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Facts
The assessee, a company engaged in manufacturing and supplying packaging products, appealed against the assessment findings and appellate order concerning cash deposits during demonetization. The lower authorities had added Rs. 6,38,143 as unexplained cash under Section 68 r.w.s. 115BBE of the Act.
Held
The Tribunal acknowledged that the assessee's business activity was not in dispute and that the source of impugned cash deposits was substantially explained as cash-in-hand from regular business turnover. It was inferred that remaining cash deposits were also business receipts.
Key Issues
Whether cash deposits during demonetization, which are substantially explained as business receipts, can be treated as unexplained income under Section 68 r.w.s. 115BBE. Applicability of Section 115BBE for transactions prior to April 1, 2017.
Sections Cited
143(3), 68, 115BBE
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Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI
Before: SHRI SATBEER SINGH GODARA
Date of hearing 09.02.2026 Date of pronouncement 09.02.2026 ORDER This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2024-25/1064557694(1), dated 01.05.2024 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.
The assessee/appellant, admittedly a company engaged in manufacturing and supplying quality and packaging products herein, is aggrieved against both the learned lower authorities’ respective assessment findings dated 07.12.2019 as well as the lower appellate discussion dated 01.05.2024 adding the same in question of Rs.6,38,143/- out of its cash deposits during demonetization amounting to Rs.37,59,573/-, as unexplained cash under section 68 r.w.s. 115BBE of the Act.
That being the case, both the learned representatives vehemently reiterated their respective stands against and in support of the impugned addition. The fact however remains that once the assessee’s principal business activity aforesaid is not in dispute and it has substantially explained the source of the impugned cash deposits as cash-in-hand in regular business turnover, the same gives rise to the necessary inference that these remaining cash deposits also are part of its business receipt only although not successfully reconciled or verified before both the learned lower authorities. It is thus deemed appropriate in the larger interest of justice that a lumpsum further addition of Rs.2 lakhs would be just and proper with a rider that the same shall not be treated as a precedent. The assessee gets relief of Rs.4,38,148/- in other words.
So far as assessee’s assessment under section 115BBE is concerned, I quote S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No.2078 of 2020 & 1742 of 2020, dated 19.11.2024 (Madras) that the impugned statutory provision would come into effect on the transaction done on or after 01.04.2017 only. The assessee is accordingly directed to be assessed under the normal provision as per law.