₹85.93 lakh demonetisation-era cash deposits: Tribunal asks Haryana taxpayer to plant 500 trees for ‘one more chance’
A Haryana man declared an income of ₹1.79 lakh. But the tax department added ₹11.22 crore to his assessed income. In an unusual twist, a tax tribunal has granted him one final opportunity to substantiate his case before the Assessing Officer. To receive that opportunity, he must plant 500 trees within one month.
If he cannot undertake the plantation himself, he must deposit the required cost of planting, installing, protecting and maintaining the 500 trees with the specified NGO within the same period, The Economic Times reported.
The man filed his Income Tax Return for Assessment Year 2017-18. He declared an income of ₹1,79,160 alongside agricultural income of ₹3 lakh. His return was selected for scrutiny, and what the Assessing Officer found was striking.
The officer discovered cash deposits of ₹85.93 lakh in his bank accounts during the demonetisation period. The man failed to explain the source of these funds. The officer also found unsecured loans exceeding ₹9.25 crore and sundry creditors exceeding ₹1.07 crore.
The man failed to substantiate these entries with the required evidence. The officer also found that the declared agricultural income of ₹3 lakh was unsupported by evidence.
All these amounts were treated as unexplained credits and income. The additions totalled ₹11.22 crore, bringing the assessed total income to around ₹11.22 crore under Section 143(3) of the Income Tax Act, 1961.
The man challenged the assessment before the Commissioner of Income Tax (Appeals) in Gurgaon. All additions were confirmed at that stage. He then approached the Income Tax Appellate Tribunal (ITAT) in Chandigarh.
His approach before the ITAT was notable. He did not seek an outright deletion of the income additions. Instead, he requested one final opportunity to present evidence before the Assessing Officer. His representative stated that he was willing to comply with whatever conditions the Tribunal deemed appropriate.
As a gesture of social and environmental responsibility, the man offered to plant 500 trees at the Yamuna Bank in Panipat’s Samalakha site.
As a gesture of social and environmental responsibility, the man offered to plant 500 trees at the Yamuna Bank site in Samalakha, Panipat. The work could be undertaken either directly or with assistance from the NGO Hari Yamuna Sehyog Samiti. He also committed to paying ₹30 per tree towards maintenance for one year.
The ITAT Chandigarh conditionally accepted his request for one final opportunity. It granted him a chance to present supporting evidence before the Assessing Officer, subject to compliance with the plantation condition.
The ₹11.22 crore addition has not been deleted. The taxpayer has merely been given another opportunity to explain the disputed amounts.
The man must plant 500 trees at the specified location within one month of the order. If he cannot undertake the plantation himself, he must deposit the full cost with the specified NGO within the same period.
The tribunal was unambiguous about the conditional nature of this relief. If the man fails to comply, the original CIT(A) order confirming the ₹11.22 crore addition will stand restored.
Why the ‘unusual’ decision?
Tax expert Karanjot Singh Khurana of DMD Advocates told ET Wealth Online that three factors likely influenced the tribunal.
First, the taxpayer volunteered the plantation offer. Second, the Income Tax Department did not oppose the opportunity though it sought strict compliance. Third, the additions also rested on an absence of evidence before lower authorities.
According to Khurana, the tribunal effectively directed that the cost of granting this indulgence be borne by ecological restitution rather than the exchequer. He described the order as “unusual”.
