Bench)) on 2022-06-28, reported as ITA No. 9/Ind/2022; date of hearing 15 June 2022. It bears on section 69A, section 10(1), section 144, section 142(1) of the Income Tax Act 1961, in Cash Credits & Unexplained Money, Evidence & Burden of Proof and Cash Transaction Limits matters.
This is the taxpayer's authority on the second commonest live dispute in the area, and its value is in the framing at para 11: the addition is not on account of unproved agricultural income, it is on account of unexplained cash deposits, so the question is whether the assessee had sufficient sources for the deposits, not whether every rupee of agricultural income is documented. That reframing is worth putting at the head of any reply to a s.69A notice of this kind. Three strands of evidence carried it — landholding and title documents, recognition establishing that the taxpayer is genuinely a full-time cultivator, and a date-wise reconciliation of cash withdrawals against cash deposits showing re-deposit was possible. The third is the one most often left out and it did real work here; the Departmental Representative did not oppose it. Two warnings. The Tribunal accepted arguments and a paper book that had never been put to the Assessing Officer or the Commissioner (Appeals), explaining that the assessee was an unrepresented agriculturist whose replies were in Hindi; a represented taxpayer will not get that latitude, and compare Shri Samadhan Rambhau Patil v. ITO (Pune Bench), also in this batch, where a similar failure produced a remand rather than a deletion. And the last strand of the Tribunal's reasoning — that since agricultural income is fully exempt the assessee has no taxable income and therefore no s.69A addition can be made — is stated very broadly and does not follow: s.69A operates on unexplained money regardless of whether the taxpayer's other income is exempt. Do not lead with it.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessment year was 2017-18. The assessee was an individual earning agricultural income. The Department received information that he had deposited Rs 15,06,678 in cash in bank accounts during the demonetisation period. Notices under s.142(1) were issued; no return was filed. He explained that agricultural income was his only source and produced bills and vouchers, documents of agricultural landholding, a Kisan Credit Card loan statement and a State Government certificate recognising high agricultural income. The Assessing Officer found the total cash deposits for the whole year were Rs 33,91,841 while vouchers supported agricultural income of about Rs 24,49,148 (given as Rs 24,49,778 at one place in the order), treated the balance of Rs 9,42,063 as unexplained and completed the assessment under s.144 with that addition under s.69A. The Commissioner (Appeals), NFAC, issued notices on 22 January 2021 and 14 October 2021 to which no submission was made, and confirmed the addition on the material on record. Before the Tribunal the assessee produced a paper book showing that he and his family held 99.195 acres of fully irrigated agricultural land, of which 40.90 acres was owned by him directly, that he was 57 years old and a full-time agriculturist, and that he had received a certificate dated 16 May 2013 from the Government of Madhya Pradesh for the highest per-acre yield of certain crops, a certificate for participation in the Global Agriculture Summit 2013, media coverage and photographs of training sessions. He also produced a date-wise reconciliation showing total cash withdrawals of Rs 33,86,980 from the same bank accounts during the year, part of which had been re-deposited. The Bench asked why these points had not been made to the Assessing Officer or the Commissioner (Appeals); counsel answered that the assessee was an unrepresented agriculturist whose replies to the Assessing Officer were in Hindi and signed by himself.
The appeal was allowed and the addition of Rs 9,42,063 made under s.69A was deleted as not sustainable (paras 12 and 13).
The Tribunal began by distinguishing the question actually before it: the Assessing Officer had not made the addition on account of unproved agricultural income but on account of unexplained cash deposits, so what had to be seen was whether the assessee had sufficient sources to prove the deposits (para 11). It then took three strands. First, the assessee was a renowned and dedicated agriculturist, as the recognition, awards and certificates from Government showed; he had produced vouchers for a large part of the receipts and explained that the balance represented sale of crops direct to ultimate consumers for which evidence could not be maintained, a submission the Tribunal found weighty and which was supported by the Chennai Bench decision in Smt. Annakkalanjiam Mathivanan. Second, the assessee had made total cash withdrawals of Rs 33,86,980 from his bank accounts during the year, and on a perusal of the bank statements the pattern of withdrawals and deposits on various dates was such that re-deposit out of those withdrawals was possible; the Departmental Representative had not opposed this. Third, agriculture was the sole source of income and no other source had been brought on record by the Assessing Officer; and since agricultural income is fully exempt the assessee had no taxable income, so on the Indore Bench's earlier decision in ITO v. Smt. Shahnaj Bano no addition under s.69A could be made (para 11).
Therefore we have to see whether the assessee had sufficient sources to prove cash-deposits made in the bank accounts or not.
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Handle my notice → Ask a CA on WhatsAppEnough to show that you had sufficient sources for the deposits, not vouchers for every rupee. The Indore Tribunal deleted an addition of Rs 9,42,063 where the assessee produced vouchers covering about 72 per cent of the year's total deposits, held 99.195 acres in the family with 40.90 acres in his own name, was a full-time agriculturist with government awards for yield, had made cash withdrawals of Rs 33,86,980 from the same accounts during the year, and had no other source of income. The Tribunal held the explanation that part of the crop was sold direct to consumers without bills deserved credence. This was decided by the ITAT (Ms. Suchitra Kamble, Judicial Member and Shri B.M. Biyani, Accountant Member (Indore Bench)) and bears on section 69A, section 10(1), section 144, section 142(1) of the Income Tax Act 1961. It is reported as ITA No. 9/Ind/2022; date of hearing 15 June 2022. This is the taxpayer's authority on the second commonest live dispute in the area, and its value is in the framing at para 11: the addition is not on account of unproved agricultural income, it is on account of unexplained cash deposits, so the question is whether the assessee had sufficient sources for the deposits, not whether every rupee of agricultural income is documented. That reframing is worth putting at the head of any reply to a s.69A notice of this kind. Three strands of evidence carried it — landholding and title documents, recognition establishing that the taxpayer is genuinely a full-time cultivator, and a date-wise reconciliation of cash withdrawals against cash deposits showing re-deposit was possible. The third is the one most often left out and it did real work here; the Departmental Representative did not oppose it. Two warnings. The Tribunal accepted arguments and a paper book that had never been put to the Assessing Officer or the Commissioner (Appeals), explaining that the assessee was an unrepresented agriculturist whose replies were in Hindi; a represented taxpayer will not get that latitude, and compare Shri Samadhan Rambhau Patil v. ITO (Pune Bench), also in this batch, where a similar failure produced a remand rather than a deletion. And the last strand of the Tribunal's reasoning — that since agricultural income is fully exempt the assessee has no taxable income and therefore no s.69A addition can be made — is stated very broadly and does not follow: s.69A operates on unexplained money regardless of whether the taxpayer's other income is exempt. Do not lead with it. If it applies to you, the first step is this: Reframe the issue in the first line of the reply: the question under s.69A is the source of the deposit, not whether every item of agricultural receipt is vouched.
The assessment year was 2017-18. The assessee was an individual earning agricultural income. The Department received information that he had deposited Rs 15,06,678 in cash in bank accounts during the demonetisation period. Notices under s.142(1) were issued; no return was filed. He explained that agricultural income was his only source and produced bills and vouchers, documents of agricultural landholding, a Kisan Credit Card loan statement and a State Government certificate recognising high agricultural income. The Assessing Officer found the total cash deposits for the whole year were Rs 33,91,841 while vouchers supported agricultural income of about Rs 24,49,148 (given as Rs 24,49,778 at one place in the order), treated the balance of Rs 9,42,063 as unexplained and completed the assessment under s.144 with that addition under s.69A. The Commissioner (Appeals), NFAC, issued notices on 22 January 2021 and 14 October 2021 to which no submission was made, and confirmed the addition on the material on record. Before the Tribunal the assessee produced a paper book showing that he and his family held 99.195 acres of fully irrigated agricultural land, of which 40.90 acres was owned by him directly, that he was 57 years old and a full-time agriculturist, and that he had received a certificate dated 16 May 2013 from the Government of Madhya Pradesh for the highest per-acre yield of certain crops, a certificate for participation in the Global Agriculture Summit 2013, media coverage and photographs of training sessions. He also produced a date-wise reconciliation showing total cash withdrawals of Rs 33,86,980 from the same bank accounts during the year, part of which had been re-deposited. The Bench asked why these points had not been made to the Assessing Officer or the Commissioner (Appeals); counsel answered that the assessee was an unrepresented agriculturist whose replies to the Assessing Officer were in Hindi and signed by himself. The matter was decided on 2022-06-28 by the ITAT (Ms. Suchitra Kamble, Judicial Member and Shri B.M. Biyani, Accountant Member (Indore Bench)). On those facts the ITAT held as follows. The appeal was allowed and the addition of Rs 9,42,063 made under s.69A was deleted as not sustainable (paras 12 and 13).
The Tribunal began by distinguishing the question actually before it: the Assessing Officer had not made the addition on account of unproved agricultural income but on account of unexplained cash deposits, so what had to be seen was whether the assessee had sufficient sources to prove the deposits (para 11). It then took three strands. First, the assessee was a renowned and dedicated agriculturist, as the recognition, awards and certificates from Government showed; he had produced vouchers for a large part of the receipts and explained that the balance represented sale of crops direct to ultimate consumers for which evidence could not be maintained, a submission the Tribunal found weighty and which was supported by the Chennai Bench decision in Smt. Annakkalanjiam Mathivanan. Second, the assessee had made total cash withdrawals of Rs 33,86,980 from his bank accounts during the year, and on a perusal of the bank statements the pattern of withdrawals and deposits on various dates was such that re-deposit out of those withdrawals was possible; the Departmental Representative had not opposed this. Third, agriculture was the sole source of income and no other source had been brought on record by the Assessing Officer; and since agricultural income is fully exempt the assessee had no taxable income, so on the Indore Bench's earlier decision in ITO v. Smt. Shahnaj Bano no addition under s.69A could be made (para 11). In the words reproduced by the source cited on this page: "Therefore we have to see whether the assessee had sufficient sources to prove cash-deposits made in the bank accounts or not." The decision followed or applied Smt. Annakkalanjiam Mathivanan, ITA No. 2451/Chny/2018 (Chennai Bench, 22 January 2019) — followed on unvouched direct sales to consumers; ITO v. Smt. Shahnaj Bano, ITA No. 443/Ind/04 (Indore Bench, 7 January 2005) — followed.
It was decided by the ITAT on 2022-06-28 and is reported as ITA No. 9/Ind/2022; date of hearing 15 June 2022. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 69A, section 10(1), section 144, section 142(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed and the addition of Rs 9,42,063 made under s.69A was deleted as not sustainable (paras 12 and 13). It arises in Cash Credits & Unexplained Money, Evidence & Burden of Proof and Cash Transaction Limits matters, on section 69A, section 10(1), section 144, section 142(1) of the Income Tax Act 1961, and was decided by Ms. Suchitra Kamble, Judicial Member and Shri B.M. Biyani, Accountant Member (Indore Bench). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Prepare a date-wise reconciliation of cash withdrawals against cash deposits from the same accounts for the whole year, with the bank statement entries highlighted. This was decisive and the Department did not oppose it. Put landholding on record properly — extent, title documents, irrigation, and the extent held by the family as against the assessee personally. Establish that agriculture is the sole occupation and that there is no other source of income. The absence of any other source brought on record by the Assessing Officer was expressly relied on. Where part of the crop is sold direct to consumers, say so on affidavit during the assessment proceeding, not for the first time before the Tribunal, and quantify the unvouched proportion — 28 per cent was accepted here. Do not rest the case on the proposition that no s.69A addition can be made because agricultural income is exempt. It is the weakest limb of the order and is likely to be contested.
Validity check could not be completed. Validity check could not be completed. Later treatment was NOT checked — indiankanoon's search endpoint returned HTTP 429 on the citator queries attempted, and it was not checked whether the Department carried this order further under s.260A. Independent of later treatment, one strand of the reasoning should be treated as unreliable: the proposition that no s.69A addition can be made because the assessee's only income is exempt agricultural income does not follow from the section, which charges unexplained money found to be owned by the assessee irrespective of the character of his other income. The decision is safe on its first two strands — sufficiency of sources and the withdrawal-to-deposit reconciliation — and should be cited on those. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Read in full from the indiankanoon print view. The figure for the vouchers is given inconsistently in the order: para 3 says Rs 24,49,778 and paras 6, 9 and 10 say Rs 24,49,148. The addition of Rs 9,42,063 is arithmetically consistent with Rs 33,91,841 less Rs 24,49,778, so Rs 24,49,778 appears to be the assessed figure; both are recorded here because the order does not resolve the discrepancy. The reasoning at para 11 that 'Since agricultural income is fully exempt, the assessee does not have any taxable income and therefore the addition under section 69A cannot be made' is set out in the entry as the Tribunal gave it, but is flagged in why_it_matters as a proposition that does not follow and should not be relied on. The order records reliance on ITO v. Smt. Shahnaj Bano, ITA No. 443/Ind/04 dated 7 January 2005 and on Smt. Annakkalanjiam Mathivanan, ITA No. 2451/Chny/2018 dated 22 January 2019; neither was retrieved for this entry. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed and the addition of Rs 9,42,063 made under s.69A was deleted as not sustainable (paras 12 and 13).
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