Labh Singh Vs ITO (ITAT Chandigarh)
In the case of Labh Singh vs. ITO, the Income Tax Appellate Tribunal (ITAT), Chandigarh, ruled on an appeal concerning a cash deposit addition of ₹25.25 lakh made to the income of an illiterate agriculturist. The case highlights issues of procedural fairness, the burden of proof, and the acceptance of bank records as valid evidence.
The assessee, Labh Singh, an illiterate agriculturist from a remote village, was subjected to a reassessment for the assessment year 2011-12. The Assessing Officer (AO) noted cash deposits totaling ₹25,25,000 in the assessee’s bank account with Sarva Haryana Gramin Bank. Since the assessee did not respond to the notices, the AO proceeded to complete an ex-parte assessment, treating the cash deposits as unexplained income from undisclosed sources under Section 144 of the Income Tax Act. This addition was subsequently confirmed by the Commissioner of Income Tax (Appeals), NFAC, citing a lack of verifiable evidence from the assessee.
During the appeal before the ITAT, the assessee’s representative argued that the cash deposits were not new income but were redeposits of funds withdrawn from the assessee’s other bank accounts. The representative provided bank statements showing a withdrawal of ₹36,00,000 from an SBI account on April 10, 2010. A portion of this amount, ₹20,40,000, was then deposited into the Sarva Haryana Gramin Bank on April 15, 2010. Similarly, further withdrawals of ₹12,00,000 were made in February 2011, followed by redeposits of ₹3,40,000 on February 24, 2011, and ₹1,45,000 on March 11, 2011.
