The income tax department has lost a battle before the Income Tax Appellate Tribunal against UP chief minister Akhilesh Yadav where it had accused him and his wife Dimple of using "unaccounted" cash to convert the land use of a property purchased in their joint names at 1-A, Vikramaditya Marg in Hazratganj, Lucknow. 

Akhilesh bought the prime property on January 31, 2005 from a Delhi-based businessman. The rights were acquired by him jointly with his wife. It is not known how much money the UP CM paid the businessman for the property. However, since it was Nazul (government) land, Akhilesh got it converted into free hold six months later on June 24, 2005 at a cost of Rs 44.67 lakh. 

Here, the CM invited trouble when he deposited Rs 44.67 lakh in cash in the joint bank account held by him and his wife in SBI's Lucknow branch on the morning of June 23, 2005 and withdrew the entire amount, in cash, the same day to pay the Nazul department against land conversion. It raised suspicion within the I-T department, which slapped him with notices to explain the "unaccounted" cash transaction. 

When confronted with the huge cash deposit in his bank account and its withdrawal the same day, Akhilesh was quick to reject doubts of the money being unaccounted saying the cash was a "loan" given to him and his wife by the Samajwadi Party. 

Akhilesh was an MP at that point and claimed that he didn't have the money to pay the Nazul department. However, within two months of the loan disbursement, Akhilesh and his wife paid back the entire amount to the party (on August 24, 2005), according to his declaration made later to the I-T department. 

The I-T department refused to buy the argument and questioned why he had agreed to take the money in cash when I-T rules clearly provide that all loans above Rs 10,000 should be through account payee cheque or draft only. When the CM failed to explain his position, the department imposed a penalty on him and his wife for the said amount. 

Akhilesh contested the penalty, arguing that he "was of the age of 32 years in the assessment year under appeal and was of immature age and ignorant of law. Therefore, on that reason also, penalty should be deleted". The I-T department, however, questioned his "immature age" argument, saying he was an MP and a lawmaker should be responsible enough to follow the law. 

The case then went to the I-T Appellate Tribunal where the revenue department argued that cash transactions were often done to hide unaccounted money. "Unaccounted cash found in the course of searches carried out by the I-T department is often explained by taxpayers as representing loans taken from or deposits made by various persons. Unaccounted income is also brought into the books of account in the form of such loans and deposits, and taxpayers are also able to get confirmatory letters from such persons in support of their explanation," the department said demanding that Akhilesh and his wife should be penalized. 

The department moved ITAT in 2007 when the case was settled in favour of the SP leader. The commissioner appeals had then deleted the penalty and had observed that "there was no scope for introducing any black money for transfer of cash from one concern to another concern" and that the genuineness of the transaction was beyond doubt. 

The I-T department may move the high court against ITAT's verdict in favour of Akhilesh and his wife. The ITAT verdict dismissing the revenue's department's case came on October 23, 2012. (Times of India)