DEVENDRA KUMAR,GHAZIABAD vs. ITO WARD-2(1)(2), GHAZIABAD

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ITA 1460/DEL/2025Status: DisposedITAT Delhi02 July 2025AY 2017-183 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal partially allowed the assessee's appeal. Regarding the first issue concerning the unexplained cash deposits of Rs. 11.19 lakhs, the Tribunal acknowledged the assessee's claim of savings and gifts, including marriage-related gifts, and the provision of photographs. Despite the admitted failure to reconcile these with the deposits, the Tribunal, in the larger interest of justice and considering the assessee's socio-economic status, deemed a lumpsum addition of Rs. 2 lakhs to be just and proper. The addition of Rs. 11.19 lakhs was consequently deleted to the extent of Rs. 9.19 lakhs. For the second issue concerning the applicability of Section 115BBE, the Tribunal, relying on the Madras High Court's decision in S.M.I.L.E. Microfinance Ltd. Vs. ACIT, held that Section 115BBE is effective only for transactions done on or after April 1, 2017. Therefore, the assessee was directed to be assessed under the normal provisions of the Act, implying Section 115BBE was not applicable to the transactions in question for AY 2017-18. No issue was expressly left undecided.

What were the facts?

The assessee, Sh. Devendra Kumar, is in appeal before the Income Tax Appellate Tribunal (ITAT), Delhi Bench, against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi. The appeal pertains to Assessment Year 2017-18 and challenges proceedings under section 143(3) of the Income-tax Act, 1961. The core of the dispute involves cash deposits of Rs. 11.19 lakhs made by the assessee during the demonetization period. The Assessing Officer framed the assessment on 22.10.2019, treating these deposits as unexplained, a view upheld by the lower appellate authority. The assessee claimed the deposits originated from his and his family's lifetime savings and cash gifts received on his son's marriage, with supporting photographs provided. However, he admitted to failing to reconcile these deposits with his claimed sources before the lower authorities.

What were the issues?

1. Whether the addition of Rs. 11.19 lakhs on account of unexplained cash deposits made during demonetization for Assessment Year 2017-18 is justified, considering the assessee's claim of savings and gifts? (Question of mixed law and fact, turning on Section 69A of the Income-tax Act, 1961). Assessee's contentions: The assessee argued that the cash deposits were from his and his family's lifetime savings and cash gifts received on his son's marriage. He relied on photographs of the marriage as evidence. Revenue's contentions: The revenue contended that the cash deposits were unexplained, as the assessee failed to reconcile them with his claimed sources before the lower authorities. The revenue supported the addition made by the Assessing Officer and upheld by the CIT(A)/NFAC. 2. Whether Section 115BBE of the Income-tax Act, 1961, is applicable to the cash deposits made during the Assessment Year 2017-18, considering the date of the transaction? Assessee's contentions: Not explicitly recorded, but implied by the assessee's plea for assessment under normal provisions. Revenue's contentions: Not explicitly recorded, but implied by the revenue's stance on the addition and taxation under Section 115BBE.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 115BBE,Section 69A

AI-generated summary — verify with the full judgment below

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

Before: SHRI SATBEER SINGH GODARA

Hearing: 02.07.2025Pronounced: 02.07.2025

Date of hearing 02.07.2025 Date of pronouncement 02.07.2025 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/250/2024-25/1071626355(1), dated 27.12.2024 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.

It emerges during the course of hearing that both the learned lower authorities have treated the assessee’s cash deposits of Rs.11.19 lakhs during demonetization, as unexplained; in assessment framed on 22.10.2019 and upheld in the lower appellate discussion.

3.

Both the parties vehemently reiterate their respective submissions against and in support of the impugned cash deposits addition. The fact however remains that the assessee all along has pleaded the source of the impugned cash deposits to his own and his family lifetime savings as well as on account of cash gifts received from friends and relatives on the occasion of marriage of the son whose relevant photographs from part of the records. It is made clear that he has admittedly failed in proving the reconciliation of his impugned cash deposits vis-à-vis his family savings and other gifts hereinabove as well before the learned lower authorities.

4.

Be that as it may, it is thus deemed appropriate in the larger interest of justice that a lumpsum addition of Rs.2 lakhs only in the given facts would be just and proper as benefit of his past savings etc. going by socio-economic status could not be altogether ruled out. The impugned addition of Rs.11.19 lakhs stands deleted to the extent of Rs.9.19 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.

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