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Facts
The assessee's appeal arose from an order treating cash deposits of Rs. 31.48 lakhs during demonetization as unexplained and liable for assessment under Section 115BBE of the Income Tax Act. The lower authorities upheld this addition.
Held
The Tribunal held that the cash deposits appeared to be from regular business sales, though not fully reconciled. It directed that the addition be restricted to 8% of the impugned cash deposits, not to be treated as a precedent. Further, it clarified that Section 115BBE applies only to transactions on or after April 1, 2017, as per a Madras High Court ruling.
Key Issues
Whether cash deposits during demonetization, allegedly from regular business sales, can be assessed as unexplained income under Section 115BBE? Applicability of Section 115BBE to transactions prior to April 1, 2017.
Sections Cited
143(3), 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA
O R D E R
PER SATBEER SINGH GODARA, JM:
This assessee’s appeal /2025 for assessment year 2017-18 arises against CIT(A)/ NFAC, Delhi’s order dated 27.08.2025 (DIN & Order No. ITBA/NFAC/S/250/2025-26/1080055424(1), in proceedings u/s 143(3) of the Income-tax Act, 1961, hereinafter referred to as the ‘Act’.
Heard both the parties. Case file perused 2. It transpires during the course of hearing with the able assistance of both the parties that the assessee/appellant is aggrieved against the learned lower authorities’ action treating his cash deposits of Rs. 31.48 lakhs during assessment order dated 06.12.2019, as upheld in the lower appellate proceedings.
I have given my thoughtful consideration to the assessee and the Revenue’s respective vehement submissions against and in support of the impugned addition.
A perusal of the case file indicates that assessee’s regular business activities in jewellery sector per se is not in doubt in principle. That being the case, the reasonable inference which could prima facie be drawn in the given facts is that the impugned cash deposits are his regular business sale although not specifically reconciled or verified to the entire satisfaction of the learned lower authorities.
That being the situation, it is deemed appropriate in the larger interest of justice that assessee’s impugned cash deposits deserve to be added only @ 8% representing his element herein with a rider that the same shall not be treated as a precedent. Necessary computation shall follow as per law.
So far as the assessee’s assessment u/s 115BBE is concerned, the revenue could hardly dispute that hon’ble Madras high court in SMILE Microfinance Ltd. v. ACIT in WP(MD) No. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) has already settled the issue that Section 115BBE applies on transactions on or after 01.04.2017 only. I, accordingly direct the Assessing Officer to finalize the very terms. Ordered accordingly.
No other ground or argument has been pressed before us.
This assessee’s appeal is partly allowed.
Order pronounced in open court on 27.11.2025.