Appeal on Unexplained Cash Deposit: A Detailed Analysis of ITA 1252/DEL/2022

Appeal on Unexplained Cash Deposit: A Detailed Analysis of ITA 1252/DEL/2022

This detailed analysis provides insights into the appeal case ITA No. 1252/Del./2022, concerning Shashi Garg, the appellant, from Narwana, and the respondent, ITO Ward-1, Jind, for the assessment year 2017-18. The crux of the dispute revolves around the addition of Rs.75,000 as unexplained cash deposit by the Income Tax Department.

Background of the Case

The Income Tax Appellate Tribunal (Delhi Bench ‘SMC’, New Delhi), presided over by Shri Shamim Yahya, Accountant Member, heard the appeal. The case was filed against the order of the National Faceless Appeal Centre (NFAC) dated 31.03.2022, which was contested on several grounds, highlighting the allegation of bad law, facts of the case, and issues of equity and natural justice.

The Grounds of Appeal

The appellant argued that the learned CIT (A) dismissed the appeal without providing an adequate opportunity for a hearing, which is against the principles of natural justice. There was also contention about the CIT (A)’s passing of a judgment without considering the information and documents available, leading to a best judgment order that was deemed as unjust.

Assessment of the Income Tax Officer (ITO)

The core of the matter traced back to cash deposits made by the assessee. According to the Assessing Officer (AO), the addition of Rs.75,000 was deemed as unexplained due to the appellant’s inability to prove the source of such deposit, largely based on assumptions, conjectures, and surmises without tangible evidence.

Detailed inquiries were made about cash withdrawals and subsequent deposits within a short span, which the appellant claimed to be a re-deposition of the same withdrawn amount. Despite these explanations, the AO deemed the cash deposit as unexplained due to a lack of satisfactory evidence.

The Tribunal’s Verdict

The tribunal reviewed the submissions and noted the lack of appearance from the appellant, despite several notices. Upon careful consideration, the tribunal found that the authorities below were not justified in disallowing the sum of Rs.75,000. It was observed that the appellant had a history of sufficient income and had provided a plausible explanation for the withdrawal and re-deposit of the amount in question.

Significantly, the tribunal pointed out that the CIT (A) failed to apply substantive thought to the appellant’s explanations and unduly emphasized the appellant’s absence as a basis for sustaining the AO’s order.

Conclusion and Impact

In a decisive turn, the tribunal’s judgment favored the appellant, setting aside the orders of the lower authorities. This outcome not only underscores the importance of substantive evidence and procedural integrity in tax assessments but also highlights the appellate tribunal’s role in ensuring justice. The case, marked by its detailed examination of evidence and legal principles, stands as a significant precedent on matters of unexplained cash deposits.

Order Pronouncement

The final order was pronounced in open court on the 15th day of November, 2022, allowing the appeal in favor of the assessee, Shashi Garg. This case serves as a compelling narrative on the procedural and evidentiary challenges faced in tax litigation, particularly surrounding the issues of unexplained cash deposits and the taxation implications therein.

Appeal on Unexplained Cash Deposit: A Detailed Analysis of ITA 1252/DEL/2022