SH. MAHESH KUMAR SAINI,JAIPUR vs. ITO, WARD-7(4), JAIPUR, JAIPUR

The Ld. CIT(A), NFAC has erred on facts and in law in taxing the alleged unexplained cash deposit in the bank account u/s 115BBE @ 60% instead of taxing the same @ 30% by ignoring that section 115BBE substituted by Taxation Laws (Second Apropos grounds of appeal, it is noticed that the ld.CIT(A) has dismissed the appeal by observing at para 4.4 to para 5 of his order as under:- 4.4 I have gone through the grounds of appeal, statement of facts, assessment order and the submission of the appellant. The remand report submitted by the AO has also been perused. It is submitted by AO that the assessee has failed to establish the nexus as to how this cash of Rs. 15,37,500/- has related to his commission income The source of this cash has not been satisfactory explained by the assessee from his regular financial activities and had demonetization not taken place the assessee should have maintained this out of books of cash with him without offering the same for taxation.

4.1 In the appellate proceedings, burden of proof lies on the assessee to prove that facts and findings of the AO are incorrect. Assessee contested in appeal that the assessment order is totally arbitrary and not proper and justified. The appellant has to prove or rebut with cogent evidence against the facts and findings of the AO in the assessment order. The appellant pointed out that the Id AO arbitrarily decided the amount of Rs. 15,37,500/- on account of unexplained money. The appellant has not produced the copy of the bank account as well as the cash book to reconcile the figures and to prove the source of the cash deposits during demonetization period. In the present appeal, the issue is with regard to the cash deposits and the sources of such cash deposits. During the course of appellant proceedings the appellant has not explained the sources for such cash deposits

4.2 As per section 69A of the Act, assessee has to explain to the satisfaction of the AO the cash deposited by him. If the assessee fails to explain or the explanation is not satisfactory, the section SHRI MAHESH KUMAR SAINI VS ITO, WARD 7(4), JAIPUR provides that the money is deemed to be income of the assessee for the year in which it was deposited. In this case the assessee failed to explain his claim that it relates to business. Therefore, the amount is liable to be added under deeming provision of 69A. Section 69A reads as under Unexplained money, etc.

4.3 in the present case the assessee is found to be the owner of the money in the financial year and no explanation is offered by her, the money is deemed to be the income of the assessee for such financial year as per section 69A of the Act Reliance in this regard is laced on the following decisions.

4.4 In view of the above discussion and the case laws relied, it is held that the AO correctly held that the assessee failed to discharge the onus vested on him. Under the circumstances and relied on the remand report dtd. 26.10.2024 submitted by the AO, the addition of Rs. 15,37,500/- made by the AO is confirmed as the source of which SHRI MAHESH KUMAR SAINI VS ITO, WARD 7(4), JAIPUR remain unexplained and unsubstantiated. All the grounds raised in this appeal are dismissed.

0. In the result, the appeal is DISMISSED.’’

2 During the course of hearing, the ld. AR of the assessee has filed following written submission with the prayer that the addition confirmed by the ld. CIT(A) amounting to Rs.15,38,500 needs to be deleted and further submitted that the amendment made in Section 115BBE is not applicable for the A.Y. 2017-18 as amendment made in Section 115BBE received assent of the President on 17-12- 2016 and it is effective from 01-04-2017 and this would apply in F.Y. 2017-18 i.e. A.Y. 2018-19. Thus this Section of 115BBE is not applicable on the assessee.

During demonetization period the total cash deposited in the bank account is Rs.15,06,000/- and not Rs.15,37,500/- (PB 22-23). Out of it the demonetized currency deposited in the bank account on 23.11.2016 is only Rs.3,25,500/- and all other currency deposited in the bank account is new currency and not the old currency. The fact that cash deposit in the bank account during demonetization period is only Rs.15,06,000/- is evident from the bank statement placed at PB 24- 44. The AO has incorrectly considered Rs.31,500/- deposited on 08.11.2016 as SHRI MAHESH KUMAR SAINI VS ITO, WARD 7(4), JAIPUR cash deposit during demonetization period ignoring that the demonetization was enforced in midnight of 08.11.2016 whereas Rs.31,500/- was deposited prior to that.

From the bank statement it can be noted that against the cash deposit in the bank account, assessee has made various payments towards online train & air tickets, LIC premium payments, mobile recharge of the customers, payment of electricity bills, DTH recharge, etc. This itself proves that the source of cash deposit in the bank account is the amount received from the customers for obtaining various services through the assessee. Therefore, it was incorrect on part of lower authorities to held that assessee has not explained the source of cash deposit in the bank account.

It may also be noted that cash deposit during FY 2014-15 in the bank account was Rs.4,01,43,100/- and there was cash deposit in every month whereas in FY 2016-17 cash deposit between April, 2016 to June, 2016 was Rs.67,16,900/- and after that no cash was deposited barring the month of November & December during which cash deposited in the bank account is only Rs.20,50,000/-. Therefore also it cannot be presumed that assessee has not explained the source of cash deposit in the bank account.

The Ld. CIT(A) has incorrectly observed that assessee has not produced the copy of bank account as well as the cash book to reconcile the figures ignoring the fact that assessee has filed the bank statement (PB 24-44) and the fact that he receives commission income from LIC of India and Suvidha Infoserve Pvt. Ltd. is evident from the return placed at PB 15-18 where on the commission income received, tax is deducted at source.

The lower authorities have taxed the alleged unexplained cash deposit in the bank account @ 60% u/s 115BBE. It is submitted that section 115BBE substituted by Taxation Laws (Second Amendment Act), 2016 received the assent of President on 17.12.2016. The section is made applicable w.e.f. 01.04.2017. Hence this section will operate on the income referred to in sections 68, 69, 69A, 69B, 69C or 69D which accrues or arises on or after 01.04.2017. For this reliance is placed on the decision of Supreme Court in case of Karimtharuvi Tea Estate Ltd. Vs. State Of Kerala 60 ITR 262 wherein it is held that it is well- April, 1957 as the Act came into force on 1st September of that year. Since the Surcharge Act was not the law in force on 1st April, 1957 no surcharge could be levied under the said Act against the appellant in the asst. yr. 1957- 58.”

Hon’ble Madurai Bench of Madras High Court in case of S.M.I.L.E Microfinance Ltd. Vs. ACIT order dt. 19.11.2024 (PB 45-68) has held that section 115BBE is applicable from 01.04.2017 and not prior to that date. Relevant extracts of the decision reads as under:-

In the present case also, section 115BBE was substituted by Taxation Laws (Second Amendment Act), 2016 whereby the tax rate under this section was increased from 30% to 60%. This amendment received the assent of President on 17.12.2016. The section is made applicable w.e.f. 01.04.2017. Hence this section will operate on the income referred therein which accrues or arises on or after 01.04.2017. Thus even if section 115BBE is applied, the pre-substituted section 115BBE would be applicable and not the substituted section and therefore even u/s 115BBE, the cash deposit would be subjected to tax @ 30% and not 60%. 2018-19. Hence the substituted section 115BBE is not applicable for AY 2017- 18. 5. It is a settled proposition of law that legislations which modify accrued rights or which impose obligations or imposed new duties or attach a new disability have to be treated as prospective. This is so held by the Hon’ble 109 DTR 33 where the Hon’ble court has given the following finding for deciding whether a provision has prospective operation or retrospective operation:-

3 On the other hand, the ld.DR supported the order of the ld.CIT(A). 2.4 We have heard both the parties and perused the materials available on record. Brief facts of the case are that Assessee is a commission agent working for LIC of India, Sahara India, Suvidha Infoserve Pvt. Ltd. and others. He filed the return on 21.07.2018 declaring total income of Rs.2,71,410/-. The nature of the business activity of the assessee is that he collects cash from customers, deposit the same in his bank account and make payment through mobile & net banking for services taken by them from the above concerns. The AO observed that as per the online information assessee has made cash deposit of Rs.15,37,500/- in his bank SHRI MAHESH KUMAR SAINI VS ITO, WARD 7(4), JAIPUR account maintained with SBI, Jaipur. The assessee explained that he is an agent of Suvidha Infoservice Pvt. Ltd. for which cash received from the customers is deposited in the bank account. The AO held that assessee did not furnish any concrete evidence that cash deposit in the bank account is part of his agency work of Suvidha Infoservice Pvt. Ltd. and therefore he treated the amount of Rs.15,37,500/- as unexplained income and made addition for the same. During the course of appellate proceedings, assessee filed additional evidences on which remand report was called from the AO. The remand report is reproduced at Pg 3-5 of the appellate order and also placed at PB 4-7 of the paper book. The rejoineder to the remand report is reproduced at Pg 6-9 of the appellate order and also placed at PB 8-14 of the paper book. The Ld. CIT(A), NFAC at Para 4.4.1 of the order held that burden of proof lies on the assessee to prove that the facts & findings of the AO are incorrect. Assessee has not produced the copy of bank account as well as the cash book to reconcile the figures and has not explained the source of cash deposit. He therefore confirmed the addition made by AO by referring to section 69A of the Act. From the entire submissions of the lower authorities, the Bench feels that lower authorities have not properly applied their mind to the facts of the present case. From the bank statement placed at PB 24 to 44 for the period 8-11- 2016 to 31-12-2016 i.e. period of demonetization, we note that Rs.31,500/- was deposited on 8-11-2016 which is prior to the announcement of demonetization. Further, against the cash deposit in the bank account, payments have been made for booking of Railway Tickets or amounts have been transferred to Suvidha Info Services Pvt. Ltd from whom assessee earned commission income as reflected in the return of income at page16 & 17. It is felt that these facts are not taken care of by the lower authorities. Therefore in the interest of equity and justice, the matter is restored to the file of the AO to decide it afresh by providing one more opportunity of hearing, however, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings. Thus the appeal of the assessee is allowed for statistical purposes.

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