Sourabh Aggarwal vs. DCIT, Karnal: A Landmark Judgment on Cash Deposits During Demonetization

Introduction

On 2nd November, 2022, the Income Tax Appellate Tribunal (ITAT), Delhi Bench, pronounced a significant decision in the case of Sourabh Aggarwal versus the Deputy Commissioner of Income Tax, Central Circle, Karnal. The case, bearing ITA No. 918/DEL/2022, revolved around the additions made under Section 69A of the Income Tax Act, 1961 concerning cash deposits during the demonetization period in the assessment year 2017-18.

Background

The appellant, Sourabh Aggarwal from Yamuna Nagar, Haryana, challenged the additions made by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) under Section 69A for cash deposits amounting to Rs. 4.50 crores in a bank account during the demonetization period. The primary contention was that these deposits stemmed from the appellant’s disclosed income, on which advance tax had been duly paid.

Judgment

The tribunal meticulously analyzed the facts, submissions, and legal provisions applicable. It observed that the appellant had declared the income under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) Scheme, 2016, complying with all the necessary conditions, including payment of tax, surcharge, and penalty under the scheme. Hence, it held that the additions made under Section 69A were not applicable to the appellant’s case, leading to the quashing of the said additions.

Implications

This landmark decision underscores the importance of the PMGKY Scheme, 2016, and its provisions concerning the disclosure of unaccounted income and the payment of taxes. It sets a precedent for similar cases where taxpayers have availed of the scheme, adhering to its conditions. Furthermore, it provides clarity on the application of Section 69A in the context of disclosed and taxed income under government schemes aimed at income declaration and tax compliance.

Conclusion

The ITAT’s decision in Sourabh Aggarwal vs. DCIT, Karnal, epitomizes the judicial scrutiny applied in ensuring justice and fairness in tax assessments, particularly concerning significant economic measures like demonetization. It reaffirms the legal sanctity of declared and taxed income under statutory schemes, thereby alleviating the concerns of taxpayers who have complied with the law in letter and spirit.