Hitesh Jaysingbhai Purohit Vs ITO (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT) Ahmedabad allowed the appeal filed by Hitesh Jaysingbhai Purohit, quashing the addition of ₹10,09,750 made by the Assessing Officer (AO) under Section 69A of the Income Tax Act for the Assessment Year 2017-18. The AO had added this amount, representing cash deposits made during the demonetization period, as unexplained cash credits. Purohit, an individual with professional income, had filed his return declaring ₹3,04,500. During the appellate proceedings before the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Purohit explained that the cash deposits were derived from his regular tuition income, earned both in the current and previous years, and from gifts received during his marriage, amounting to ₹3.5 lakhs. He also presented an opening cash balance of ₹5,16,400, which was not disputed by the revenue authorities.
The ITAT, after considering the evidence presented by Purohit, including detailed accounts and an affidavit, concluded that the sources of the cash deposits were adequately explained. The tribunal acknowledged the opening cash balance, the tuition income, and the marriage gifts as valid sources, and therefore, determined that no addition under Section 69A was warranted. The ITAT also addressed the issue of the AO invoking Section 115BBE, which levies a higher tax rate on unexplained income, stating that the AO had not issued a specific show cause notice regarding this provision. Consequently, the ITAT allowed Purohit’s appeal, effectively deleting the addition made by the AO and upheld by the NFAC. This decision highlights the importance of considering all presented evidence and adhering to procedural fairness in tax assessments, particularly regarding cash deposits during significant financial events like demonetization.
