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Facts
The assessee's appeal for AY 2017-18 arose against an order that treated cash deposits of Rs. 32.86 lakhs during demonetization as unexplained. The assessee claimed these deposits represented cash sales from their export business.
Held
The Tribunal found that while the assessee had not sufficiently proved all facts before lower authorities, treating the entire deposit as unexplained was not justified. A lump sum addition of Rs. 4,00,000 was deemed just and proper, granting relief of Rs. 28.86 lakhs.
Key Issues
Whether cash deposits during demonetization are to be treated as unexplained income, and the applicability of Section 115BBE to transactions prior to April 1, 2017.
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)/ NFAC, Delhi’s order dated 23.06.2025 (DIN & Order No. ITBA/NFAC/S/250/2025-26/1077407293(1), in proceedings u/s 143(3) 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 with the able assistance coming from both the parties that learned lower authorities have treated the assessee’s cash deposits during demonetization amounting to Rs. 32.86 lakhs as unexplained u/s 68 upheld in the lower appellate proceedings.
That being the case, learned counsel invites the tribunal’s attention to the assessee’s detailed paper book indicating it as an exporter all along for the past so many assessment years in light of corresponding balance sheet and books of account etc. His case is that cash deposits all along represent assessee’s cash sales in regular business activity which has been wrongly treated as unexplained. The fact, however, remains that assessee has not been able to plead and prove all the necessary relevant facts and verification thereof before the learned lower authorities. I further find no merit in the Revenue’s vehement contention that cash deposit ought to be added in entirety in light of assessee’s supportive evidence.
That being the factual position, it is thus deemed just and proper in the larger interest of justice that a lump sum addition of Rs. 4,00,000/- only would be just and proper. The assessee gets relief of Rs. 28.86 lakhs in other words. Ordered accordingly.
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. v. ACIT in WP(MD) No. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) 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.
This assessee’s appeal is partly allowed in very terms.
Order pronounced in open court on 06.10.2025.