Sourabh Aggarwal L/H Late Smt Kamla Aggarwal vs. DCIT, Karnal – Assessment Year 2017-18

Income Tax Appellate Tribunal Verdict: A Turning Point for PMGKY Declarations

In a persuasive judgment dated November 2, 2022, the Income Tax Appellate Tribunal, Delhi Bench, delivered a notable ruling in the case of Sourabh Aggarwal, the legal heir of Late Smt. Kamla Aggarwal, against the Deputy Commissioner of Income Tax (DCIT), Karnal concerning the Assessment Year 2017-18 under ITA No. 919/DEL/2022. This case marked a substantial discussion on the applicability and implications of the Pradhan Mantri Garib Kalyan Yojana (PMGKY) scheme, 2016 on the undisclosed incomes amid the demonetization period.

The focal issue revolved around the addition of Rs. 4.50 crores under section 69A of the Income-tax Act, 1961, attributed to unexplained cash deposits in the bank account during the demonetization period. The appellant argued that advance tax was duly paid on these deposits, and hence, they should not be taxed as unexplained under section 69A following their declaration under the PMGKY scheme.

Throughout the hearings, the tribunal meticulously examined the submissions, evidence, and legal frameworks, focusing on whether the conditions for a valid PMGKY declaration were met and if such a declaration could negate the applicability of Section 69A. Notably, the tribunal highlighted the procedural aspects and the assessees’ compliance with the PMGKY scheme’s conditions, including timely payment of taxes and deposit under the scheme.

The detailed verdict included a thorough analysis of the legal provisions, interpretations, and precedents related to the PMGKY scheme and Section 69A. The Tribunal concluded that the appellant had made a valid declaration under the PMGKY scheme, along with the requisite tax and penalty payments, conflicting with the application of Section 69A for taxing the cash deposits as unexplained income.

Conclusively, the tribunal allowed the appeals, directing the deletion of the addition made under Section 69A related to the cash deposits, providing substantial relief to the appellant. This ruling not only serves as a significant reference for cases involving similar PMGKY declarations but also underscores the need for precise adherence to procedural mandates in availing benefits under special disclosure schemes.

Given the nuanced debate over legal interpretations and compliance requirements, this judgment stands out as a critical reference point, providing clarity on PMGKY declarations and their impact on subsequent income tax assessments, establishing a precedent for future disputes of similar nature.

The decision reaffirms the tribunal’s role in judiciously interpreting tax laws and schemes, ensuring that lawful declarations under special schemes like PMGKY are duly recognized, thereby safeguarding the taxpayers’ interests against undue tax claims on declared incomes.

Sourabh Aggarwal L/H Late Smt Kamla Aggarwal vs. DCIT, Karnal – Assessment Year 2017-18