Comprehensive Analysis: ITA No. 992/Del/2022 – Reema Nair vs. ITO, Ward-30(7)

In a significant decision made by the Income Tax Appellate Tribunal, Delhi Bench, concerning ITA No. 992/Del/2022 for the Assessment Year 2017-18, justice was sought by the appellant, Reema Nair of F-9/10, Vasant Vihar, South West Delhi, against the respondent, ITO, Ward-30(7), Delhi. This case casts light on the critical aspects of tax law, the due process of law, and the rights of the assessee in the context of cash deposits made during the demonetization period.

Background of the Case

Reema Nair, a senior citizen, filed her return of income declaring an income of Rs.5,62,640/- for the A.Y. 2017-18 on December 18, 2017. The return was selected for limited scrutiny, focusing on the cash deposits amounting to Rs.31,19,000/- in her bank account. The Assessing Officer (AO) questioned the source of these deposits, leading to a contention that led to the appeal in question.

The AO, unconvinced by the assessee’s explanation and cash flow statement, added the entire sum as unexplained income. The aggrieved assessee appealed against this order to the ld.CIT(A), National Faceless Appeal Centre, Delhi, which upheld the AO’s decision, prompting the appeal to the Tribunal.

Arguments Presented

The assessee, represented by Shri Surendra Garg, CA, contended against the sustenance of addition made on account of cash deposits and argued that adequate opportunity for hearing was not provided. This ground, amongst the core contention that the sources of cash deposits were justified based on the withdrawals from various bank accounts held by the assessee, formed the crux of the appeal.

The respondent, represented by Shri Om Parkash, Sr. DR, stood firm on the decision of the lower authorities, arguing that the assessee was given ample opportunity and the addition was rightly made, highlighting a lack of justification for keeping substantial cash and depositing it during the demonetization period.

Judiciary Insight

After an extensive review of the submissions and records, SHRI KUL BHARAT, Judicial Member, highlighted the dilemma faced by the assessee—a senior citizen who, driven by anxiety and old age, preferred keeping cash at home. Despite acknowledging withdrawals from various bank accounts, the AO had failed to offset such withdrawals against the deposits in question. This oversight, coupled with the absence of evidence on the AO’s part to prove that the withdrawn cash was utilized for other purposes, led to the conclusion that the addition made was unjustified without proper verification.

Final Judgment

In a decisive move, SHRI KUL BHARAT set aside the impugned order, remanding the case to the file of the ld.CIT(A) for a fresh decision. This was to be done after providing the assessee an adequate opportunity of being heard and requesting a remand report from the AO. The grounds raised in the appeal were thus allowed for statistical purposes, marking a significant disposition in the appellee’s favor.

Conclusion

This case underscores the importance of due process and the need for taxation authorities to consider the factual matrix of each case. It emphasizes the principle that additions cannot be made merely on assumptions without substantive evidence. For Reema Nair, the Tribunal’s decision presents a beacon of hope, not just for herself but for many who find themselves in similar predicaments.

The ITA No. 992/Del/2022 thus serves as a noteworthy precedent in the landscape of Indian tax jurisprudence, highlighting the judiciary’s role in ensuring justice and the application of law with substantial fairness and consideration.

Comprehensive Analysis: ITA No. 992/Del/2022 – Reema Nair vs. ITO, Ward-30(7)