JAMTARAM VIRARAM PUROHIT,MUMBAI vs. INCOME TAX OFFICER, WARD-20(2)(1), MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.4468/MUM/2026 (A.Y. 2017-18) Jamtaram Viraram Purohit v/s. Income Tax Officer, Ward – Room No. 512, 5th Floor, Ram बनाम 20(2)(1) Darshan Building, K.K. Marg, Room No. 216, 2nd Floor, BIT Chawl, Mumbai Central, Piramal Chambers, Lalbaug, Mumbai – 400 008, Parel, Mumbai – 400 012, Maharashtra Maharashtra स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No: ASEPP6732C Appellant/अपीलार्थी .. Respondent/प्रतिवादी

Assessee by : Shri Saiprasad Ghosh,AR Revenue by : Shri Swapnil Savant,(Sr.DR)

Date of Hearing 09.07.2026 Date of Pronouncement 02.09.2026 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The instant appeal emanating from the appellate order dated 18.03.2026 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3)of the Income-tax Act, 1961

P a g e | 2 ITA No. 4468/Mum/2026 A.Y. 2017-18 Jamtaram Viraram Purohit [hereinafter referred to as “Act”] dated 14.12.2019 for the Assessment Year [A.Y.] 2017-18. 2. The grounds of appeal are as under: 1. On facts and circumstances of the case and in law, Ld. CIT(A) erred in estimating the income element of Rs. 1,79,800/- @ 20percentage of disputed cash deposits made during demonetisation period of Rs.8,99,000/-. 2. Without prejudice, an alternate prayer is made to adopt the concept of real income and estimate the profit @8 percentage on disputed cash deposited in bank account of Rs.71,290/- (@8percentage of Rs.8,99,000/-). 3. The Ld. CIT(A), having estimated the income element embedded in cash deposits made in bank account, erred in holding such income as liable to tax u/s.115BBE of the Act. 4. Without prejudice, the provisions of Sec. 115BBE charging the tax @60percentage shall apply only on the transactions entered on/or after 15/12/2016, being the date of granting the assent of the President of India. 3. The assessee filed return of income declaring income of Rs. 2,98,940/- and the case was selected for scrutiny under CASS. He is engaged in the business on sale and purchase of mobile accessories in the mobile accessories etc., who deposited Rs 14,17,000/- during demonetization period in certain bank accounts with Syndicate Bank, Axis Bank etc.

3.1 In response to the query made to explain the sources of such deposits, it was inter alia submitted by him that he had taken home loan on 11.12.2013 from DHFL of Rs. 40,64,577/- and claimed that an amount of Rs. 8,99,000/- out of the above loan was kept in hand for 35

P a g e | 3 ITA No. 4468/Mum/2026 A.Y. 2017-18 Jamtaram Viraram Purohit months, and subsequently deposited in cash during demonetization period. The AO disbelieved the explanation observing that it seemed highly improbable for the reason that the loan taken was a Home loan and also cash withdrawal from the loan sanctioned was also far fetching. Hence, the amount of Rs. 8,99,000/- out of Rs 14,17,000/- deposited during demonetization period was treated as unexplained u/s 69A and added to the income.

P a g e | 4 ITA No. 4468/Mum/2026 A.Y. 2017-18 Jamtaram Viraram Purohit sourced from cash sales and accumulated cash in hand, including certain amounts stated to be derived from earlier withdrawals and loan proceeds. The Assessing Officer, however, rejected the explanation mainly on the ground that the claim of retaining cash out of a housing loan taken in earlier years for a prolonged period was improbable and not supported by cogent evidence. While the reasoning of the Assessing Officer raises valid doubts regarding the source of certain deposits, it was also evident that the assessee was engaged in a cash-intensive business of trading in mobile accessories, and therefore the existence of cash transactions could not be entirely ruled out. Further, the AO had not rejected the books of account nor disproved the business activity carried out by the appellant. The addition had been made primarily on the basis of disbelief of explanation rather than on the basis of conclusive evidence demonstrating that the entire amount represents unexplained income. At the same time, the assessee had not been able to fully substantiate the availability of cash balance with credible documentary evidence such as contemporaneous cash book, stock records or correlation of sales with deposits. Therefore, the explanation could not be accepted in entirety. In such circumstances, where cash deposits are partly explained and partly unverifiable, the addition should be restricted to a reasonable estimate rather than treating the

P a g e | 5 ITA No. 4468/Mum/2026 A.Y. 2017-18 Jamtaram Viraram Purohit entire amount as unexplained. Considering the nature of business, the pattern of deposits, and the absence of complete verification, he opined that it would be fair and reasonable to estimate the income element embedded in such deposits. Accordingly, cash deposits to the extent of 20% of total addition was treated as from undisclosed sources and treated as unexplained. Accordingly, the addition was restricted to 20% of Rs.8,99,000/-, which worked out to Rs. 1,79,800/-and needed to be taxed u/s 115BBE of the Act and the balance addition was deleted.

P a g e | 6 ITA No. 4468/Mum/2026 A.Y. 2017-18 Jamtaram Viraram Purohit 7. We have carefully considered the relevant facts of the case. The Revenue has not disputed the fact that business of the assessee i.e. dealing mobile accessories etc. generated mostly cash receipts/sales. As such, cash deposits in the bank accounts could not be wholly considered unexplained and benefit of doubt to certain extent goes in favour of the assessee. The ld.CIT(A) has appreciated such facts and in a judicious manner restricted the addition to 20% of the cash deposits which has also not been agitated by the Revenue. Therefore, we find not infirmity in the conclusion drawn by him and upheld the appellate order, dismissing the grounds of appeal of the assessee.

7.1 In so far as the applicability of the provisions of section 115BBE of the Act is concerned, the ld.AR submitted that the amendment inserting section 115BBE has come into force w.e.f. 01.04.2017 and therefore, it is applicable for AY 2018-19 and not for AY 2017-2018. He, therefore, submitted that the Assessing Officer is not justified in levying tax at increased rate of 60% under section 115BBE of the Act and pleaded that applying the higher rate of tax is not sustainable and liable to be deleted. In support of his contention, he relied upon the judgment of Hon'ble Rajasthan High Court dated

P a g e | 7 ITA No. 4468/Mum/2026 A.Y. 2017-18 Jamtaram Viraram Purohit 27.05.2026 in the case of Deepak Maratha vs. Union of India & two Others in Civil Writ Petition No.3625 of 2020.

P a g e | 8 ITA No. 4468/Mum/2026 A.Y. 2017-18 Jamtaram Viraram Purohit amendment of Section 115BBE, which is effective from 01.04.2017). The question framed in para 8.1, in the preceding part, is answered accordingly." 8.1 Accordingly, by following the above judgement, this issue is decided in favour of the assessee. Therefore, the appellate order is set aside and the ground of appeal in this regard is allowed. 9. In the result, the appeal of the assessee stands partly allowed.

Order pronounced in the open court on /09/2026.

Sd/- Sd/- (CHALLA NAGENDRA PRASAD) (PRABHASH SHANKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER

Place: म ुंबई/Mumbai ददनाुंक /Date 02.09.2026 Lubhna Shaikh / Steno आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतधकरण/ ITAT, Bench, Mumbai.