Case Analysis of Tikaram Sharma vs ITO Ward-2(4), Faridabad on Assessment Year 2017-18: Understanding the Appeal and Judgment

Case Analysis of Tikaram Sharma vs ITO Ward-2(4), Faridabad on Assessment Year 2017-18: Understanding the Appeal and Judgment

This article presents an exhaustive analysis of the Income Tax Appellate Tribunal case ITA No. 1423/DEL/2022, which involves appellant Tikaram Sharma from VPO Khambi Saraiya Mohalla, Tehsil Hodal, Palwal-121106, and the respondent Income-tax Officer, Ward-2(4), Faridabad. The judgment for the assessment year 2017-18 was pronounced in favor of the appellant, allowing the appeal and providing significant insights into the judicial review process and statutory interpretation within the Indian income tax context.

Introduction

The case between Tikaram Sharma and the Income-tax Officer of Ward-2(4), Faridabad, centers around an appeal by the assessee against an order passed by the Commissioner of Income-tax Appeals (CIT(A)), National Faceless Appeal Centre (NFAC), Delhi. The appeal challenges the CIT(A)’s decision to sustain the assessment order under section 143(3) which resulted in a substantial addition to the appellant’s income for the A.Y. 2017-18.

Background of the Case

The dispute originates from a return filed by Tikaram Sharma for the assessment year 2017-18, declaring an income of Rs. 7,41,200. The case was marked for limited scrutiny due to a deposit of Rs. 11,00,000 in the assessee’s account during the demonetization period, raising questions about the source of these funds. Despite the assessee’s explanation that the cash was deposited out of opening balance and receipts from various persons, the Assessing Officer (AO) concluded the amount was from undisclosed sources, leading to an addition of Rs. 11,00,000 to Sharma’s income under Section 69A of the Income-tax Act, 1961.

Grounds of Appeal and Proceedings

The appellant contested the AO’s decision on two main grounds: firstly, that the NFAC erred in sustaining the assessment order without jurisdiction; and secondly, that sustaining the addition of Rs. 11,00,000 under section 69A along with section 115BBE was incorrect. During the trial, the appellant’s counsel argued the authorities failed to acknowledge proven sources of income and overlooked the cash flow statement provided by the assessee.

Judgment and Analysis

The Income Tax Appellate Tribunal, led by Judicial Member Shri Kul Bharat, heard the arguments. After reviewing the materials on record, the Tribunal noted that the assessee had a claimed opening balance and had deposited Rs. 11,00,000 into HDFC Bank. The authorities below did not appropriately consider the assessee’s income sources and bank statements. It was concluded that the addition made by the AO was based on conjecture rather than concrete evidence. Therefore, the Tribunal deleted the impugned addition, allowing the appeal in favor of Tikaram Sharma.

Conclusion

The case of Tikaram Sharma vs ITO Ward-2(4), Faridabad marks a significant point in the jurisprudence related to income tax assessments and appeals. It underscores the Tribunal’s role in ensuring that assessments are made based on tangible evidence and proper examination of an assessee’s financial records. This decision not only provided relief to Tikaram Sharma but also sets a precedent for similar cases, emphasizing the necessity of fair assessment procedures and the value of credible evidence in tax litigation.

Case Analysis of Tikaram Sharma vs ITO Ward-2(4), Faridabad on Assessment Year 2017-18: Understanding the Appeal and Judgment