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Facts
The assessee's appeal arises from an order treating cash deposits during demonetization as unexplained under section 68 and estimating net profit. The assessee accepted a profit estimation of 4% to 5%.
Held
The Tribunal directed the Assessing Officer to assess the impugned cash deposits @ 5% and to finalize consequential computation under normal provisions, not under section 115BBE, as the latter applies only from 01.04.2017.
Key Issues
Whether cash deposits during demonetization are to be treated as unexplained, and the applicability of Section 115BBE.
Sections Cited
143(3), 68, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA
2017-18 arises against CIT(A)/JCIT(A)-5, Kolkata’s order dated 08.10.2025 (DIN & Order No. ITBA/APL/S/250/2025-26/1081555848(1), in proceedings u/s 143(3) of the Income-tax Act, 1961, hereinafter referred to as the ‘Act’.
Heard both the parties at length. Case file perused. 2. It transpires during the course of hearing that the assessee is aggrieved against both the learned lower authorities’ action, inter alia, treating his cash read with section 115 BBE of the Act followd by estimation of net profit on the total transaction @ 5% as against that declared @ 4%; respectively, in assessment order dated 24.12.2019 as upheld in the lower appellate discussion.
That being the case, learned counsel very fairly submits that the assessee does not wish to press for estimation of his net profit from 4% to 5% in question.
Rejected accordingly.
Next comes the sole surviving substantive issue of correctness of both the learned lower authorities’ action assessing his cash deposits of Rs. 22.37 lakhs as “unexplained”. There could be hardly any dispute that assessee has already suffered net profits estimation from 4% to 5% hereinabove. That being the case, the reasonable inference which could prima facie be drawn is that the same per se formed part of his business turnover although not specifically reconciled or verified by both the lower authorities. Faced with this situation, the tribunal hereby finds part merit in his case and directs the learned Assessing Officer to assess the impugned cash deposits @ 5% in preceding terms. 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. 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 consequential computation under normal provisions than u/s 115BBE of the Act in very terms. Ordered accordingly.
No other ground or argument has been pressed.
This assessee’s appeal is partly allowed.
Order pronounced in open court on 27.11.2025.