Cash deposit out of sale of agricultural land cannot be treated as unexplained: ITAT Chennai
Here was an interesting case before ITAT Chennai on the scope of unexplained amount for levy of tax under special provision of section 68. The case detail is as under:
Mr. V. Nagarajan vs The Income Tax Officer (ITA No.:593/CHNY 2019)
Let us have a short overview of the case:
1. An addition of Rs.2.20 crores as unexplained cash deposits in the Bank account, despite the Assessee giving evidences that the cash deposits are out of sale consideration of agricultural land of assessee’s mother.
2. As per the agreement to sale mentioned that the land was sold for Rs.2,80,75,000/- whereas the sale deed mentioned an amount of Rs.60,75,800/-, which incidentally was received by cheque.
3. The assessee mentioned that the cheque amount was Rs 60,75,800 and the rest was the cash amount on the sale of land, which was deposited in the bank.
4. The AO contended that the cash deposited could be for some other business.
The ITAT Chennai held as below:
1. There should be direct nexus with the money deposited by the assessee. In the present case before us, the source of money cannot be out of assessee’s meagre source of income i.e., agricultural income out of agricultural activity carried out, electrical repairs or plumbing works.
2. The assessee has fairly established the fact that the cash deposits are out of sale consideration as recorded in the agreement of sale.
3. So the cash deposit of Rs 2.20 crores is out of sale of agricultural land by the assessee’s mother including assessee and hence, cannot be treated as unexplained cash deposit.