This article analyzes the Income Tax Appellate Tribunal’s decision in the case between Vivek Garg and the ITO, Ward 2(3)(5), Hapur, concerning cash deposits during the demonetization period for the assessment year 2017-18.
The case centers on the addition of Rs.1,134,095 to Vivek Garg’s income as undisclosed, which the assessee challenged. The dispute originates from cash deposits made during the demonetization period in India, which were flagged by the Income Tax Department as potentially undisclosed income.
The assessing officer (AO) scrutinized the increased sales reported during a brief period coinciding with demonetization and compared them with the corresponding period in the previous year. The assessee, Vivek Garg, argued that the sales were genuine and that the cash deposits stemmed from legitimate business transactions.
The tribunal, led by Shri Shamim Yahya, noted the lack of defects in the books of account presented by Garg and criticized the AO’s approach of treating part of the sales as bogus without substantive evidence. It was highlighted that if the sales were indeed bogus, corresponding expenses would have been affected, potentially making any addition revenue-neutral.
The tribunal eventually ruled in favor of Vivek Garg, setting aside the lower authorities’ decisions and allowing the appeal. This case underscores the importance of providing clear evidence and following due process in tax assessments, especially in cases involving significant economic events like demonetization.
Tax Appeal of Vivek Garg Against ITO, Hapur on Demonetization Cash Deposits for AY 2017-18
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