Theory of preponderance of probability applied in favour of Assessee for Cash deposits during the demonetization period

Here is a case by Dehradun ITAT wherein the theory  of preponderance of probability applied in favour of Assessee for Cash deposits during the demonetization period

Case detail is as under:

ITAT DEHRADUN:_
SH. CHAUDHARY MANGE RAM PANWAR VERSUS

INCOME TAX OFFICER, WARD-1 (3) (4) ,

ROORKEE,No.- ITA No. 36/DDN/2022
Dated.- June 23, 2023

Facts of the case were as under:

The assessee is an agriculturist and had filed his return of income on 06.11.2017, declaring income of Rs. 3,16,230/- and agricultural income of Rs. 9,50,000/- for the assessment year 2017-18. A sum of Rs. 13,17,500/- was deposited in cash on 12.11.2016 by the assessee with State Bank of India, Gudgajpur Branch in (KCC)account of the assessee in old demonetized currency. The explanation given by the assessee for the said source was not accepted by AO and the addition made in the assessment, treating the cash deposit in bank account as unexplained money under section 69A of the Act.

HELD THAT:-
Sale of old Car ;_ It is not in dispute that the assessee owns a car which was sold during the year on 05.06.2016. This sale has happened 5 months prior to the announcement of the demonetization by the Government. The assessee sold his car and that sum is available as a cash source for the assessee explaining the cash deposit.

Sale of Poplar Trees – whether the assessee had sold Poplar trees or not? – Assessee claimed that he had sold 727 Poplar trees to Sh. Prakash for Rs. 6 lakhs for which photocopy of the receipt was filed before AO.
Assessee had indeed sold poplar trees. Merely because the assessee is not able to produce Sh. Prakash (buyer of the Popular trees), transaction carried out by the assessee cannot be disputed or suspected. It is a fact that the assessee has declared 9,50,000/- as agricultural income in the return of income and these are also reflected in the affidavit furnished by him before the CIT(A). Hence, the cash source disclosed by the assessee for the sum of Rs. 6 lakhs towards sale of poplar trees is to be accepted as the source available for explaining the cash deposit.

Sale proceeds of Crop sold in October 2016 – As on a conservative basis, even if this sum of Rs. 2 lakhs is taken together with the aforesaid two receipts of on sale of car and sale of Poplar trees, this would explain the entire cash deposits made by the assessee, which is the subject matter of dispute.

Old Personal Savings – The assessee claimed old personal savings of Rs. 1,17,500/- as a cash source available for explaining the cash deposit, which was accepted by learned CIT(A) to the extent of Rs. 1 lakh. Even, this is taken together with the aforesaid three receipts it would explain the entire cash deposits by the assessee during the demonetization period. Hence, on merits, the entire cash deposits stands proved with proper source.

Thus preponderance of probability theory would go in favour of the assessee in the instant case. The predominant income available with the assessee is only the agricultural income. We direct the Ld AO to delete the addition made in respect of cash deposits made during the demonetization period in demonetized currency –

The copy of the ITAT order is as under:

 

1687530494-ita no. 36 DDN 2022, Chaudhary Mange Ram Panwar Vs