Manju Agarwal Vs ITO (ITAT Agra)
The Income Tax Appellate Tribunal (ITAT), Agra Bench, in the case of Manju Agarwal Vs ITO, delivered an order resolving an appeal concerning the addition of unexplained cash deposits made during the financial year 2016-17 (Assessment Year 2017-18), a period marked by the central government’s demonetisation exercise. The Tribunal allowed the assessee’s appeal for statistical purposes, setting aside the earlier orders passed by the Assessing Officer (AO) and the National Faceless Appeal Centre (NFAC), and directing a fresh assessment on the grounds of procedural irregularity and the need for factual verification.
Background to the Dispute and Initial Assessment
The core of the dispute originated from significant cash deposits made into the assessee’s bank account with UCO Bank during A.Y. 2017-18, which included transactions during the demonetisation period. Observing the abnormal nature of these deposits, the AO, Income Tax Officer, Ward-1(2), Gwalior, proceeded to treat a portion of the total deposit as unexplained money.
The AO completed the original assessment ex-parte under Section 144 of the Income-tax Act, 1961 (the Act), on December 19, 2019. Under this provision, the AO makes an assessment based on available material if the assessee fails to comply with required notices or fails to furnish necessary details. The AO added a sum of Rs. 7,73,760/- to the assessee’s income as unexplained money. The appeal filed against this assessment also challenged a separate addition of Rs. 5,47,766/- (8% of Rs. 68,47,079/-), also classified as alleged unexplained money.
