NAVEEN KUMAR,DELHI vs. INCOME TAX OFFICER, NEW DELHI

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ITA 5512/DEL/2025Status: DisposedITAT Delhi29 October 2025AY 2017-183 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found merit in the assessee's claim of regular business activity, acknowledging that the cash deposits, while not fully reconciled, could not be entirely disregarded. Consequently, a lumpsum addition of Rs. 2 lakhs was deemed just and proper, providing the assessee relief on the remaining amount. The assessment under Section 115BBE was directed to be made under normal provisions as the section was effective from April 1, 2017.

What were the facts?

The assessee deposited Rs. 15 lakhs in cash during demonetization. The lower authorities treated these deposits as unexplained income under Section 68/69 read with Section 115BBE of the Income Tax Act. The assessee claimed to be engaged in hosiery trading and provided financial statements for the preceding year.

What were the issues?

Whether cash deposits made during demonetization can be treated as unexplained income when the assessee demonstrates regular business activity. Applicability of Section 115BBE to transactions prior to its effective date.

Which sections of the Income-tax Act were involved?

Section 68,Section 69,Section 115BBE,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI

Before: SHRI SATBEER SINGH GODARA

Hearing: 29.10.2025Pronounced: 29.10.2025

Date of hearing 29.10.2025 Date of pronouncement 29.10.2025 ORDER 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/250/2025-26/1078900173(1), dated 25.07.2025 involving proceedings under section 144 of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.

2.

It emerges during the course of hearing that the assessee/appellant is aggrieved against both the learned lower authorities’ respective findings treating his cash deposits of Rs.15 lakhs during demonetization; as unexplained under section 68/69 r.w.s. 115BBE of the Act, in assessment order dated 09.12.2019 as upheld in the lower appellate discussion.

3.

That being the case, learned counsel has invited the tribunal’s attention to the clinching fact that the assessee all along is engaged in hosiery trading business wherein he had also filed his income tax return for the preceding assessment year 2016-17 very well before the impugned cash deposits. This is indeed coupled with the fact that he has further placed on record the assessee’s balance- sheet as well as P & L Account of the said preceding assessment year. Faced with this situation, the tribunal hereby finds part merit in the assessee’s case as he has proved his regular business activity in principle wherein such cash deposits; although not specifically reconciled or verified to the entire satisfaction of the learned lower authorities, could not be altogether brushed aside. That being the case, it is deemed appropriate in the larger interest of justice that a lumpsum addition of Rs.2 lakhs only would be just and proper with a rider that the same shall not be treated as a precedent. The assessee gets relief of Rs.13 lakhs in other words. Necessary computation shall follow as per law.

4.

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