DILIP KUMAR CHOPRA,SURAT vs. ITO, WARD 2(3) (1), SURAT
Facts
The assessee deposited Rs. 24,02,500/- in bank accounts during the demonetisation period. The Assessing Officer made an ex-parte addition for unexplained cash deposits, which was subsequently confirmed by the CIT(A).
Held
The ITAT partly allowed the appeal, upholding an addition of Rs. 14,02,500/- for unexplained cash deposits while granting relief for Rs. 10,00,000/-. It also ruled that the amended Section 115BBE, effective from 15.12.2016, could not be applied to cash deposits made prior to that date.
Key Issues
The key issues were the explanation for cash deposits during demonetisation and the applicability of the amended Section 115BBE tax rate to transactions occurring before its effective date.
Sections Cited
Section 144, Section 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, SURAT
Before: SHRI TR SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 28.07.2025 for the Assessment Year (A.Y.) 2017-18 in the proceeding u/s 144 of the Income Tax Act.
The brief facts of the case are that the assessee had filed his return of income for A.Y. 2017-18 on 31.03.2018 declaring income of Rs.3,93,220/-. The case was selected for scrutiny under CASS to examine the cash deposits in the bank accounts in old denomination notes during demonetisation period. The AO had noticed that the assessee had made
ITA No. 865/SRT/2025 Dilip Kumar Chopra Vs. ITO, AY- 2017-18 2
total cash deposit of Rs.24,02,500/- in three bank accounts during the period from 09.11.2016 to 30.12.2016. Before the AO no compliance was made and no explanation regarding the source of cash deposits was given. Therefore, the AO had completed the assessment ex-parte u/s 144 of the Act on 18.12.2019 making addition of Rs. 24,02,500/- on account of unexplained cash deposits.
Aggrieved with the order of the AO the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.
Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:
On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has ered in confirming the action of assessing officer in making an addition of Rs 24,02,500/- on account of alleged unexplained cash credit being cash deposits in bank account. 2. On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in taxing the addition by taking the rate @77.25% by attracting S 115BBE instead of taxing as per normal tax slab. 3. Even otherwise on the facts and circumstances of the case as well as law on the subject, the assessing officer has erred in taxing the income u/s 115BBE @ 77 25% in a retroactive manner by applying the duly substituted S 115BBE inserted retrospectively instead of taxing it at 35.54% as per the old provisions of S 115BBE. 4. It is therefore prayed that the above additions made by the assessing officer and confirmed by the learned CIT(A) may please be deleted. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.
ITA No. 865/SRT/2025 Dilip Kumar Chopra Vs. ITO, AY- 2017-18 3 5. The first ground taken by the assessee pertains to addition of Rs.24,02,500/- on account of unexplained cash deposits in the bank account. Shri Mehul Shah, the Ld. AR of the assessee submitted that the assessee was employed with Mansi Realty Pvt Ltd. from 2010 to 2015 and, thereafter, he was self-employed. He explained that the non- compliance before the AO was for the reason that the assessee was out of country for the most period during which the assessment proceeding was in progress. However, the source of cash deposits was duly explained before the Ld. CIT(A). The cash deposits made in the bank accounts were out of past savings of the assessee and also the income received during the year and the assessee had duly furnished the cash book in support thereof in the course of appellate proceeding. The Ld. AR submitted that the Ld. CIT(A) did not consider the evidences furnished by the assessee in right perspective and had wrongly confirmed the addition.
Per Contra, Shri Ashish Kumar, the Ld. Sr.-DR submitted that the Ld. CIT(A) had not only considered the additional evidences furnished by the assessee but also called for remand report of the AO and thereafter decided the matter on merits. He explained that the assessee had disclosed opening cash balance of Rs. 24,01,486/- on 01.04.2016 which was not supported by any documentary evidence. Further, no evidence for the debit and credit entries appearing in the cash book was brought on record and, therefore, the cash book of the assessee was not reliable. The Ld. Sr. DR submitted the sale proceeds of car being Rs.7,50,000/- as reflected in the cash book was also not supported with any evidence. He, therefore, strongly supported the order of the Ld. CIT(A).
ITA No. 865/SRT/2025 Dilip Kumar Chopra Vs. ITO, AY- 2017-18 4 7. We have considered the rival submissions. There is no dispute to the fact that total cash deposit of Rs. 24,02,500/- was made in three bank accounts of the assessee during the demonetisation period from 09.11.2016 to 30.12.2016. Before the Ld. CIT(A) the assessee had furnished the following explanation for source of the cash deposits.
It is found that the assessee had shown opening cash balance of Rs. 24,01,486/- as on 01.04.2016 in support of which a cash book for financial year 2015-16 was also filed. The Ld. CIT(A) had called for a remand report of the AO on the additional evidences filed before him. The AO in his remand report had stated that no supporting documentary
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evidence in respect of the entries in the cash book was furnished so that the correctness of the same can be verified. The AO had rightly observed that the rational for withdrawal of cash of Rs. 46,000/- on 02.04.2016 and Rs. 20,000/- on 31.05.2016 was not explained when the assessee had already cash balance of Rs. 24,01,486/- with him as on 01.04.2016. In the absence of any supporting evidence for debit and credit entries as reflected in cash book, the AO had rightly rejected the cash book of the assessee. It is found that the Ld. CIT(A) had considered the evidences filed by the assessee and given the following finding in this regard.
“7.1 It is emanating from the material on record that the appellant has deposited cash of Rs 24,01,487/- in 3 bank accounts as mentioned earlier in this order The only submission appellant has made in support of cash availability is of Cash Book for FY 2016-17. From the cash book, appellant has shown that cash was available (Rs. 24,01,486/- on 31.03.2016 with the appellant to deposit it in the bank accounts. However, appellant has not produced a shred of evidence in support of the cash book prepared. Appellant is required to adduce all the evidences in support of the cash generated which was deposited in to bank accounts later on. Appellant has produced the bank account statement of Bank of Baroda. From the bank statement, it is seen that appellant had deposited cash of Rs. 800,000/-on 14.11.2016 in the bank account and further, it was observed that appellant had not withdrawn the cash from the said bank till 13.11.2016 which would have become available to deposit it in the same bank. Appellant has not provided the evidence of sale of car which had generated cash for the appellant. Thus appellant has not provided any supporting documentary evidences in support of the source of cash deposits. The onus is on the appellant to substantiate his claims with credible and verifiable evidence. Mere oral assertions or uncorroborated statements are not sufficient in the absence of supporting documentation. Assessee is required to disclose all primary facts; the burden to prove correctness lies on him. The burden of proof lies on the assessee to show the nature and source of a credit in the books. The Courts have taken a consistent position that the assessee is expected to establish proof of identity of creditors, capacity of creditors and genuineness of creditors in order to discharge onus cast on assessee. Mere production of party or confirmation from party will not suffice, unless the assessee is also able to substantiate their creditworthiness ie ability to advance the sum to the assessee.
ITA No. 865/SRT/2025 Dilip Kumar Chopra Vs. ITO, AY- 2017-18 6 9. We find that the Ld. CIT(A) had rightly rejected the additional evidences as the same were not reliable. The cash book was uncorroborated with any independent evidence and was in the nature of self-serving document, which was rightly rejected by the Ld. CIT(A). We don’t find anything wrong with the findings as recorded by the Ld. CIT(A). It is thus evident that the assessee had failed to explain the source of cash deposits of Rs.24,02,500/ made in the bank accounts during the demonetisation period. At the same time, certain old savings available with the assessee being deposited in the bank accounts cannot be ruled out. As per the instruction of the CBDT, the cash deposits during the demonetisation period to the extent of Rs. 2,50,000/- was not required to be inquired into. Further, the assessee had filed a copy of agreement for sale of car No. GJ 16 BN0003 dated 06.10.2016 as per which the car was sold to one Shri Ashif Khan J. Pathan for a consideration of Rs. 7,50,000/- and the entire consideration was paid on the date of agreement. The AO did not dispute this additional evidence filed by the assessee by causing necessary inquiry in the matter. Therefore, the assessee is allowed relief to the extent of Rs.7,50,000/- being sale proceeds of car. Considering these facts, it will be reasonable to accept total cash deposit of Rs.10,00,000/- as explained being on account of past and current savings. Accordingly, the assessee is allowed a relief to that extent. The balance addition of Rs.14,02,500/- on account of unexplained cash deposit in the bank accounts, is upheld. In the result, the ground of the assessee is partly allowed.
The next two grounds pertain to charging tax @ 77.25% u/s. 115BBE of the Act. The Ld. AR submitted that the amendment made to
ITA No. 865/SRT/2025 Dilip Kumar Chopra Vs. ITO, AY- 2017-18 7 provision of section 115BBE of the Act, was brought on statute with effect from 15.12.2016 and the cash deposits made by the assessee in the bank accounts were prior to that date. Therefore, the AO was not correct in charging tax in respect of addition for cash deposits in accordance with amended provision of section 115BBE of the Act. In this regard the assessee has relied upon the decision of co-ordinate bench of this Tribunal in the case of Samir Shantilal Mehta in ITA No. 42/Srt/20022 dated 08.05.2023.
Per contra, Shri Ashish Kumar, Ld. Sr.-DR supported the order of the lower authorities on this issue.
We have considered the rival submissions. The amendment in section 115BBE of the Act, vide Taxation Laws (Second Amendment) Bill 2016 was made effective from 01.04.2017 and was thus applicable to the impugned Assessment Year 2017-18. However, this amendment was brought on statute only on 15.12.2016 and, therefore, the transactions made on or after 15.12.2016 were hit by the mischief of the amended provision. The provision of the amended section could not have been applied to the transactions already entered into prior to 15.12.2016. The Co-ordinate Bench of this Tribunal in the case of Samir Shantilal Mehta (supra) had held that the amended provision of section 115BBE of the Act, could not have been applied to the search conducted on 16.08.2016. Respectfully following the decision of the Co-ordinate Bench of the Tribunal, it is held that the amended provision of section 115BBE of the Act, could not have been applied in the present case to the cash deposits
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made in the bank accounts prior to 15.12.2016. Accordingly, the grounds taken by the assessee are allowed.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the Court on 11/03/2026 at Ahmedabad.
Sd/- Sd/- (TR SENTHIL KUMAR) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 11th March, 2026 Neelesh, Sr. PS True Copy आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद
