LAKSHMI NAYAK,KORAPUT vs. ITO JEYPORE WARD, KORAPUT

आयकरअपीलीयअधिकरण,कटकन्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK (THROUGH HYBRID HEARING) BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI GOPALAN GURUSAMY, ACCOUNTANT MEMBER आयकर अपील सं/ITA No.766/CTK/2026 (नििाारणवर्ा / Assessment Year : 2017-2018) Lakshmi Nayak Vs ITO Jeypore Ward, Jeypore W/o Prabhakar Nayak, Near Police Station Semiliguda Koraput-764036 PAN No. : ARYPN 5496 J (अपीलार्थी/Appellant) (प्रत्यर्थी / Respondent) ..

नििााररतीकीओरसे /Assessee by : Shri S.K.Sarangi, AR राजस्वकीओरसे /Revenue by : Shri Vijay Singh, Sr. DR सुनवाईकीतारीख/ Date of Hearing : 06/10/2026 घोषणाकीतारीख/Date of Pronouncement : 06/10/2026 आदेश / O R D E R Per Bench: This is an appeal filed by the assessee against the order of the ld. CIT(A), NFAC, Delhi, in appeal No.NFAC/2016-17/10576862, dated 08/07/2026 for the assessment year 2017-2018. 2. Shri S.K.Sarangi, ld. AR appeared on behalf of the assessee and Shri Vijay Singh, ld. Sr. DR appeared on behalf of the revenue. 3. It was submitted by the ld. AR that the assessee is a roadside vendor of fruits and vegetables. It was the submission that during demonetization the assessee had deposited Rs.11,05,000/- in her bank account. It was the submission that the assessee is not maintaining regular books of accounts and the assessee does not have cash book to provide before the Tribunal. It was the submission that the entire amount of cash deposit should not be treated as undisclosed income of the assessee. It was the prayer that the

2 ITA No.766/CTK/2026 assessee may be given reasonable relief. It was also the prayer that the AO has applied the provision of Section 115BBE of the Act to levy higher rate of tax. It was the submission that the impugned assessment year is A.Y.2017-2018 whereas as per the decision of the Hon’ble Madras High Court in the case of S.M.L.E Microfinance Limited, passed in W.P.(MD) No.2078 of 2020 and W.M.P(MD) No.10742 of 2020 (Judgment dated 19.11.2024), has held that the higher rate of tax at 60% u/s.115BBE of the Act will apply only to the transaction from 01.04.2017 onwards and not prior to the said cut-off date. It was the prayer that the assessee may be granted relief on this ground also. 4. In reply, ld. Sr. DR submitted that the Government has permitted the assessee to deposit cash during the demonetization period to a maximum amount of Rs.2,50,000/- only. It was the submission that even if relief is being granted, it should be restricted to Rs.2,50,000/-. It was the prayer that the provision of Section 115BBE of the Act was introduced by the Finance Act, 2016. It was the prayer that the provision of Section 115BBE of the Act may be applied. 5. We have considered the rival submissions. A perusal of the facts in the present case clearly shows that the assessee is a roadside vendor of fruits and vegetables. The assessee is a small type self-employed lady. Considering the explanation of the assessee and the nature of activity of the assessee, we are of the view that an amount of Rs.4 lakhs can be treated in the case of the assessee as reasonable cash availability for deposit in the bank account. Consequently, the AO is directed to accept the

3 ITA No.766/CTK/2026 claim of Rs.4 lakhs as explained source for the deposit in the bank account. Balance of Rs.7,05,000/- is to be treated as undisclosed income of the assessee. 6. Coming to the issue of applicability of Section 115BBE of the Act, the Hon’ble Madras High Court in the case of S.M.L.E Microfinance Limited, referred to supra, in para 17, has categorically held that the provision of Section 115BBE of the Act is to be applied only to the transactions from 01.04.2017 only. The relevant observation of the Hon’ble Madras High Court in para 17 is as under :- “17. In the aforesaid objects and reasons nowhere it is stated that due to "demonetization" the unaccounted money ought to be charged 60% rate of tax. It only states that step had been taken to curb black money by withdrawing Specified Bank Notes of denomination of Rs.500 and Rs.1000. And also states the people may find illegal ways of converting their black money into black again, hence as per experts advice heavy penalty ought to be levied. From the language of the object "that instead of allowing people to find illegal ways of converting their black money into black again", it is evident that the government is intended to impose the same for future transactions. Especially the use of word "again" in the object would clearly indicate it is for future transactions i.e. from 01.04.2017. Therefore this Court is of the considered opinion that the revenue is empowered to impose 60% rate of tax for the transactions from 01.04.2017 onwards and not prior to the said cut-off date. And for prior transaction the revenue is empowered to impose only 30% rate of tax.” 7. Respectfully following the decision of the Hon’ble Madras High Court in the case of S.M.L.E Microfinance Limited, referred to supra, and as it is noticed that the impugned assessment year is 2017-2018 ending on 31.03.2017 and the transaction and deposit in the bank account is prior to 01.04.2017, the AO is directed to apply regular rate of tax and not the provision of Section 115BBE of the Act. With these directions, the appeal of the assessee is partly allowed.

4 ITA No.766/CTK/2026 8. In the result, appeal of the assessee is partly allowed. Order dictated and pronounced in the open court on 06/10/2026. Sd/- Sd/- GOPALAN GURUSAMY GEORGE MATHAN लेखा सदस्य/ACCOUNTANT MEMBER न्यानयक सदस्य/JUDICIAL MEMBER दिनाांक Dated 06/10/2026 RS आदेशकीप्रनतललपपअग्रेपर्त/Copy of the Order forwarded to : 1. अपीलार्थी/ The Appellant- 2. प्रत्यर्थी/ The Respondent- 3. आयकरआयुक्त(अपील) / The CIT(A), 4. आयकरआयुक्त/ CIT 5. ववभागीयप्रतततनधि, आयकरअपीलीयअधिकरण, कटक / DR, ITAT, Cuttack गार्डफाईल / Guard file. 6.

सत्यावपतप्रतत //True Copy// आदेशािुसार/ BY ORDER,

(Assistant Registrar) आयकरअपीलीयअधिकरण, कटक/ITAT, Cuttack