INCOME TAX OFFICER, WARD-4(1)(10, ALIGARH vs. SONU VARSHNEY, ALIGARH
Facts
The assessee deposited Rs. 1,71,50,000 in cash during demonetization. The Assessing Officer added Rs. 1,50,29,754 as unexplained cash credit under Section 68 and taxed it under Section 115BBE, also adding Rs. 20,00,000 contributed to PMGKY. The CIT(A) deleted these additions, finding the source of cash from business.
Held
The Tribunal dismissed the Revenue's appeal as the tax effect, after applying the Madras High Court decision on Section 115BBE, fell below the CBDT's monetary limit for appeals. The assessee's cross-objection regarding the applicability of Section 115BBE was partly allowed, resulting in a lower tax demand.
Key Issues
The key legal issues were the unexplained cash credit under Section 68 and the applicability and tax rate under Section 115BBE for Assessment Year 2017-18, as well as the monetary limit for Revenue appeals.
Sections Cited
Section 68, Section 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH, AGRA
Before: SHRI S. RIFAUR RAHMAN & SHRI SUNIL KUMAR SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 495/Agr/2025 Assessment Year: 2017-18 Income-tax Officer, Vs. Sonu Varshney, Pratishtha, Ward 4(1)(1), Aligarh. Pragati Vihar, Ramghat Road, Aligarh. PAN :ACUPV9679E (Appellant) (Respondent)
C.O. 08/Agr/2025 (in ITA No. 495/Agr/2025) Assessment Year: 2017-18 Sonu Varshney, Pratishtha, Vs. Income-tax Officer, Pragati Vihar, Ramghat Road, Ward 4(1)(1), Aligarh. Aligarh. (Appellant) (Respondent)
Assessee by Sh. Raj Kumar, C.A. & Sh. Suraj Gupta, Advocate. Department by Sh. Shailendra Srivastava, Sr. DR
Date of hearing 17.12.2025 Date of pronouncement 15.01.2026
ORDER PER : S. RIFAUR RAHMAN, ACCOUNTANT MEMBER:
The Revenue has filed this appeal against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 20.08.2025 for the Assessment Year 2017-18.
Assessee has also filed cross-objection in this appeal.
ITA No.495 & CO 08/Agr/2025
Brief facts of the case are, the case of the assessee was selected for
scrutiny on the basis that the assessee has deposited cash during
demonetization period of Rs.1,71,50,000/-. The assessee did not submit
the relevant evidences before the Assessing Officer nor produced any
books of account, cash book, ledger etc. during the assessment
proceedings. The Assessing Officer observed on perusal of cash flow chart
that the assessee did not make cash sales in the preceding month. After
considering the opening cash in hand during the month of November, 2016
amounting to Rs.1,20,246/- and Rs.20,00,000/- declared in PMGKY-2016,
the difference of Rs.1,50,29,754/- was considered as unexplained cash
credits. Accordingly, he proceeded to make addition u/s. 68 of the Income-
tax Act, 1961 (“the Act” for short) and taxed the same u/s. 115BBE of the
Act. Further, he observed that the assessee has contributed in Pradhan
Mntri Garib KalyanYojna to the extent of Rs.20,00,000/- in cash.
Accordingly, he proceeded to make the above said addition of
Rs.20,00,000/-.
Aggrieved with the above order, the assessee preferred an appeal
before NFAC, Delhi and the assessee filed a detailed submission before
the learned CIT(A). The same is reproduced by the learned CIT(A) at
pages 2 to 40 of the impugned order. After considering the detailed
submissions of the assessee, learned CIT(A) deleted the additions made 2 | P a g e
ITA No.495 & CO 08/Agr/2025
by the Assessing Officer and found that the source of cash is out of
business carried on by the assessee and also deleted the amount
contributed in Pradhan Mantri Garib KalyanYojna.
Aggrieved with the above order, Revenue is in appeal before us and
at the same time, assessee has also filed a cross-objection.
At the time of hearing, learned AR of the assessee submitted that the
appeal preferred by the Revenue is below the tax effect as per Circular
issued by CBDT No. 09/2024 dated 17.09.2024. Further, he submitted that
the assessee has raised ground No.3 in cross objection, as per which, the
provisions of section 115BBE are not applicable for assessment year 2017-
18 based on the decision of 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. By applying the decision of Hon’ble Madras
High Court, the tax should be calculated on the basis of normal tax rate of
30%. It being so, the total tax demand on the additions made by the
Assessing Officer would be Rs.53,40,823/- as under :
Tax @ 30% on 1,50,29,754/- 45,08,924/- Surcharge @ 15% 6,76,339/- Education Cess @ 3% 1,55,558/- 53,40,823/-
Further, learned AR submitted that the additions made u/s. 68 does
not fall under exceptions issued by the CBDT vide Circular No. 05/2024
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ITA No.495 & CO 08/Agr/2025
dated 15.03.2024, as referred in para-3 of the Circular dated 17.09.2024.
He filed a copy of the said circulars.
On the other hand, learned DR relied on the findings of the lower
authorities.
Considered the rival submissions and material placed on record.
After giving effect to the decision of Hon’ble Madras High Court in the
case of S.M.I.L.E. Microfinance Ltd.(supra), the tax demand relating to the
additions proposed by the Assessing Officer is reduced to Rs.53,40,823/-,
which is below the monetary limit fixed by CBDT, to which the Revenue
cannot contest in appeal before ITAT.
In the result, Revenue’s appeal is dismissed and the cross-objection
filed by assessee is partly allowed.
Order pronounced in the open court on 15.01.2026.
Sd/- Sd/-
(SUNIL KUMAR SINGH) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 15.01.2026 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra
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