Dismissal of Appeal in Case No. ITA 1607/DEL/2022: Preksha Lal vs ACIT – Analyzing the Verdict

In the Income Tax Appellate Tribunal, Delhi Bench ‘F’, the case between Preksha Lal and the ACIT, Central Circle-05, New Delhi, bearing case number ITA No. 1607/Del/2022 for the assessment year 2018-19, was closely examined. This case delves into the complexities of income tax assessments, unexplained cash deposits, and the rigorous processes of appeals within the income tax framework in India. The final verdict was a dismissal of the appeal filed by Preksha Lal, marking a significant conclusion to a dispute that presented various legal and factual challenges.

The case was presided over by Shri Shamim Yahya, Accountant Member, and Shri Challa Nagendra Prasad, Judicial Member. The primary contention revolved around the legitimacy of cash deposits made by the appellant in the assessment year 2018-19, which were deemed unexplained by the Assessing Officer under section 69A of the Income Tax Act, 1961.

Background of the Case

Preksha Lal, the appellant, found herself embroiled in a legal battle after a search and seizure operation under section 132 of the Income Tax Act was carried out on Shri Kshitij Lal Group cases. As a part of the operation, the appellant was also scrutinized, leading to proceedings under section 153A of the Act. The crux of the issue was the deposit of an amount of Rs.9,90,000/- in her bank account, which was flagged during the operation.

The appellant contended that the deposit was from the accumulated income derived from the sale of paintings, a profession she had been engaged in since childhood. She highlighted her history of declaring income from painting sales in previous assessment years, submitting that the cash deposits were merely a continuation of her lawful income.

Assessment and Appeals

Despite the explanations provided, the Assessing Officer rejected the appellant’s submissions due to a lack of satisfactory evidence supporting the claims of cash sales. Consequently, a portion of the deposit, amounting to Rs.6,32,974/-, was treated as unexplained income under section 69A of the Act.

The matter was taken to the Commissioner of Income Tax (Appeals)-24, but the appeal only reinforced the decision of the Assessing Officer. The appellant’s submissions failed to convince the judiciary, leading to a further appeal in the Income Tax Appellate Tribunal.

Arguments and Verdict

Throughout the tribunal proceedings, the appellant reiterated her stance, arguing that the cash deposits were legitimate earnings from her work as a painter. However, the defense was met with skepticism by the tribunal, particularly due to the absence of concrete evidence like bills or vouchers to substantiate the cash sales.

The tribunal’s scrutiny laid bare the gaps in the appellant’s argument, emphasizing the improbability of accumulating such significant amounts through cash sales over the years without any documentary evidence. The verdict ultimately upheld the decisions of the lower authorities, dismissing the appellant’s plea and cementing the addition of the undisclosed sum to her taxable income.

Conclusion and Implications

The dismissal of ITA No. 1607/Del/2022 serves as a cautionary tale for taxpayers, underscoring the importance of maintaining thorough records and transparent financial transactions. It highlights the rigorous standards of evidence required in tribunals and the challenges faced by appellants in overturning decisions of assessing officers without concrete proof.

This case epitomizes the intricate balance between taxpayer rights and the enforcement of tax laws, offering valuable insights into the procedural and substantive aspects of tax litigation in India.

Dismissal of Appeal in Case No. ITA 1607/DEL/2022: Preksha Lal vs ACIT – Analyzing the Verdict