Keyur Rajeshbhai Agrawal Vs ITO (ITAT Ahmedabad)
Income Tax Appellate Tribunal (ITAT) Ahmedabad has set aside the assessment order against Keyur Rajeshbhai Agrawal concerning cash deposits of ₹1.58 crore made during the demonetization period. The case arose when the Assessing Officer (AO) added the entire deposit as unexplained cash credit without considering the taxpayer’s explanation or relevant legal provisions. The tribunal ruled that the order violated the principles of natural justice, as the assessee was not given a fair opportunity to present supporting documents, including a government press release that provided relief to sellers of SIM cards and recharge vouchers.
The taxpayer, engaged in the distribution of mobile recharge vouchers and SIM cards, had filed a return declaring an income of ₹4.98 lakh for Assessment Year 2017-18. The AO, upon identifying significant cash deposits, demanded an explanation. In response, the assessee submitted that the deposits originated from daily business collections, which were permitted under a press release dated November 24, 2016. However, the AO disregarded this submission and treated the entire sum as unexplained cash credit under Section 68 of the Income Tax Act. Additionally, a rectification order was later passed, raising an additional tax demand under Section 115BBE.
The taxpayer appealed before the National Faceless Appeal Centre (NFAC), but due to non-appearance at multiple hearings, the appeal was dismissed ex parte. On further appeal to ITAT Ahmedabad, the tribunal observed that the AO had failed to evaluate withdrawals and payments made to Airtel Ltd., which were critical to determining the legitimacy of the deposits. Additionally, the tribunal noted that the AO did not consider the press release that exempted businesses dealing in SIM cards and recharge coupons from scrutiny for cash deposits made during demonetization.
