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Facts
The assessee's appeal against the CIT(A)'s ex-parte order confirming the addition of Rs.11,98,000/- made by the AO on account of unexplained cash deposits during demonetization. The assessee had provided explanations for the cash deposits from salary and gift, but these were rejected by the AO.
Held
The Tribunal partially allowed the appeal. It accepted the cash deposit of Rs.1,40,000/- from salary and Rs.3,00,000/- as gift. However, the remaining amount of Rs.7,58,000/- was confirmed as unexplained.
Key Issues
Whether the cash deposits during demonetization are explained and whether Section 115BBE of the Act applies in the impugned assessment year.
Sections Cited
115BBE, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC”, DELHI
(A.Y. 2017-18) Pranay Jain, ...... अपीलाथ�/Appellant 56, Kiran Vihar, Delhi 110092 PAN: AZKPJ-5252-E बनाम Vs. Income Tax Officer, Ward-58(6), R.No. 319, D-block, Vikas Bhawan, ..... �ितवादी/Respondent New Delhi 110002 अपीलाथ� �ारा/Appellant by : Shri Rajiv Jain, Chartered Accountant �ितवादी�ारा/Respondent by : Ms. Sudha Gupta, Sr. DR सुनवाई क� ितिथ/ Date of hearing : 29/07/2025 घोषणा क� ितिथ/ Date of pronouncement : : 24/10/2025 आदेश/ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 23.04.2025, for Assessment Year 2017-18.
Shri Rajiv Jain, appearing on behalf of the assessee submits that the CIT(A) in an ex-parte order has confirmed the addition made by the Assessing Officer (AO) on account of unexplained cash deposit during demonetization. The ld. AR submits that the AO has made addition of Rs.11,98,000/-without appreciating the documents furnished by the assessee during assessment proceedings. The ld. AR submits that the source of cash deposited on various dates during the month of (AY 2017-18) November 2016 and December 2016 were explained to the AO. He referred to chart at page 2 of the assessment order. The ld. AR submitted that during the period relevant to assessment year under appeal, the assessee has received salary from Jay Parkash Jain & Sons Rs.20,000/- per month. The cash deposits of Rs.1,60,000/- are from salary. To substantiate payment of salary, the assessee has placed on record ledger account of Jai Parkash Jain & Sons at page 20 and 21 of the paper book. He further pointed that Rs.3,00,000/- deposited on 01.12.2016 was cash gift received by the assessee from his grandfather. To substantiate cash gift, he referred to ledger account of Jai Parkash Jain & Sons at page 22 of the paper book and also a letter from Shri Jai Parkash Jain dated 01.12.2016 at page 25 of the paper book. The submissions made by the assessee were out rightly rejected by the AO. The AO thus, made addition of Rs.11,98,000/-. The assessee carried the issue in appeal before the CIT(A) but remained unsuccessful. The ld. AR reiterating the submissions made before the lower authorities prayed for deleting the addition.
Per contra, Ms. Sudha Gupta representing the department vehemently defended the impugned order and the assessment order. The ld. DR submitted that despite repeated opportunities to the assessee, the assessee failed to appear before the CIT(A). The AO has made addition as the assessee failed to substantiate source of cash deposits during the period of demonetization. The explanation furnished by the assessee were neither plausible nor substantiated with documents evidences. She thus prayed for dismissing appeal of the assessee.
Both sides heard, orders of the authorities below examined. The impugned order has been passed in ex-parte proceedings. However, the ld. AR of the assessee submitted that the appeal be decided on the basis of documents already (AY 2017-18) available on record and the assessment order. The solitary issue raised by the assessee in appeal pertains to addition of Rs.11,98,000/- made by AO on account of unexplained cash deposits during demonetization and further invoking section 115BBE of the Act. The assessee has explained the source cash deposits in his bank account as under:- S.No Date of cash deposit in Amount (Rs.) Source bank account 1. 10.11.2016 4,00,000 Out of cash in hand as on 31.03.2016 2. 12.11.2016 1,60,000 Out of salary from Jai Parkash Jain & Sons 3. 12.11.2016 90,000 Tuition Income 4. 15.11.2016 48,000 Out of cash in hand 5. 17.11.2016 2,00,000 Out of tuition income 6. 01.12.2016 3,00,000 Out of gift received from Grand Father Total 11,98,000/- 5. In so far as opening cash in hand Rs.4,00,000/- is concerned, no documentary evidence has been placed on record by the assessee. The assessee has contended that Rs.1,60,000/- deposited on 12.11.2016 is out of salary received from Jai Parkash Jain & Sons. The assessee in his return of income has mentioned total income from salary as Rs.2,40,000/-. The ledger account placed on record at page 20 of the paper book reveals that the assessee receives salary of Rs.20,000/- for the month in the first week of the following month. However, for the month of November 2016 the assessee received salary on 07.11.2016 itself. The said salary is purportedly paid in advance. The assessee deposited entire salary of the month received in advance in bank, which appears to be absurd and improbable. Therefore, cash deposit of Rs.1,60,000/- on 12.11.2016 out of salary is accepted only to the extent Rs.1,40,000/- i.e. salary for the (AY 2017-18) months of April to October 2016 (seven months). The assessee in his return of income has also disclosed tuition income aggregating to Rs.2,90,000/-. The income from tuition has been deposited by the assessee on 12.11.2016 Rs.90,000/- and on 17.11.2016 Rs.2,00,000/-. However, the details of the students have not been furnished and there is no plausible reason for depositing the said amounting in two trenches in a short span of five days. Also it is not explained as to why the income from tuition which was received for the past months was not deposited regularly by the assessee and was only deposited during demonetization. The assesseee’s explanation with regard to tuition income is unsubstantiated, hence, rejected.
The assessee has explained that Rs.3,00,000/- cash has been received as gift from his grandfather Shri Jai Parkash Jain. In support of his contention, the assessee has placed on record copy of the ledger account of Shri Jai Parkash Jain as well as a letter of confirmation from Shri Jai Parkash Jain. The cash deposits of Rs.3,00,000/- from grandfather which has been duly confirmed by the grandfather Shri Jai Parkash Jain is accepted. Thus, the assessee has been able to explain source of cash deposits to the extent of Out of salary Rs.1,40,000/- Gift Rs.3,00,000/- Total Rs.4,40,000/- The remaining amount of Rs.7,58,000/- is confirmed.
I further find that the AO while making addition u/s.69A of the Act has also invoked the provision of section 115BBE of the Act. The Hon’ble Madras High Court in the case of SMILE Microfinance Ltd. vs. ACIT, WP (MD) No.2078 of 2022 (AY 2017-18) decided on 19.11.2024 has held that amendment to section 115BBE of the Act would come into effect from 01.04.2017 i.e. relevant to AY 2018-19 onwards. Thus, in the impugned assessment year un-amended provisions of section 115BBE of the Act would apply.
In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on Friday the 24th day of October, 2025.