Case Law Details
Vivek Prahladbhai Patel Vs ITO (ITAT Ahmedabad)
In the case of Vivek Prahladbhai Patel vs Income Tax Officer (ITO), adjudicated by the Income Tax Appellate Tribunal (ITAT) Ahmedabad, a significant dispute arose regarding cash deposits made by the assessee during the period of demonetization. The Additional/Joint Commissioner of Income Tax (Appeals) upheld the addition made by the Assessing Officer under section 69A of the Income Tax Act, 1961. However, the ITAT Ahmedabad, upon careful consideration, reversed this decision.
The crux of the matter lies in the source of the cash deposits made by Vivek Prahladbhai Patel. The Assessing Officer treated a substantial portion of these deposits as unexplained income, adding it to Patel’s taxable income under section 69A of the Act. Patel, in defense, provided affidavits from his parents affirming that the cash deposits originated from their accumulated savings and income derived from agricultural activities on their own land. However, both the AO and the CIT(A) dismissed these affidavits without conducting any substantial verification or inquiry.
The ITAT, in its analysis, emphasized the importance of proper investigation by the revenue authorities when faced with plausible explanations supported by credible evidence. It cited legal precedents highlighting the burden of proof lying with the revenue to establish that the amount in question constitutes income of the assessee. In this case, the affidavits submitted by Patel’s parents, along with the absence of any counter-evidence, rendered the addition under section 69A unsustainable.
Moreover, the tribunal criticized the failure of the AO and the CIT(A) to fulfill their duty of conducting a fair and thorough investigation into the source of the cash deposits. Despite the provision of plausible explanations and supporting affidavits, no effort was made to verify the claims made by Patel. The tribunal deemed this lack of diligence unacceptable and ordered the deletion of the addition under section 69A.
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