SURAJMAL GARG METALS PRIVATE LIMITED,DELHI vs. ITO, WARD 24(4), DELHI

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ITA 5307/DEL/2025Status: DisposedITAT Delhi15 January 2026AY 2017-183 pages
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What did the Tribunal hold?

The Tribunal held that while the assessee is engaged in a regular business of metal trading as a wholesaler and retailer and had produced its sales register, the lower authorities could not deny the explanation for the cash deposits in its entirety. Therefore, a lumpsum addition of Rs.5 lakhs was deemed just and proper, with the rider that it would not be treated as a precedent. This grants the assessee relief of Rs.47,49,500/-. Regarding the application of section 115BBE, the Tribunal, relying on S.M.I.L.E. Microfinance Ltd. Vs. ACIT (Madras), held that this provision applies only to transactions done on or after 01.04.2017. Consequently, the assessee is directed to be assessed under normal provisions of law for this assessment year. No issue was expressly left undecided.

What were the facts?

The assessee, Surajmal Garg Metals Pvt. Ltd., is in appeal against the order of the CIT(A)/NFAC, Delhi, for assessment year 2017-18. The appeal challenges proceedings under section 143(3) of the Income-tax Act, 1961. The core issue revolves around cash deposits of Rs.52,49,500/- made during the demonetization period, which were treated as unexplained under section 68 read with section 115BBE of the Act. The assessment order was dated 26.12.2019, and the CIT(A)/NFAC upheld this addition. The assessee claims to be engaged in the business of trading copper, aluminum, brass sheets, and scraps, holding VAT registration and operating as a wholesaler and retailer. Despite producing its sales register, the lower authorities did not accept the explanation for the cash deposits.

What were the issues?

1. Whether the Tribunal has to decide if the cash deposits of Rs.52,49,500/- made by the assessee during the demonetization period are unexplained under section 68 read with section 115BBE of the Income-tax Act, 1961, as upheld by the lower appellate authority. Assessee's contentions: The assessee, engaged in metal trading and holding VAT registration, argued that its business activities as a wholesaler and retailer should be considered. It presented its sales register, implying that the cash deposits were related to its business operations. Revenue's contentions: The Revenue, through the lower authorities, treated the cash deposits as unexplained under section 68 read with section 115BBE of the Act, rejecting the assessee's explanation and documentation.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI

Before: SHRI SATBEER SINGH GODARAAND

For Appellant: Adv. Sh. Aditya Gupta, Adv
For Respondent: Ms. Ankush Kalra, Sr. DR
Hearing: 15.01.2026Pronounced: 15.01.2026

ORDER

PER SATBEER SINGH GODARA, JM

1.

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/250/2025-26/1079253636(1), dated 04.08.2025 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.

2.

We notice during the course of hearing at the outset that the assessee/appellant; as a company, raises its sole substantive ground challenging both the learned lower authorities’ respective findings treating its cash deposits made during demonetization amounting to Rs.52,49,500/- as unexplained under section 68 r.w.s. 115BBE of the Act in assessment order dated 26.12.2019 as upheld in the lower appellate discussion.

3.

We have given out thoughtful consideration to the assesseee’s and the Revenue’s respective vehement submissions against and in support of the impugned addition. The assessee’s stand all along has been that it is engaged in metal trading of copper, aluminum, brass-sheets and scraps. It further appears to have obtained VAT registration as well. There is further no quarrel between the parties about its regular business activity of being an wholesaler and retailer in nature. That being the clinching factual position and in light of the fact that it had produced its sales register etc., which could not satisfy both the learned lower authorities, we are of the considered view that the same could not be altogether denied in entirety so as to tax its cash deposits of Rs.52,49,500/- in totality.

2 | P a g e We thus deem it appropriate in this factual backdrop that a lumpsum addition of Rs.5 lakhs in the assessee’s hands would be just and proper with a rider that the same shall not be treated as a precedent. The assessee gets relief of Rs.47,49,500/- in other words. Necessary computation shall follow as per law.

4.

So far as assessee’s assessment under section 115BBE is concerned, we 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.

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