DEVI LAXMI EXTRUSION WORKS,DELHI vs. CIT(APPEALS), DELHI

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ITA 3310/DEL/2025Status: DisposedITAT Delhi24 July 2025AY 2017-183 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that while the assessee's evidence of audited books and purchase entries could not be entirely disregarded, the failure to get relevant facts verified by the assessee in assessment and appellate proceedings was a significant factor. Considering these peculiar facts, the Tribunal deemed a lumpsum addition of Rs. 2 lakhs to be just and proper, with the rider that this would not be treated as a precedent. This grants the assessee relief of Rs. 40 lakhs on the disputed amount. Regarding the assessment under Section 115BBE, the Tribunal, relying on the Madras High Court's decision in S.M.I.L.E. Microfinance Ltd. Vs. ACIT, held that this provision comes into effect only for transactions done on or after 01.04.2017. Therefore, the assessee is directed to be assessed under the normal provisions as per law for the disputed period. No other grounds were pressed.

What were the facts?

The assessee, Devi Laxmi Extrusion Works, is challenging an order passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC) for Assessment Year 2017-18. The dispute pertains to cash deposits of Rs. 42 lakhs made during the demonetization period, which were assessed as unexplained income under Section 68 read with Section 115BBE of the Income Tax Act, 1961. The assessment order was dated 01.12.2019. The assessee runs a manufacturing unit of aluminum collapsible tubes and had declared a business turnover of Rs. 63,22,503/-, which was accepted. The assessee contended that these cash deposits were from regular business transactions supported by audited books and corresponding purchase entries. However, both lower authorities noted the assessee's failure to get relevant facts verified during assessment and appellate proceedings.

What were the issues?

1. Whether the cash deposits of Rs. 42 lakhs made during the demonetization period can be assessed as unexplained cash credits under Section 68 read with Section 115BBE of the Income Tax Act, 1961, despite the assessee providing audited books and purchase entries as evidence of regular business transactions? Assessee's contentions: The assessee argued that the cash deposits were from its regular business transactions, supported by its duly audited books and corresponding purchase entries. The assessee relied on the fact that its declared business turnover of Rs. 63,22,503/- was accepted. Revenue's contentions: The revenue, through the lower authorities, contended that the assessee failed to get the relevant facts verified during the assessment and lower appellate proceedings, leading to the addition of the cash deposits as unexplained.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI

Before: SHRI SATBEER SINGH GODARA

Hearing: 24.07.2025Pronounced: 24.07.2025

Date of hearing 24.07.2025 Date of pronouncement 24.07.2025 ORDER This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2024-25/1075065707(1), dated 26.03.2025 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.

2.

Coming straightway to the assessee’s sole substantive grievance canvassed in the instant appeal challenging both the learned lower authorities’ action assessing its cash deposits during demonetization of Rs.42 lakhs as unexplained under section 68 r.w.s. 115BBE of the Act, in assessment order dated 01.12.2019 and upheld in the lower appellate discussion.

3.

It transpires during the course of hearing that in fact the assessee runs a manufacturing unit of aluminum collapsible tubes at Okhla Industrial Area, Phase-2, Delhi. And that it has also declared total business turnover of Rs.63,22,503/- in the relevant previous year which duly stands accepted.

4.

It is in light of all these facts that the assessee has invited the tribunal’s attention to its duly audited books as well as all purchases having corresponding purchases entries that these cash deposits are in fact its regular business transactions only. The fact however remains that although the assessee’s above detailed evidence could not be simply brushed aside, both the lower authorities have quoted its failure to get the relevant facts verified on account of its failure in assessment as well as the lower appellate proceedings. Be that as it may, it is deemed appropriate

2 | P a g e in these peculiar facts that a lumpsum addition of Rs.2 lakhs only would be just and proper with a rider that the same shall not be treated as a precedent. The assessee gets relief of Rs.40 lakhs in other words.

5.

So far as assessee’s assessment under section 115BBE is concerned, I quote S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No.2078 of 2020 & 1742 of 2020, dated 19.11.2024 (Madras) that the impugned statutory provision would come into effect on the transaction done on or after 01.04.2017 only. The assessee is accordingly directed to be assessed under the normal provision as per law. No other ground or argument has been pressed before us.

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