Case Summary: ITA No.1692/Del/2022 – Smt. Mamta Gupta vs. ITO OSD-1, Faridabad
This analysis delves into the appeal filed by Smt. Mamta Gupta against the order dated 27.05.2022 passed by the Ld. National Faceless Appeal Centre, New Delhi, concerning the assessment year 2017-18. The core of the dispute revolves around the addition of Rs 7,00,000 to the appellant’s income, which was claimed to be deposited during the demonetization period without a clear indication of the applicable section under the Income Tax Act, 1961. The Income Tax Appellate Tribunal (ITAT), Delhi Bench, partly allowed the appeal, setting a significant precedent regarding additions made during the demonetization period.
Background of the Case
The appellant, Smt. Mamta Gupta, contested the addition of Rs 7,00,000 to her income for the Assessment Year 2017-18, arguing the addition was made without specifying the precise section under the Income Tax Act, 1961. The addition was initially invoked under section 115BBE, which the appellant contended was erroneously applied as it is not a charging section but rather provides a mechanism for taxation in cases of undisclosed income.
Arguments and Findings
The appellant’s representative argued that the addition under section 115BBE was not justified, as no specific addition had been made under the sections that section 115BBE pertains to. They relied on a judgment by a co-ordinate bench of ITAT Delhi to support their argument. The respondent, on behalf of the revenue, defended the addition based on the absence of a satisfactory explanation for the source of the cash deposits made during the demonetization period.
Upon review, the ITAT found that both the Assessing Officer and the CIT(A) did not specify under which section of the Income Tax Act the addition was made, rendering the addition bad in law. Additionally, the appellant successfully demonstrated the source of the cash deposits as being from legitimate sources, including rental income, tuition fees, and bank withdrawals made prior to demonetization, thereby supporting the deletion of the addition.
Conclusion and Impact
The ITAT’s decision to partly allow the appeal, directing the deletion of the Rs 7,00,000 addition, highlights the necessity for precise legal grounding in making additions to an assessee’s income. This case sets an important precedent for how cases related to cash deposits made during the demonetization period should be handled, particularly emphasizing the need for the authorities to clearly specify the sections under which any additions are made.
