Padam Singh vs Income Tax Officer

The appeal in ITA No.2489/Del/2026 for AY 2011-12, arises out of the order of the Id. Jt. Commissioner of Income Tax (Appeals)-3, Bengaluru [hereinafter referred to as 'Id. JCIT(A)', in short] dated 31.12.2025 against the order of assessment passed u/s 147 r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') dated 27.09.2018 by the Assessing Officer, ITO, Ward-2(1), Ghaziabad (hereinafter referred to as 'Id. AO').

The Ground Nos. 1 and 9 raised by the assessee are general in nature.

No arguments were advanced in respect of Ground No. 8 raised by the assessee and hence, the same is hereby dismissed as not pressed.

The Ground No. 2 raised by the assessee was stated to be not pressed by the ld AR at the time of hearing. Accordingly, the same is hereby dismissed as not pressed.

The Ground No. 3 raised by the assessee is challenging the addition made on account of bogus agricultural income in the sum of Rs. 1 lakh. The Ground No. 4 raised by the assessee is challenging the action of the lower authorities in not accepting the receipt of cash from sale of property in the sum of Rs. 5 lakhs as an available source for making cash deposits. The Ground No. 5 raised by the assessee is challenging the action of the lower authorities in not accepting the receipt of cash from relatives as gifts in the sum of Rs. 1,96,000 as available source for explaining the cash deposits. The Ground No. 6 raised by the assessee is challenging the confirmation of action of lower authorities in not accepting the receipt of unsecured loans from two parties in the total sum of Rs. 6 lakhs as available source for explain the cash deposits.

I have heard the rival submissions and perused the materials available on record. The assessee is an individual and had filed his return of income for the AY 2011-12 declaring total income of Rs. 1,84,207/- comprising of salary income. The ld AO noted that assessee had made cash deposits in his bank account to the tune of Rs. 13,96,000 and hence, sought for the source of such cash deposits. The assessee explained in the following manner:-

The assessee submitted that he is the co-owner of agricultural land situated at Village Kiravalli and Village Tikri and Village Vajidpur, Dist-Agra, UP. The assessee owns 0.7536 hectares (approximately 1.86 acres) of agricultural land. The assessee submitted that he had given the agricultural lands on lease to Mr. Sabal Singh, who is the nephew of the assessee. The lease income was derived by the assessee in the sum of Rs. 1 lakh, which was shown as agricultural income and the cash to that extent was deposited in the bank account. The assessee placed on record the confirmation letter from Mr. Sabal Singh and also proof of owning of agricultural lands. This source of Rs. 1 lakh was not accepted by the ld AO. Infact very strangely the ld AO absolutely without any basis and without bringing any concrete material on record made a bald statement that assessee has filed fabricated documents and evidences regarding agricultural income, loans, gifts received and sale of property. The ld AO completely disbelieved the explanation of the assessee and added all the four sums totalling to Rs. 13,96,000 by treating the same as not an available cash source for explaining the cash deposits made in the bank account. While making these additions, the ld AO did not refer to any sections or any provisions of the Act in the assessment order. This action of the ld AO was upheld by the ld CIT(A) in respect of all the four additions.

As far as owning of agricultural lands, the assessee had furnished the revenue records (Khatuni/ Jamabandi) which constitute primary authenticated evidence of agricultural land ownership under the UP Land Revenue Act. The assessee had also enclosed Form No. 6 from Krishi Utpadan Mandi Samithi, Fatehpur Sikri dated 13-05-2026 before this tribunal as additional evidence. In respect of cash received on sale of property of Rs. 5 lakhs, it was submitted that the property owned by the assessee at Sangam Vihar is situated in an unauthorized colony of Delhi for which there would be no registered purchase deed. Hence, there would be no circle rate available for the same. It was submitted that assessee had sold the said property through an unregistered agreement of sale and handed over possession of the property in favour of the buyer. The documents to this effect were duly placed on record before the lower authorities. The general power of attorney authorizing the buyer to manage, possess and deal with the property and also special power of attorney for utility connections like water, electricity, etc., executed in favour of the buyer was also placed on record. A copy of the will bequeathing the property to the buyer was also placed on record. An affidavit confirming the full receipt of amount from the buyer was also placed on record. Despite all these documents, the lower authorities disbelieved the entire transaction and held that the sum of Rs 5,00,000 cannot be construed as an available cash source with the assessee on the ground that an immovable property had been transferred through an unregistered agreement of sale. In this regard, I find that assessee had given plausible explanation, as to why the property could not be transferred through a registered sale deed. But assessee on his part had furnished all the relevant collateral documents in support of the sale of the property. These facts could be cross verified from the buyer of the property by the ld AO, which was not done in the instant case. Hence, we direct the ld AO to examine the buyer to understand the veracity of these documents and if it is found correct, then accept the source of cash of Rs. 5 lakhs as an available amount for explaining the cash deposits.

The assessee had received gifts from the following four parties in cash:-

In support of these gifts, the assessee submitted affidavit from these donors who are farmers owning some agricultural land holdings and the confirmation from them. It is a fact that these documents were furnished by the assessee only before the ld CIT(A) and hence the notarization of these documents had happened subsequent to the completion of assessment proceedings.

With regard to loans received from Shri Sunil Singh (agriculturist) on 02.05.2010 amounting to Rs. 3 lakhs and Shri Siya Ram (agriculturist) on 07.05.2010 amounting to Rs. 3 lakhs, the assessee furnished the confirmation, affidavit together with the land holdings of the lenders before the lower authorities.

I find the documents placed on record and the additional evidence placed before us require factual verification by the ld AO. The said additional evidence is hereby admitted. The ld AO is directed to examine the veracity of all the documents and do necessary verification in accordance with law as he deems fit. Hence, in the interest of justice and fairplay, I deem it fit and appropriate to restore all the 4 issues to the file of ld AO for de novo adjudication in accordance with law in the light of the aforesaid evidences already placed on record and the additional evidence filed before me. The assessee is further given liberty to furnish fresh evidences, if any, in support of his contentions. Accordingly, the Ground Nos. 3, 4, 5 and 6 raised by the assessee are allowed for statistical purposes.

The Ground No. 7 raised by the assessee is challenging the chargeability of interest which would be consequential.

In the result, the appeal of the assessee is partly allowed for statistical purposes.