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Facts
The assessee, engaged in the brick kiln business, made a cash deposit of Rs. 45 lakhs during the demonetization period. The Assessing Officer added this entire amount as income under section 69A, taxed at the enhanced rate of 60% under section 115BBE. The CIT(A) dismissed the appeal due to a delay of 707 days.
Held
The Tribunal condoned the delay in filing the appeal before the CIT(A) due to the assessee's ill health and subsequent death. On merits, the Tribunal restricted the addition to 10% of the cash deposit (Rs. 4.50 lakhs) and directed that it be taxed at the normal rate, not the enhanced rate under section 115BBE.
Key Issues
Whether the delay in filing the appeal before the CIT(A) should be condoned. Whether the addition for cash deposit during demonetization is justified and whether section 115BBE is applicable at the enhanced rate for AY 2017-18.
Sections Cited
69A, 115BBE, 147, 144B, 44AD, 254(1)
AI-generated summary — verify with the full judgment below
PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by assessee is directed against the order of learned CIT(A)/National Faceless Appeal Centre, Delhi dated 13.08.2025 for assessment year (AY) 2017-18. Though, the appellant has raised multiple ground of appeal, however, in my considered view the substantial ground of appeal relates to upholding the addition under section 69A on account of cash deposit during demonetization period.
Brief facts of the case are that the assessee was individual and engaged in the business of brick kiln (Bhatta). During the assessment, the Assessing Officer recorded that he has information that during demonetization period, the assessee made cash deposit of Rs.45.00 lakhs with Bank of Maharashtra, Branch at Sector Alpha, Greater Noida. The Assessing Officer issued show-cause notice of substantiate such cash deposit. The Assessing Officer also obtained information from bankers of the assessee. The banker of assessee informed that the assessee made total cash deposit in his current bank account during demonetisation with Bank of Maharashtra in the name of M/s Raghuber Brick Company was of Rs. 45.00 lakhs. The Assessing Officer recorded that the assessee deposited cash during demonetisation period and has not satisfactory explained. The Assessing Officer added entire cash deposit under section 69A and taxed the same u/s 115BBE i.e. enhanced rate @60%. The assessing officer passed assessment order on 15.10.2019. Aggrieved by the additions in the assessment order the assessee filed appeal before ld. CIT (A). The CIT(A) confirmed the action of the Assessing Officer by taking a view that there was delay of 707 days in filing first appeal. The assessee failed to substantiate the delay in filing appeal. Accordingly, the appeal was dismissed in limine.
Further aggrieved, the legal heirs of assessee (son) has filed the present appeal before Tribunal. The appellant/son of the assessee has also filed a copy of death certificate of the main assessee who died on 20.03.2025.
I have heard the submissions of learned AR of the assessee as well as the learned Sr. DR for the Revenue. The learned AR of the assessee fairly submits that there was delay of 707 days in filing the appeal before First Appellate Authority. The delay in filing appeal was neither intentional nor deliberate. The assessment was completed on 15.10.2019. Though, the assessment was communicated to the assessee in time. The assessee was not well during November, 2019. Due to loss in the business, the assessee was under depression and taking medical treatment, copy of one of such medical prescription by Dr Rajesh Goyal consultant physician from Sir Ganga Ram Hospital is placed on record. Before the assessee could recover from his illness, nationwide lockdown was declared due to covid-19. On recovery from illness of depression, the assessee could filed appeal before the ld. CIT(A) on 21.10.2021. The assessee in statement of facts pleaded such facts for condoning the delay. The learned CIT(A) instead of condoning the delay dismissed the appeal in limine. There was sufficient and reasonable cause for condoning the delay. There was no intentional delay in filing appeal before ld CIT(A). Majority of time involved in delay is covered by the decision of Hon’ble Supreme Court in Suo Moto Writ Petition No. 3 of 2020. The ld. AR of the assessee submits that the first appeal was dismissed on 13.08.2025. Before the decision of First Appellate Authority, the assessee died on 25.03.2025 and the present appeal is preferred by his son/legal hears, copy of death certificate is also placed on record. Now the legal heirs of the assessee furnished the medical certificate and certain prescriptions of Shri Gangaram Hospital for the month of November, 2019. The learned AR submits that since the assessee has died and his legal heir /son has no other details of medical prescription or record to his illness. The Learned AR prayed that the delay in filing of appeal before the learned CIT(A) may be condoned.
On merit, the ld. AR of the assessee submits that the Assessing Officer made addition of Rs.45.00 lakhs on account of cash deposit during demonetisation period. Admittedly, the assessee was in the business brick kiln, wherein majority of sales are in cash as the business was in a remote.
The majority of purchaser of product of assessee were agriculturist or rural person who purchased bricks in cash. The case of assessee for earlier year was also re-opened and assessment was completed under section 147/ 144B on 04/03.2025, copy of which is filed. In earlier assessment year i.e. in AY 2016-17, as per contents of assessment order, the assessee has shown aggregate cash deposit of Rs.98.51 lakhs. Assessment for AY 2016- 17 was completed on 04.03.2024, wherein income of the assessee was accepted under section 44AD on offering total sales of Rs.42.38 lakhs. The learned AR further submits that instead of remitting the matter back to the ld. CIT(A) or the Assessing Officer, it would be appropriate estimated a reasonable component of income on the basis of assessment for AY 2016-
The legal heir/ appellant has no much evidences or means to contest the long drown process of litigation with department. The ld. AR voluntarily offered that 8% of cash deposit of Rs.45.00 lakhs may be accepted as reasonable.
On the other hand, the ld. Senior Departmental Representative (Sr DR) for the Revenue submits that the assessee has not explained the delay.
Though he has not seriously opposed the grounds of condonation of delay.
On merits, the learned Sr. DR for the revenue submits that the matter may be remitted back to the file of the Assessing Officer to pass the order afresh after giving a reasonable opportunity to the appellant.
I have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. Firstly I am considering the plea of condoning the delay. It is an admitted fact that the assessee was engaged in the business of brick kiln. Further, the assessee has died before filing the present appeal. The legal heirs/appellant has placed on record sufficient evidence to show that assessee was not well at the time of passing of assessment order and ultimately he died before filing the present appeal. Thus, on considering the peculiar facts of the case in hand and considering the principal in law that when technical consideration and cause of substantial justice is pitted against each other, the cause of Justine may be preferred. Hence, on considering the facts of the case and the legal position narrated above, I find that there was a reasonable and sufficient cause for condoning the delay before ld CIT(A), which is condoned. Now adverting to merits of the case.
As recorded above, before me, learned AR of the assessee has already explained that the assessee has died and his legal heirs are not having sufficient evidence in their power and possession, however, she has placed on record a copy of assessment order for AY 2016-17 dated 04.03.2025.
On careful perusal of assessment order for AY 2016-17, I find that in para- 3.4 the Assessing Officer has recorded that the assessee made cash deposit of Rs.98.51 lakhs. However, the assessee offered income under section 44AD on presumptive basis on total turnover of Rs.42.38 lakhs, which was accepted and income of assessee was estimation of income @8% of Rs. 42.38 lakhs was accepted. I find that the Assessing Officer in AY 2016-17 has accepted estimation of income @8% of Rs. 42.38 lakhs despite the fact that total cash deposit during preceding year was more than Rs. 98 lakhs.
Now, turning to the facts for year under consideration, there is cash deposit of Rs. 45 lakhs during demonetization period. It is a common fact that business of brick kiln is unorganized sector. Cash sale is a common factor is such business. Similarly, majority of expenses are incurred in such business of payment of labour and procurement or raw material, which is mainly in the form of loose soil (mitti) and majority of labour expenses are incurred in cash. Entire cash deposit during demonetization period cannot be considered as total turnover. However, in earlier assessment year, the assessee has shown turnover of Rs.42.38 lakhs, so instead of sending the matter back to the lower authorities, I find that no useful purpose would be served as the appellant has claimed that he has no much evidence available with him. Therefore, in order to avoid the possibility of revenue leakage 10% of the total cash deposit would be sufficient to avoid any possibility of revenue leakage. To be more specific, the addition is restricted to Rs. 4.50 Lakhs. So far as the taxing of such addition is concerned, I find that the Hon’ble Madras High Court in the case of S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No.2078 of 2020 & 1742 of 2020, dated 19.11.2024 has held that operation of section 115BBE is not retrospective. Even otherwise, in a number of decisions, the division Bench of different Tribunal has taken a view that enhanced rate of tax @60% is not applicable for the assessment year 2017-18. Therefore, the Assessing Officer is directed to tax the addition restricted by me at the normal rate applicable for impugned assessment year. In the result, grounds of appeal raised by the assessee are partly allowed.
In the result, the appeal of the assessee is partly allowed. Order was pronounced in the open Court on 02nd December, 2025.