Akash Singh Chawla vs. ITO Ward 44(1), New Delhi – Dispute over Unexplained Cash Deposits for AY 2011-12

Final Tribunal Order: Akash Singh Chawla vs. ITO Ward 44(1), New Delhi

Case Number: ITA 6570/DEL/2019

Appellant: Akash Singh Chawla, New Delhi

Respondent: ITO Ward 44(1), New Delhi

Assessment Year: 2011-12

Date of Order: October 27, 2021

Order Type: Final Tribunal Order

Introduction

This article provides an in-depth look into the case of Akash Singh Chawla vs. ITO Ward 44(1), New Delhi, concerning the assessment year 2011-12. The case was heard by the Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘SMC’, on October 27, 2021, with Shri Anil Chaturvedi, Accountant Member, presiding. The appeal focused on the addition of unexplained cash deposits as income by the Assessing Officer (AO), which was subsequently upheld by the Commissioner of Income Tax (Appeals) [CIT(A)].

Background of the Case

Akash Singh Chawla, an individual taxpayer, was at the center of this tax dispute. The issue arose when the AO noted that the appellant had not filed a return of income for the assessment year 2011-12. However, information received through the Income Tax Department’s system indicated that there had been an aggregate cash deposit of Rs. 14,51,000/- in the appellant’s savings bank account during the relevant financial year.

Based on this information, the AO issued a notice under Section 148 of the Income Tax Act, initiating reassessment proceedings. Despite issuing multiple notices under Section 142(1) of the Act, the appellant failed to comply. Consequently, the AO proceeded to assess the income under Section 144/147 of the Act, treating the entire cash deposit as unexplained income and assessing it at Rs. 14,51,000/-.

Appellant’s Grounds for Appeal

Aggrieved by the AO’s decision, Akash Singh Chawla appealed to the CIT(A), arguing several points:

• No Notice Was Served: The appellant contended that the notice was never served to him, which led to his non-compliance with the AO’s directives.
• Non-Taxable Income: The appellant asserted that his income for the relevant year was not taxable, and therefore, the cash deposits should not have been treated as income.
• Unexplained Cash Deposits: The appellant challenged the AO’s decision to treat the cash deposits in his savings account as income, arguing that the funds were not taxable income.
• Lack of Opportunity to Present Evidence: The appellant claimed that the CIT(A) refused to accept his application under Rule 46A, which would have allowed him to submit additional evidence and documents. The refusal, according to the appellant, denied him the opportunity to receive a fair hearing and natural justice.
• Non-Speaking Order: The appellant argued that the CIT(A)’s order was non-speaking, meaning it did not address all the contentions and citations he presented. The appellant believed that the CIT(A) focused solely on the issue of notice service, ignoring other critical aspects of his defense.

Tribunal’s Findings

The ITAT, led by Shri Anil Chaturvedi, examined the arguments and evidence presented by both sides. The Tribunal considered the appellant’s claims, especially concerning the lack of proper notice and the CIT(A)’s refusal to admit additional evidence under Rule 46A. The appellant’s advocate, Shri Daljeet Singh, represented him during the proceedings, while Ms. Sangeeta Yadav, Senior Departmental Representative (Sr.D.R.), represented the Revenue.

The Tribunal acknowledged the importance of serving proper notice to the taxpayer and providing an opportunity to present evidence. However, the Tribunal also noted that the appellant had failed to comply with multiple notices issued under Section 142(1) during the reassessment proceedings. The non-compliance led to the AO assessing the income based on the available information, which included unexplained cash deposits.

Conclusion of the Case

After considering the facts and circumstances of the case, the Tribunal upheld the CIT(A)’s decision to dismiss the appeal. The Tribunal concluded that the appellant had not provided sufficient justification for his non-compliance with the notices issued by the AO. Additionally, the Tribunal found that the CIT(A)’s refusal to admit additional evidence under Rule 46A was justified, given the appellant’s failure to present the evidence during the original assessment proceedings.

As a result, the appeal was dismissed, and the addition of Rs. 14,51,000/- as unexplained income was sustained. The Tribunal’s decision was pronounced on October 27, 2021, marking the conclusion of this tax dispute.

Implications

This case highlights the critical importance of timely compliance with notices issued by the Income Tax Department. Taxpayers must ensure that they respond to all notices and provide the necessary documentation during the assessment and reassessment proceedings. Failure to do so can lead to adverse decisions, including the addition of unexplained cash deposits as income, as seen in this case.

The Tribunal’s decision also underscores the necessity of presenting all relevant evidence at the appropriate stages of the assessment process. Attempting to introduce new evidence at the appellate stage, without sufficient justification, may not be allowed, resulting in a dismissal of the appeal.

Overall, the case of Akash Singh Chawla vs. ITO Ward 44(1), New Delhi serves as a reminder for taxpayers to maintain transparency and compliance in their financial transactions and interactions with the Income Tax Department.

Akash Singh Chawla vs. ITO Ward 44(1), New Delhi – Dispute over Unexplained Cash Deposits for AY 2011-12