Income Tax Appeal Outcome: Rajan Aggarwal vs. DCIT, Central Circle, Karnal – Assessment Year 2017-18

In-Depth Analysis of ITA No. 964/DEL/2022: Rajan Aggarwal vs. DCIT, Central Circle, Karnal – Assessment Year 2017-18

The Income Tax Appellate Tribunal (ITAT) Delhi’s \’E\’ Bench delivered a landmark decision on case number ITA 964/DEL/2022 concerning the assessment year 2017-18, where the appellant, Rajan Aggarwal from Haryana, emerged victorious against the Deputy Commissioner of Income Tax (DCIT), Central Circle, Karnal. This case highlights critical aspects of the Income Tax Act’s applicability, specifically focusing on undeclared income during the demonetization period and its implications under the Pradhan Mantri Garib Kalyan Yojna (PMGKY) 2016 scheme.

Background

The case centered around an addition of Rs. 4.50 crores made u/s 69A of the Income Tax Act, 1961, by the DCIT, which was treated as undeclared income allegedly parked in the bank account of Rajan Aggarwal during the demonetization period. The primary focus was whether this addition was justifiable under the tax laws and the validity of the declaration made under the PMGKY Scheme, 2016, alongside the procedural aspects involved therein.

Contentions and Evidences

Both parties presented their contentions robustly. Rajan Aggarwal’s standpoint was that he had declared this amount under the PMGKY Scheme, had paid all necessary taxes, surcharges, and penalties, and had complied with all the requirements set forth by the scheme. The disagreement arose on the acceptance of this declaration by the tax authorities and the subsequent procedural lapses that led to the addition of this amount as undeclared income.

Judgment and Implications

The ITAT, after thorough examination, found merit in Aggarwal’s arguments and evidences. It was observed that Aggarwal had indeed made a bona fide declaration under the PMGKY scheme and had complied with all its stipulations, including tax payments and deposit placement under the scheme. The Tribunal explicitly noted that the provisions of Section 69A of the Income Tax Act were not applicable in this case, rendering the addition made by the tax authorities unsustainable.

This judgment underscores the significance of adhering to the tax laws’ procedural requirements, especially concerning declarations under schemes like PMGKY. It highlights the necessity for the Income Tax Department to carefully evaluate declarations and avoid undue penal actions when taxpayers comply with the scheme’s requirements.

Conclusion

The ITAT’s decision in ITA 964/DEL/2022 illustrates the imperative of proper legal and procedural adherence by both taxpayers and the tax authority, ensuring fairness and legality. This case serves as a precedent for similar disputes, ensuring taxpayers who adhere to the law are not unjustly penalized. It also affirms the importance of schemes like PMGKY in providing a window for tax compliance and should encourage clearer guidelines and procedural simplifications for its uptake.

Income Tax Appeal Outcome: Rajan Aggarwal vs. DCIT, Central Circle, Karnal – Assessment Year 2017-18