The case of Tilak Raj Anand versus the Income Tax Officer, Ward 4(4), Gurgaon, marked by ITA No. 1453/DEL/2021, delves into the complexities surrounding cash deposits made during the demonetization period in India. This tribunal decision scrutinizes the applicability of section 69A of the Income-tax Act, 1961, in the context of the demonetization declared on November 8, 2016.
Tilak Raj Anand faced scrutiny from the Income Tax Department regarding a total cash deposit of Rs. 9,00,000 in old currency notes during the demonetization period. The Assessing Officer questioned the legitimacy of Rs. 4,00,000 deposited in two tranches, leading to an addition under section 69A as unexplained cash.
Anand’s defense revolved around the assertion that the deposited cash was accumulated savings, citing detailed cash flow statements from previous years as evidence. Despite this, both the Assessing Officer and the CIT(Appeals) upheld the addition, prompting an appeal to the ITAT.
The tribunal, led by Shri Kul Bharat, focused on whether Anand had the explained cash at the time of demonetization to justify the deposits. It noted the absence of adverse comments on the provided evidences by lower authorities and criticized their decision based solely on assumptions.
The tribunal found that the lower authorities failed to provide concrete evidence against Anand’s claims and relied on assumptions. It highlighted the practical challenges faced by citizens during demonetization, such as safety concerns and overcrowded banks, which justified staggered deposits. Consequently, the tribunal ordered the deletion of the Rs. 4,00,000 addition, allowing Anand’s appeal.
This case underscores the importance of proper evidence and rational assessment in tax scrutiny cases, especially those involving unprecedented economic measures like demonetization. It sets a precedent on how tax authorities should handle similar cases, emphasizing the need for a balanced approach between legal statutes and practical realities.
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