This article provides an in-depth analysis of the tax appeal case filed by Aniket Agarwal against the Income Tax Officer (ITO), Ward-2(3)(1), Bulandshahar, regarding cash deposits during the demonetization period for the assessment year 2017-18. The appeal was filed on May 27, 2021, and the final order was pronounced on May 11, 2022.
Aniket Agarwal, a resident of Bulandshahar, Uttar Pradesh, filed an appeal with the Income Tax Appellate Tribunal (ITAT) challenging the addition made by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC). The addition pertained to a cash deposit of Rs. 2,30,000 during the demonetization period, which the AO treated as unexplained cash deposits under Section 69 of the Income Tax Act, 1961.
The central issue in this case was whether the addition of Rs. 2,30,000 as unexplained cash deposits during the demonetization period was justified. Aniket Agarwal argued that the cash deposits were from his past savings and cash gifts received on various occasions from friends and relatives. He contended that the total cash deposit was less than Rs. 2,50,000, the threshold set by CBDT Instruction No. 03/2017, which did not require further verification for individuals not having any business income.
The appellant’s representative presented the following key arguments:
The respondent, represented by the Sr. Departmental Representative (DR), supported the assessment and the first appellate order, emphasizing that the addition was justified. However, the respondent did not provide any substantial evidence to counter the appellant’s claims about the source of the cash deposits.
The tribunal, comprising Shri Chandra Mohan Garg, Judicial Member, analyzed the arguments and facts presented by both parties. The key observations and conclusions of the tribunal were:
Based on these observations, the tribunal concluded that the addition made by the AO and confirmed by the CIT (Appeals) was not sustainable as it was against the instructions issued by the CBDT.
As recorded in the final judgment:
“In view of foregoing discussion, I hold Instruction No. 1.1 to a logical conclusion that when the CBDT Circulars clearly provide, no further clarification and verification is required to be made in the case of an Individual who is earning income from salary filing return of income has deposited amount of Rs.2,30,000/- during demonetization period. Therefore, the addition made by the Assessing Officer and confirmed by the ld. CIT (Appeals) cannot be held as sustainable as the same is clearly against the Instruction issued by the CBDT. Therefore, sole ground of appeal of the assessee is allowed.”
“In the result, the appeal of the assessee stands allowed.”
Signed,
(CHANDRA MOHAN GARG)
JUDICIAL MEMBERDated: 11/05/2022
The judgment in favor of Aniket Agarwal sets a precedent for similar cases involving cash deposits during the demonetization period. It reinforces the applicability and authority of CBDT instructions and highlights the importance of adhering to these guidelines in tax assessments.
The withdrawal of the appeal signifies an end to a dispute over the tax assessment for the specified year, demonstrating how individuals can effectively use established guidelines and precedents to contest unjustified tax additions.
Aniket Agarwal vs ITO: Demonetization Cash Deposit Case for Assessment Year 2017-18
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