Shakti Singh Vs NFAC (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT) Delhi bench has remitted the case of Shakti Singh back to the National Faceless Appeal Centre (NFAC) for a fresh assessment of unexplained cash deposits. The core issue revolves around the addition of Rs. 1,13,31,950 made by the Assessing Officer (AO) on account of cash deposited in the assessee’s bank account during the demonetization period in Assessment Year (AY) 2016-17. The ITAT has directed the AO to apply the peak credit theory and allow for a set-off against the assessee’s agricultural income.
The case originated when the assessee, primarily an agriculturist with 60 bighas of land, did not file an income tax return for AY 2016-17, as he claimed to have no taxable income. Information from the Annual Information Return (AIR) indicated cash deposits totaling Rs. 1,13,31,950 in his Prathama UP Gramin Bank account. Based on this, the AO initiated reassessment proceedings under Section 147 of the Income-tax Act, 1961, issuing a notice under Section 148. The assessment was ultimately completed ex-parte under Section 144 read with Section 147, with the entire cash deposit being added as unexplained money.
The assessee appealed to the NFAC, asserting that the cash deposits represented a rotation of funds from earlier cash withdrawals and a portion of his net agricultural income, amounting to Rs. 20,12,800. During the appeal, the assessee submitted additional evidence under Rule 46A of the Income Tax Rules, including a cash flow statement that indicated a peak credit of Rs. 19,77,410 on January 28, 2016, excluding agricultural income. A remand report was sought from the AO, who, notably, accepted the assessee’s explanation regarding agricultural income and allowed a set-off of Rs. 20,12,800 against the cash deposits. The assessee contended that if the agricultural income was fully accounted for in the peak credit workings, no further addition would be necessary.
