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Facts
The assessee's appeal was filed three days late, but the delay was condoned. The Assessing Officer (AO) made an addition of Rs. 9,79,500/- on account of unexplained cash deposits during demonetization, which was confirmed by the CIT(A).
Held
The Tribunal accepted the assessee's explanation for Rs. 4,00,000/- based on bank withdrawals prior to demonetization. The Tribunal also noted that the unamended provisions of Section 115BBE of the Act would apply for the assessment year in question.
Key Issues
Whether the cash deposits made during demonetization are unexplained, and the applicability of Section 115BBE of the Act considering its amendment.
Sections Cited
69A, 115BBE, 147, 148, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC”, DELHI
ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Additional/Joint Commissioner of Income-tax (Appeals)-4, Chennai (hereinafter referred to as ‘the CIT (A)’) dated 10.09.2025, for the Assessment Year 2017-18.
The appeal is time barred by 3 days. The assessee has filed an application supported by an affidavit citing reasons causing delay in filing of appeal. After perusal of the same, I am satisfied that delay in filing of appeal is not intentional, the delay has been caused for the reasons stated in petition which appears to be bonafide. Thus, delay in filing of appeal is condoned and appeal is admitted for decision on merits.
In appeal, the assessee has assailed the order of CIT(A) in confirming addition of Rs.9,79,500/- u/s.69A r.w.s. 115BBE of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on account of cash deposits during demonetization.
During the course of assessment proceedings, the Assessing Officer (AO) questioned source of cash deposits aggregating to Rs.11,79,500/- in various bank accounts of the assessee. The assessee explained the source of cash deposits as earlier withdrawals from the Bank and cash in hand. The AO after considering submissions of the assessee allowed relief of Rs.2,00,000/- and made addition of remaining amount of Rs.9,79,500/- as unexplained money u/s 69A r.w.s. 115BBE of the Act. The assessee carried the issue in appeal before the CIT(A), but remained unsuccessful. Hence, the present appeal.
Both sides heard. The ld. Counsel for the assessee has placed on record assessee’s saving bank account statement with The Vaish Corporative New Bank Ltd. for the period 01.04.2016 to 31.03.2017. A perusal of the said bank statement shows that there are drawings from the said bank account aggregating to Rs.4,00,000/- just before the demonetization on:
Date Amount 03.10.2016 Rs.3,00,000/- 19.10.2016 Rs. 1,00,000/-
The proximity of withdrawal of aforesaid amounts from the Bank and re- deposit shortly thereafter in the month of November is plausible. Therefore, source of deposit of Rs.4,00,000/- is accepted. Apart from said bank statement the assessee has furnished cash flow statement. The said statement is a self- serving document hence no much reliance can be placed on the same.
The assessee has also claimed that withdrawals of Rs. 40,000/- on 25.04.2016 from The Vaish Co-op New Bank Ltd. were also part of deposits during demonetization. The said withdrawal was made more than six months back, hence, it is not plausible that the said amount would be available with the assessee even after six months for deposit.
I find that the AO has invoked provisions of section 115BBE of the Act. The Hon’ble Madras High Court in the case of SMILE Microfinance Ltd. vs. ACIT, WP (MD) No.2078 of 2022 decided on 19.11.2024 has held that amendment to section 115BBE of the Act would come into effect from 01.04.2017 i.e. relevant to AY 2018-19 onwards. Thus, in the impugned assessment year un-amended provisions of section 115BBE of the Act would apply.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on Thursday the 12th day of March, 2026.