Introduction
This article delves into the Income Tax Appellate Tribunal’s judgment in the case of ITA No. 966/DEL/2022, involving the appellant, Rama Aggarwal from Haryana, and the respondent, the Department of Central Income Tax (DCIT), Central Circle, Karnal, for the assessment year 2017-18. The appeal, which was allowed in favor of the appellant, presents a critical reflection on the application of the Pradhan Mantri Garib Kalyan Yojana (PMGKY) Scheme, 2016, and the implications of the Income Tax Act, particularly Section 69A, regarding unexplained deposits in bank accounts.
Background
Rama Aggarwal, the appellant, faced scrutiny under the Income Tax Act for depositing a substantial amount of Rs. 4.50 crores in her bank account during the demonetization period of 2016. The Income Tax Department, represented by DCIT, Central Circle, Karnal, assessed these deposits as unexplained income under Section 69A of the Income Tax Act, levying taxes, surcharge, and penalty accordingly.
Arguments and Judgment
The core issue revolved around the applicability of the PMGKY Scheme, 2016 to the appellant’s case. The appellant contended that the deposits were made out of disclosed income, taxes were duly paid, and the amount was declared under the PMGKY scheme. The Income Tax Department’s stance was that the appellant failed to furnish sufficient proof of the declaration under the PMGKY scheme, leading to the categorization of the deposits as unexplained income.
The Tribunal, after a thorough examination of the facts and provisions of the PMGKY Scheme, found that the appellant had indeed fulfilled all requirements of the Scheme and had made a valid declaration. It observed that the provisions of Section 69A of the Act, which pertain to unexplained money, could not be applied when the assessee had availed benefits under the PMGKY Scheme by making a valid declaration and paying the requisite taxes and penalties.
Conclusion
This case highlights the significance of adhering to the procedural and substantive aspects of tax compliance schemes like PMGKY. It underscores the need for taxpayers to diligently document and provide evidence of compliance to avail of the benefits under such schemes. For the tax authorities, it serves as a reminder to thoroughly assess the applicability of tax schemes before making additions under sections like 69A of the Income Tax Act. The judgment thus sets a precedent for future cases involving declarations under government schemes aimed at unearthing undisclosed income.
The decision in the case of Rama Aggarwal vs. DCIT has vital implications for taxpayers and tax planners, emphasizing the importance of compliance with statutory provisions and timely availing of beneficial schemes offered by the government to avoid unnecessary litigations and penalties.
