PRANESH SODHI,NEW DELHI vs. ITO WARD 59(5), NEW DELHI

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ITA 2132/DEL/2025Status: DisposedITAT Delhi28 May 2025AY 2017-184 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal decided as follows: 1. Regarding the Rs. 27,45,500/- deposit in Punjab National Bank, the Tribunal found that this amount represented a payment made by the assessee towards a One Time Settlement (OTS) finalized with the bank. It was inferred that this was a re-deposit of the corresponding loan amount. Therefore, the Tribunal found no merit in this addition and directed its deletion. The ratio is that a re-deposit of a settled loan amount does not constitute unexplained income. 2. Regarding the cash deposits of Rs. 11,05,000/- and Rs. 4,50,000/- in Karnataka Bank and State Bank of India, the Tribunal noted that the assessee is engaged in dairy business and had filed records of previous cash withdrawals. While the lower authorities did not give credit for these, the assessee could not reconcile all entries to their satisfaction. In the interest of justice, a lumpsum addition of Rs. 2,00,000/- was deemed just and proper out of both these heads, with a rider that it should not be treated as a precedent. The Tribunal deleted the entire addition of Rs. 11,05,000/- and confirmed the CIT(A)'s finding restricting the addition on the Rs. 4,50,000/- head to Rs. 2,00,000/-. Necessary computation shall follow. 3. Regarding assessment under Section 115BBE, the Tribunal, relying on S.M.I.L.E. Microfinance Ltd. Vs. ACIT (Madras High Court), held that the provision comes into effect for transactions done on or after 01.04.2017. The assessee was directed to be assessed under normal provisions as per law. The Tribunal expressly left undecided the exact applicability of Section 115BBE for the specific assessment year if the transactions fell before the effective date.

What were the facts?

The assessee, Sh. Pranesh Sodhi, has filed an appeal for Assessment Year 2017-18 against the order of the CIT(A)/NFAC, Delhi. The appeal challenges proceedings under section 143(3) of the Income-tax Act, 1961. The assessee did not appear before the Tribunal, and the case was proceeded ex-parte. The Revenue contended that the lower authorities rightly added cash deposits of Rs. 27,45,500/- in Punjab National Bank, Rs. 11,05,000/- in Karnataka Bank, and Rs. 4,50,000/- in State Bank of India. These additions were made in the assessment order dated 27.12.2019 and upheld by the CIT(A).

What were the issues?

1. Whether the addition of Rs. 27,45,500/- representing cash deposits in the assessee's Punjab National Bank account is justified, considering it was a payment made towards a One Time Settlement (OTS) with the bank? (Question of law and fact, concerning Section 68 of the Act). 2. Whether the additions of Rs. 11,05,000/- and Rs. 4,50,000/- representing cash deposits in Karnataka Bank and State Bank of India accounts, respectively, are justified, given the assessee's dairy business and prior cash withdrawals? Assessee's contentions: Not recorded as the assessee did not appear. Revenue's contentions: The Revenue vehemently argued in support of the lower authorities' findings, asserting that the cash deposits in the three bank accounts were rightly added. The Revenue supported the additions made in the assessment order and upheld by the CIT(A).

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

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

Before: SHRI SATBEER SINGH GODARA

Hearing: 28.05.2025Pronounced: 28.05.2025

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/250/2024-25/1071593171(1), dated 26.12.2024 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

2.

Case called twice. None appears at the assessee’s behest. He is accordingly proceeded ex-parte.

3.

Learned Departmental representative vehemently argues

during the course of hearing in support of both the learned lower authorities’ respective findings that they have rightly added the assessee’s cash deposits of Rs.27,45,500/- in Punjab National Bank; Rs. 11,05,000/- lakhs in Karnataka Bank and Rs.4,50,000/- in State Bank of India accounts; respectively, in assessment order dated 27.12.2019 and upheld in the lower appellate discussion.

4.

I have given my thoughtful consideration to the assessee’s pleadings all along and the Revenue’s foregoing vehement contentions. Coming to the first and foremost head of Rs.27,45,500/- hereinabove, there is hardly any dispute that the same represents the assessee’s payment made to his bank account in One Time Settlement “OTS” finalized with the bank account; and, therefore, the necessary inference which would arise in the given facts is that he had re-deposited the corresponding loan amount itself. That being the case, I find no merits in the impugned first and foremost addition Rs. 27,45,500/-, which is directed to be deleted.

5.

Next comes the assessee’s second and third cash deposits of Rs.11.05 lakhs and Rs.4.50 lakhs; respectively. A perusal of the case file such suggests that the assessee is actually engaged in dairy business and allied activities who had also filed records of his previous cash withdrawal from the bank itself. Both the learned lower authorities do not appear to have given any credit thereof whilst making the impugned addition in the assessee’s hands. The fact also remains that he has not been able to reconcile all the deposits and withdrawals entries to the satisfaction of the learned lower authorities. It is thus deemed appropriate in the larger interest of justice that a lumpsum addition of Rs. 2 lakhs only out of both these heads; would be just and proper with a rider that the same shall not treated as a precedent. For the sake of clarity, it is thus made clear that the tribunal has deleted the above entire addition of Rs.11.05 lakhs and confirmed the learned CIT(A)’s findings restricting the last head of Rs.4.50 lakhs to Rs.2 lakhs only, in other words. Necessary computation shall follow as per law.

6.

So far as assessee’s assessment under section 115BBE is 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.

7.

This assessee’s appeal is partly allowed.

Order pronounced in the open court on 28 May, 2025 Dated: 28th May, 2025. RK/-

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