Income Tax Appeal Case ITA 1297/DEL/2022: Pernika Gupta vs ACIT – Understanding the Grounds and Judgment

Income Tax Appeal Case ITA 1297/DEL/2022: Pernika Gupta vs ACIT – A Detailed Review

Introduction

The appeal case ITA No. 1297/Del/2022 involves appellant Pernika Gupta from New Delhi against the respondent ACIT, Central Circle, Karnal, concerning the assessment year 2017-18. The case reached a conclusive judgment on 12.09.2023, with the decision allowing the appeal in favor of the assessee, Ms. Pernika Gupta. This article provides a comprehensive analysis into the case, exploring the reasons behind its filing, the proceedings, and the implications of the final judgment.

Background of the Case

Pernika Gupta, an individual taxpayer residing at C-5/2A, Opp. CC Colony, Rana Pratap Bagh, New Delhi, challenged the order of the Commissioner of Income Tax (Appeals)-3, Gurgaon dated 19.05.2022 for the assessment year 2017-18. The core of the dispute revolved around the addition made by the Assessing Officer (AO) of Rs.2,40,000 to Ms. Gupta’s income, purportedly as undeclared income during the demonetization period.

The legal contention was based on the Central Board of Direct Taxes (CBDT) Instruction No. 3/2017, which directed tax authorities not to undertake any action in cases of individual deposits below Rs.2,50,000 during the demonetization period. Ms. Gupta’s appeal emphasized this instruction, arguing that her deposit was within the non-actionable limit, and thus, the addition made by the AO was unjustified.

Hearing and Arguments

The case was represented by Shri Ved Jain, Advocate, and Shri Aman Garg, CA, for the appellant, while the Revenue was represented by Shri Vivek Vardhan, Sr. DR. During the proceedings, it was highlighted by the appellant’s counsel that, except for grounds no. 5 & 6, the assessee did not wish to press other grounds of appeal.

In response to the submission, the Ld. CIT-DR supported the orders of the authorities below but did not contest the applicability of the CBDT Instruction No. 3/2017 on cases like that of Ms. Gupta.

Judgment and Conclusion

Considering the arguments and the specific provisions of the CBDT Instruction No. 3/2017, the bench, comprised of Shri Chandra Mohan Garg, Judicial Member, and Shri M Balaganesh, Accountant Member, concluded that the appeal deserved to be allowed. It was noted that since Ms. Gupta’s cash deposit of Rs.2,40,000 was below the threshold specified by the CBDT directive, the grievance of the assessee was justified. Consequently, the Assessing Officer was directed to delete the addition.

The decision was pronounced in open court on 12.09.2023, marking a significant victory for Pernika Gupta and setting a precedent for similar cases regarding the demonetization period deposits. This case underscores the importance of clear guidelines and their consistent application in tax assessments, providing vital clarifications for taxpayers and authorities alike.

Conclusion

The judgment in the case of ITA 1297/DEL/2022 serves as an essential reference point for cases involving cash deposits during the demonetization period. By upholding the CBDT Instruction No. 3/2017, the ITAT has reinforced the need for adherence to policy guidelines, ensuring fair treatment of taxpayers and supporting the principles of justice and equity in tax law.

Income Tax Appeal Case ITA 1297/DEL/2022: Pernika Gupta vs ACIT – Understanding the Grounds and Judgment