REKHA VARMA,MUZAFFARNGAAR vs. INCOME TAX OFFICER, WARD-3(2)(2), MUZAFFARNAGAR

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ITA 2441/DEL/2025Status: DisposedITAT Delhi08 July 2025AY 2017-183 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal partly allowed the assessee's appeal. Regarding the cash deposits of Rs. 2,43,784/-, the Tribunal inferred, considering the assessee's socio-economic circumstances, that she could have been carrying cash representing family savings, although not satisfactorily proved. The Tribunal granted partial relief by accepting the assessee's argument to the extent of Rs. 93,784/-, thus confirming an addition of Rs. 1.5 lakhs. For the assessment under section 115BBE, the Tribunal, relying on the Madras High Court decision in S.M.I.L.E. Microfinance Ltd. Vs. ACIT, held that this provision applies only to transactions done on or after 01.04.2017. Therefore, the assessee was directed to be assessed under the normal provisions of the Act. The ratio is that while unexplained cash deposits can be partly accepted based on socio-economic circumstances, the applicability of section 115BBE is prospective from 01.04.2017.

What were the facts?

The assessee, Smt. Rekha Verma, is in appeal against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, dated 05.03.2025. This order arose from proceedings under section 143(3) of the Income-tax Act, 1961, for the assessment year 2017-18. The dispute concerns cash deposits of Rs. 2,43,784/- which were treated as unexplained by the lower authorities. The CIT(A)/NFAC had previously accepted that Rs. 8 lakhs represented withdrawals and Rs. 1,85,216/- was derived from the sale of milk, leaving only the sum of Rs. 2,43,784/- in dispute.

What were the issues?

1. Whether the Tribunal had erred in law and on facts in treating the cash deposits of Rs. 2,43,784/- as unexplained under section 69A read with section 115BBE of the Act. Assessee's contention: The assessee argued that the cash deposits represented family savings and that she could be held to have been carrying cash in hand. The assessee sought relief on the disputed amount. Revenue's contention: The revenue contended that the cash deposits were unexplained, supporting the findings of the lower authorities. The judgment records no specific arguments from the revenue beyond reiterating their stand.

Which sections of the Income-tax Act were involved?

Section 69A,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: 08.07.2025Pronounced: 08.07.2025

Date of hearing 08.07.2025 Date of pronouncement 08.07.2025 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/250/2024-25/1074049567(1), dated 05.03.2025 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.

Learned counsel straightway comes to the assessee’s sole substantive grievance raised in the instant appeal that both the lower authorities herein have erred in law and on facts in treating the cash deposits of Rs.2,43,784/-; as unexplained under section 69A r.w.s. 115BBE of the Act. This is what leaves the assessee aggrieved.

3.

I have given my thoughtful consideration to the assessee’s and the department’s vehement rival submissions reiterating their respective stands. A perusal of the learned CIT(A)’s lower appellate discussion indicates that he has already treated the assessee to have explained her cash deposits of Rs.8 lakhs as representing withdrawals, Rs.1,85,216/- has derived from sale of milk etc. and the remaining sum of Rs.2,43,784/- lakhs only form subject matter of dispute herein.

4. That being the case, it could indeed be inferred keeping in mind the assessee’s socio-economic circumstances that she could very well be held to have been carrying cash in hand representing family savings etc., although not satisfactorily proved before both the lower authorities. I accordingly deem it appropriate in the larger interest of justice to partly accept the assessee’s argument to the tune of Rs.93,784/-only and confirm the balance addition of Rs.1.5 lakhs in other words. Necessary computation shall follow as per law.

4.

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.

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