The case ITA 1694/DEL/2021 involves Jitender Kumar, a resident of Noida, contesting the addition of unexplained money under Section 69 made by the Income Tax Officer (ITO), Ward-1(5), Noida for the assessment year 2010-11. The appeal was heard by the Income Tax Appellate Tribunal (ITAT), Delhi Bench: ‘SMC’.
Jitender Kumar, a civil contractor, did not file any return of income for the assessment year 2010-11, claiming he had no taxable income. The assessing officer received information that Jitender Kumar had deposited Rs. 21,17,000 in his Savings Bank Account with Mahamedha Urban Co-operative Bank, Noida. Based on this information, the assessing officer reopened the assessment under Section 147 of the Income Tax Act, 1961.
The assessing officer issued various statutory notices under Sections 148 and 142(1) of the Act, which were not complied with by the assessee. Consequently, the assessing officer completed the assessment by invoking the provisions of Section 144 of the Act, adding Rs. 21,17,000 to Jitender Kumar’s income as unexplained money under Section 69.
Jitender Kumar appealed against the assessment order before the National Faceless Appeal Centre (NFAC), which reduced the addition to Rs. 11,17,000. The NFAC partially accepted Jitender Kumar’s explanation that the cash deposits were from his contractual receipts.
Dissatisfied with the partial relief, Jitender Kumar further appealed to the ITAT. He argued that the difference between his contract receipts and the actual cash deposits in the bank was due to the redeposit of earlier withdrawals. The case was heard on June 1, 2022, and the order was pronounced on August 26, 2022.
The ITAT, comprising Judicial Member Shri Saktijit Dey, reviewed the submissions and the material available on record. It noted that Jitender Kumar had not appeared before the assessing officer or provided any material to explain the source of the cash deposits. However, he did provide explanations before the appellate authority, claiming the deposits were from contractual receipts.
The appellate authority had granted credit for Rs. 10,00,000 based on an ad hoc assessment without providing clear reasons for this figure. The tribunal found Jitender Kumar’s explanation plausible and noted that the appellate authority did not completely reject the assessee’s claim.
The ITAT held that the addition of Rs. 11,17,000, based on conjecture and surmise, could not be sustained. It deleted the entire addition, allowing Jitender Kumar’s appeal in full.
This case highlights the importance of providing substantiated explanations for cash deposits during tax assessments. The tribunal’s decision underscores that partial acceptance of claims without thorough reasoning does not justify additions based on assumptions.
The judgment in ITA 1694/DEL/2021 serves as a significant precedent for handling cases involving unexplained money under Section 69 of the Income Tax Act. It emphasizes the need for accurate documentation and transparent explanations in tax assessments.
The tribunal’s decision to allow Jitender Kumar’s appeal in ITA 1694/DEL/2021 reinforces the principle that tax authorities must base their assessments on clear evidence and logical reasoning. Taxpayers should ensure they maintain detailed records and provide comprehensive explanations to support their financial transactions during assessments.
This case demonstrates the critical role of the appellate process in ensuring fair and just assessments, and it highlights the need for taxpayers to actively engage with the process to protect their rights.
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