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Facts
The assessee's appeal for AY 2017-18 arises against the CIT(A)/NFAC's order. The core issue pertains to cash deposits made during demonetization amounting to Rs. 31.50 lakhs, which were treated as unexplained by the lower authorities. The assessee is engaged in the business of manufacturing and selling LEDs and accessories, declaring significant sales and excise duty.
Held
The Tribunal noted that while the assessee provided details, the lower authorities did not concur. In this peculiar backdrop, it was deemed appropriate to adopt a lumpsum Gross Profit (GP) estimation at 8% or the declared GP, whichever is higher, with the rider that this shall not be treated as precedent. The assessee is to be assessed under normal provisions as per law.
Key Issues
Whether cash deposits made during demonetization are unexplained and if the GP estimation needs adjustment.
Sections Cited
143(3), 144B, 115BBE
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Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI
Before: SHRI SATBEER SINGH GODARA
DIN & Order No:ITBA/NFAC/S/250/2025-26/1082370891(1), dated 07.11.2025 involving proceedings under section 143(3) read with section 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
Heard both the parties. Case file perused.
It emerges during the course of hearing that the assessee/appellant seeks to reverse both the assessment as well as lower appellate findings treating its cash deposits during demonetization amounting to Rs.31.50 lakhs as unexplained forming subject matter of adjudication before the tribunal.
Both the parties vehemently reiterate respective stands against and in support of the impugned addition. There does not appear to be much in dispute that the assessee is engaged in the business of manufacturing and sale of LEDs, bulbs, lights and accessories, etc. It had also declared regular sales amounting to Rs.73,55,106/- along with excise duty to the tune of Rs.6,94,660/-. The fact also remains that although it had filed all the other relevant details on record, the same failed to make both the learned lower authorities concur with the same. Be that as it may, it is deemed appropriate in this peculiar backdrop that a lumpsum GP estimation @8% or that already declared at his behest, whichever is higher would be suffice with a rider that the same shall not be treated as precedent.
Necessary computation shall follow as per law.
So far as assessee’s assessment under section 115BBE is concerned, we quote S.M.I.L.E. Microfinance Ltd. Vs. ACIT, 2 | P a g e 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.
This assessee’s appeal is partly allowed.
Order pronounced in the open court on 22nd January, 2026.