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  • In the case of Parmesh Chand Yadav vs Income Tax Officer, the division bench of Justice Manindra Mohan Shrivastava and Justice Shubha Mehta held that bank transactions alone are not sufficient to verify the trade in crypto currency.
  • The relevant ledger statement by the assessee has to be submitted before the department as an evidence saying that he had entered into trade of crypto currency in the manner, as asserted by him by way of the information stated by him.

FACTS OF THE CASE

  • The petitioner/assessee payee for the assessment year of 2018–19 submitted his income tax returns and assessment proceedings were drawn. A notice under Section 148A(b) of the Income Tax Act was issued to the petitioner stating that information received suggests that income chargeable to tax for the assessment year 2018-19 has escaped assessment.
  • It was disclosed that an investment to the tune of Rs.4,65,72,546 was made by the assessee towards the purchase of crypto currency, but the source was not verified and in the ITR filed.

ANALYSIS

  • The petitioner submitted that the amount as alleged in the notice only reflects the volume of transactions in the course of trade of crypto currency and not the investment amount as alleged.
  • The Assessing Officer was dissatisfied with the response, primarily because the volume of transaction was incorrectly assumed to be the investment amount, which was not supported by the relevant documentary evidence.
  • The court observed that whether it was the volume of the trade which is reflected in the total amount of Rs.4,65,72,546 or whether it was an investment made in the crypto currency without any withdrawal therefrom, it would essentially be a matter for consideration upon perusal of the crypto currency ledger.

JUDGEMENT

  • The court said “We find that the authority has considered, though in brief, the reply of the petitioner at this stage only for the purpose of deciding whether proceedings under Section 148 of the Income Tax Act, 1961 should be drawn. In our considered opinion, the exercise which has been undertaken by the authority fulfilled the legal requirement of Section 148(A) of the Act, 1961”.
  • It was further observed that it would be open for the assessee to satisfy the authorities by submitting the relevant crypto currency ledger to verifythe information as was submitted by him before the Assessing Officer in proceedings under Section 148A.
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