The case ITA 1688/DEL/2021 involves Kishan Singh and Associates, a New Delhi-based entity, challenging the addition of Rs. 10,00,000 to their income alleged by the Income Tax Department to be unexplained cash deposits during the demonetization period in 2016. The tribunal had to determine the legitimacy of these deposits under scrutiny.
The dispute pertains to the assessment year 2017-18, with the appellant contesting the Income Tax Officer’s decision at the Income Tax Appellate Tribunal, Delhi Bench ‘SMC’. The key issue revolved around the nature of cash deposits and the identity confusion due to multiple PANs associated with the firm and individual accounts.
The appellant argued that the deposits were from legitimate sources and had been declared in the income tax return of Ms. Arti Chauhan, under whose PAN the transactions were mistakenly made. The tribunal examined the sequence of transactions, withdrawals, and deposits alongside the firm’s dissolution claims.
The tribunal, led by Shri Kul Bharat, acknowledged the complexity arising from the firm’s dissolution and the subsequent handling of its bank accounts. After reviewing the submissions and documents provided, the tribunal directed the AO to delete the addition of Rs. 10,00,000, citing the need to assess the income correctly under the right PAN.
This ruling highlights the challenges of handling assessments involving dissolved entities and the importance of accurate record-keeping. It underscores the need for the Income Tax Department to ensure accurate assessment and respect for taxpayer rights to procedural fairness.
The decision in ITA 1688/DEL/2021 serves as an important precedent for cases involving cash deposits during sensitive periods such as demonetization, providing clarity on handling such issues with due diligence and legal foresight.
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