MAHESH KUMAR AGRAWAL HUF,DELHI vs. ITO WARD 36(3), DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’, NEW DELHI BEFORE SH. SATBEER SINGH GODARA, JUDICIAL MEMBER AND SH. NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 3555/Del/2026 (Assessment Year : 2017-18) Mahesh Kumar Agrawal, Vs. ITO HUF Ward – 36(3) B-3/57, Sector – 11, Rohini New Delhi Delhi – 110 085, New Delhi PAN No. AACHM 6387 A (APPELLANT) (RESPONDENT) Assessee by Shri Mohit Bansal, C.A. Revenue by Shri Balkishan Goptal, Sr. D.R. Date of hearing: 13.08.2026 Date of Pronouncement: 13.08.2026

ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER : This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals)/NFAC-Delhi [‘CIT(A)/NFAC’ in short] dated 20.03.2026 arising from the assessment order under section 143(3) of the Income Tax Act, 1961 [hereinafter referred as ‘the Act’] dated 31.12.2019 for the Assessment Year 2017-18 passed by the Ward-36(3), Delhi. 2. The grounds of appeal raised by the assessee are as under :

ITA No. 3555/DEL/2026 [A.Y 2017-18] Mahesh Kumar Agrawal HUF vs. ITO 1. “That the Ld. A.O. has misunderstood and misinterpreted the facts of the case by completely ignoring the return filed by the assessee and other relevant information available with the A.O. 2. That the Ld. A.O. has erred in not following the Standard Operating Procedure and has treated the entire deposits in the bank as unexplained cash and added to income. 3. That the A.O. has erred in making an addition of Rs. 1,69,29,600/- under section 69 of the Act on account of unexplained cash deposits. 4. That the A.O. has grossly erred in, arbitrarily and erroneously applying the provisions of section 69 of the Act. 5. That the Ld. A.O. has further erred in charging interest of mentioned section, while determining demand payable by appellant without appreciating that since the Appellant could not be held liable for the payment of Advance tax for the amount under reference, no interest u/s 234A and 234B could be charged. 6. That the A.O. has further erred in initiating penalty proceedings under section 270AAC of the Income Tax Act, 1961. 7. That the appellant craves to add/ alter any grounds of appeal on OR before the date of hearing.”

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ITA No. 3555/DEL/2026 [A.Y 2017-18] Mahesh Kumar Agrawal HUF vs. ITO 6. Before us, the ld. counsel for the assessee vehemently submitted that the cash deposits in bank were out of cash sales and the Assessing Officer made the addition of Rs.1.69 crore as unexplained cash credit under section 69A of the Act without rejecting the books of account and without there being any evidence and was made on the basis of conjectures and surmises. 7. Per contra, the ld. DR relied on the orders of the authorities below. 8. We have heard the rival submissions and have perused the relevant material on record. In the instant case, we find that the assessee has attempted to prove the entire source of cash deposit during demonetization period as being from cash sales. We also find that on the other hand, the Revenue’s endeavour to disbelieve the assessee’s contention that cash deposit has been made out of sales, cannot be fully justified. In this factual matrix, there is some element of failure to explain some of the cash deposit, cannot be ruled out. We find that the CIT(A) has sustained the addition @15% of total cash deposit. Be that as it may, it is deemed appropriate, in larger interest of justice, that a lump-sum addition of Rs. 5 lakh only would be just and proper with a rider that the same shall not be treated as a precedent, so as to cover all loopholes. The assessee’s ground on this count is partly allowed. 9. In so far as levy of tax at a higher rate under section 115BBE of the Act is concerned, we find that the Madras High Court in the Writ petition in the

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ITA No. 3555/DEL/2026 [A.Y 2017-18] Mahesh Kumar Agrawal HUF vs. ITO case of S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No.2078 of 2020 & 1742 of 2020, dated 19.11.2024 (Madras) has held that the impugned statutory provision would come into effect on the transaction done on or after 01.04.2017 only. Accordingly, we direct the AO to tax the addition under normal provisions of tax and not under the provisions of 115BBE. 10. In the result, appeal of the assessee in ITA No. 3555/Del/2026 is partly allowed. Order pronounced in the open court on 13.08.2026 Sd/- Sd/- (SATBEER SINGH GODARA) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:-19.08.2026 Priti Yadav, Sr. Ps* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

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