Rakesh Reddy Keshanna Vs ITO (ITAT Hyderabad)
In a noteworthy judgment dated December 26, 2023, the Income Tax Appellate Tribunal (ITAT) Hyderabad bench addressed a significant concern related to the assessment of cash deposits made outside the relevant assessment year. The case, Rakesh Reddy Keshanna Vs Income Tax Officer (ITO), centered around the addition of Rs. 20 lakhs to the income of the assessee by the Assessing Officer due to deposits made during the demonetization period and shortly thereafter.
Background of the Case
The appellant, Rakesh Reddy Keshanna, faced scrutiny for deposits totaling Rs. 20 lakhs in his bank accounts, prompting the Assessing Officer to seek explanations for the source of these funds. The assessee’s inability to furnish satisfactory explanations led to the entire sum being added to his income for the assessment year 2017-18. Challenging this decision, the assessee appealed to the Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre (NFAC), Delhi, which upheld the Assessing Officer’s action for lack of convincing evidence.
Tribunal’s Analysis and Ruling
The ITAT’s examination revealed a critical oversight by the lower authorities. The assessee had deposited Rs. 5 lakhs on August 7, 2017, which fell outside the previous year relevant for the assessment year 2017-18. This crucial detail was missed in the assessment, leading to an incorrect inclusion of this amount in the assessee’s income for the said assessment year.
Acknowledging this error, the ITAT ordered the deletion of the Rs. 5 lakhs from the assessee’s income, citing that it could not be considered for assessment for the year in question. This ruling highlights the importance of precise assessment periods and the need for tax authorities to meticulously evaluate the timing of income and deposits.
