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Facts
The assessee appealed against an order that treated cash deposits during demonetization amounting to Rs. 10,23,000 as unexplained. The assessee's opening cash balance was Rs. 18.59 lakhs, with a withdrawal of Rs. 15.76 lakhs, arguing the deposits were redeposits of withdrawals.
Held
The Tribunal found that the assessee had not satisfactorily proven their explanation for the cash deposits. However, in the interest of justice, a lumpsum addition of Rs. 1 lakh was deemed appropriate, with the condition that it would not be treated as a precedent.
Key Issues
Whether the cash deposits made by the assessee during the demonetization period were adequately explained. Applicability of Section 115BBE in light of its effective date.
Sections Cited
143(3), 115BBE
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Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI
Before: SHRI SATBEER SINGH GODARA
Date of hearing 02.02.2026 Date of pronouncement 02.02.2026 ORDER This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)/Addl./JCIT(A)- 4, Chennai’s order dated 10.09.2025 having DIN and order no. ITBA/APL/S/250/2025-26/1080505461(1), 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.
It transpires during the course of hearing that the assessee/appellant is aggrieved against both the learned lower authorities’ respective assessment and lower appellate findings treating his cash deposits during demonetization amounting to Rs.10,23,000/- as unexplained for being the sole subject matter of adjudication.
I have given my thoughtful consideration to the assessee’s and Revenue’s respective vehement submissions. Learned counsel has invited the tribunal’s attention to the assessee’s opening balance as per his cash book to the tune of Rs.18.59 lakhs followed by single withdrawal of Rs.15.76 lakhs in the relevant previous year; and, therefore, his case in light of all these facts is that the impugned cash deposits are nothing but redeposit of the cash withdrawals only. The fact however remains that the assessee has not successfully pleaded and proved his explanation to the entire satisfaction of both the learned lower authorities. Be that as it may, it thus deemed appropriate in the larger interest of justice that a lumpsum addition of Rs.1 lakhs only would be just and proper with a rider that the same shall not be treated as a precedent. The assessee gets relief of Rs.9,23,000/- 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)
2 | P a g e 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.