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Facts
The assessee, Usha Devi, filed her ITR for AY 2017-18 and her case was selected for scrutiny due to a cash deposit of Rs. 70,00,000/- during demonetization on 01.12.2016. She explained the source as an opening cash balance of Rs. 32,63,876/- as on 01.04.2016 and cash withdrawals of Rs. 43,18,000/- during FY 2016-17, primarily for purchasing jewellery. The Assessing Officer and CIT(A) rejected her explanation, adding the entire amount as unexplained money under Section 69A read with Section 115BBE due to lack of documentary evidence and questioned the long holding period and purpose of withdrawals.
Held
The Tribunal confirmed the addition of Rs. 32,63,876/- related to the unexplained opening cash balance due to insufficient substantiation by the assessee. However, it deleted the addition of Rs. 37,36,124/- (remaining from Rs. 70,00,000/-) by accepting the explanation for the source of cash withdrawals, noting the gap between withdrawal and deposit was not inordinate and sources were established. Furthermore, the Tribunal directed the AO to impose a 30% tax rate instead of 60% on the sustained addition of Rs. 32,63,876/-, citing a Madras High Court judgment that the higher rate under Section 115BBE applies only from 01.04.2017, whereas the transaction occurred before this date.
Key Issues
1. Whether the source of cash deposited during demonetization, specifically the opening cash balance and cash withdrawals, was adequately explained by the assessee. 2. Whether the higher tax rate of 60% under Section 115BBE was applicable to transactions that occurred before April 1, 2017.
Sections Cited
143(3), 124(3), 143(2), 142(1), 127, 69A, 115BBE, 68
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Income Tax Appellate Tribunal, DELHI BENCH, C: NEW DELHI
Before: SHRI VIKAS AWASTHY & SHRI BRAJESH KUMAR SINGH
ORDER
PER BRAJESH KUMAR SINGH, AM,
1. This appeal has been preferred by the assessee against the order dated 12.02.2024 of National Faceless Appeal Centre (NFAC) [hereinafter referred to as the Ld. CIT(A)] pertaining to Assessment Year 2017-18 arising out of Assessment Order u/s 143(3) of the ITA No.- 1233/Del/2024 Usha Devi Income-tax Act, 1961(hereinafter referred to as ‘the Act’) passed the Ld. Assessing Officer (Ld. AO’, for short) dated 13.11.2019.
2. The grounds of appeal
raised by the assessee reads as under: - “
1. Because, the order of both the Ld. Lower Authorities are bad in law as well as is against the facts and circumstances of the case hence is unsustainable.
2. Because learned Commissioner of Income Tax (Appeals) erred in rejecting the assessee ground of challenging the jurisdiction of the ld. A.O. by wrongly invoking provision of sec 124(3), whereby all the notices u/s 143(2) / 142(1) and show cause notice was issued by the jurisdictional AO though order is framed by the non-jurisdictional AO even without any change of jurisdiction in term of sec 127, therefore impugned Assessment Order is void-ab-initio.
3. Because learned Commissioner of Income Tax (Appeals) further erred in not appreciating the fact that addition made u/s 69A/ 115BBE of the Act is beyond the scope of said provisions as amount is duly recorded in cash book and nature and source of said cash deposited is also duly explained.
4. Because learned Commissioner of Income Tax (Appeals) erred in sustaining the addition of Rs. 70,00,000/- made u/s 69A, being the cash amount deposited during demonetization out of accounted cash in hand with assessee as on 31.03.2016 and out of cash withdrawal from her bank account during current year which are fully supported and neither any material on record is rejected nor there is any material against the assessee.
The Appellant craves leave to add, alter, amend the grounds of appeal
and to take additional ground of appeal before the” Ground no. 1 is general in nature and requires no specific 3. adjudication.
4. Ground no. 2 is dismissed as not pressed.
5. Ground nos. 3 and 4 are taken up for adjudication on merits. 2 ITA No.- 1233/Del/2024 Usha Devi 6. The brief facts of the case are: In this case, the assessee e-filed her original return of income for the Assessment Year 2017-18 on 24-03-2018 declaring income of Rs. 14590/-. The case was selected for Limited Scrutiny through CASS for the reason 'High Risk Transactions and Cash deposit during demonetization period’. As per information available on record with the AO, the assessee had made cash deposit Rs. 70,00,000/- during demonetization period i.e. on 01-12-2016 with State Bank of India in account no. 62281307938. In response to the query by the AO on the issue of cash deposit in her bank account during demonetization period, the assessee replied vide letter dated 30-05-2019 and 16-09-2019 that the cash of Rs. 70,00,000/- was deposited in her bank account out of opening cash balance of Rs. 32,63,876/- as on 01-04-2016 and cash withdrawal from her Axis Bank account before demonetization period. Further, the AO regarding the opening cash balance at Rs. 32,63,876/- on 01.04.2016, vide notice u/s 142(1) of the Act, dated 05.08.2019, (placed at pg. no. 39 of the Paper Book), asked the assessee the following query: “ 3. Furnish a copy of complete copy of I.T.R for the A.Y. 2016-17 for claiming cash in hand of Rs. 32,63,876/- as on 01/04/2016 or any other documentary evidence in support of opening cash balance.”
ITA No.- 1233/Del/2024 Usha Devi 6.1 According to the AO, the said details were not filed by the assessee. Further, the AO regarding the claim of the assessee that the source of the cash deposit was withdrawal of Rs. 48 lakhs in cash during F.Y. 2016-17, observed that there was a huge gap of 8 to 10 months between the withdrawal of the said cash and deposit of the same during demonetization period. The AO further took note of the fact that the explanation for the cash withdrawal in the current year on multiple occasions was for the purchase of jewellery and that too from unidentified / unknown jewellers and at last not buying the jewellery and re-depositing the same which was withdrawn earlier in bank account during demonetization period, was not supported by any valid reason. Considering the above facts, the AO issued a show- cause notice dated 26.09.2019 (placed at pg. no. 44-45 of the P.B.) asking the assessee to explain as to why the amount of Rs. 70 lakhs should not be added to her total income for the year under consideration. In reply, the assessee, vide letter dated 03.10.2019, (placed at pg. no. 58-59 of the P.B.) submitted that the cash of Rs. 70 lakhs in old currency were deposited by the assessee in her bank account no.- 62281307938 with State Bank of Hyderabad (now merged with State Bank of India) on 01-12-2016 after the 4 ITA No.- 1233/Del/2024 Usha Devi demonetization was out of the available cash, the source of which was as follows: Opening cash balance as on 01-04-2016 - Rs. 32,63,876/- Cash withdrawals from bank during F.Y. 2016-17 (details on pg. 73-75 of the P.B.) - Rs. 43,18,000/- Total - Rs. 75,81,876/- 6.2 Further, on the issue that there was a huge gap of 8 to 10 months between the withdrawal of cash and deposit, it was submitted that there was no bar earlier and even now for a reason to keep cash with himself or herself. It was further submitted that there was no evidence available on record that the assessee had prior information with her that demonetization of currency notes was to take place in November, 2016 and therefore, the assessee withdrew cash from the bank in F.Y. 2015-16 to create the fiction and declared the same in her return filed on 17.10.2016, showing the cash balance of Rs. 32,63,876/- as on 01.04.2016. 6.3 However, the AO did not accept the above explanation of the assessee because according to him, the assessee failed to substantiate with documentary evidence to show that the said 5 ITA No.- 1233/Del/2024 Usha Devi amount deposited was out of cash in hand or brought back from past savings, and therefore, treated the same as unexplained money of the assessee and added the sum of Rs. 70,00,000/- under section 69A of the Act r.w.s. 115BBE of the Act.
Aggrieved with the said order, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee. While dismissing the appeal of the assessee, the Ld. CIT(A) took note of the fact that the assessee had not filed any documentary evidence to substantiate to hold cash in hand i.e. opening cash balance as on 01.04.2016. The Ld. CIT(A) also held that in absence of any positive verifiable evidence with the assessee’s engagement in earning of income which was incidentally a very meagre income of Rs. 1,16,030/-, and that too from house property income and income from other source, was not enough to prove that deposit of cash in bank was the outcome of her endeavor of entrepreneurship and corroborative evidence to substantiate withdrawal. The Ld. CIT(A) also took note of the fact that the cash withdrawals of Rs. 43,18,000/- during F.Y. 2016-17, claimed to be for the purpose of the purchase of jewellery which remained unutilized for a long period of an elderly woman earning a very meagre income of Rs. 1,16,030/- 6 ITA No.- 1233/Del/2024 Usha Devi from house property income and income from other source cannot be held as a normal feature. The Ld. CIT(A) relied upon the decision of the Hon’ble Supreme Court in the case of Sumati Dayal vs. CIT [1995] 214 ITR 801(SC), and stated that while deciding any issue surrounding circumstances/ evidence and test of human probabilities should also be looked into and where the factual matrix is not commensurate with the human probabilities, additions cannot be deleted. The Ld. CIT(A) held that “In absence of any positive material to dislodge the findings of the AO, I don't have any hesitation to hold that when nature and source of deposits, purpose of withdrawals and evidence of recycle of cash withdrawn for subsequent deposits are not established, whatever have been credited in the bank account ought to be taxed as income of the appellant out of his undisclosed source.” Accordingly, the Ld. CIT(A) dismissed the appeal of the assessee.
In the appeal before us, the assessee filed a Paper Book containing pages 1 to 90, including a copy of the written submissions filed before the Ld. CIT(A) placed at page nos. 1 to 4 of the Paper Book. The Ld. AR also filed a written submission and relied upon ITA No.- 1233/Del/2024 Usha Devi various judicial precedents, in support of her contention. The said written submission of the Ld. AR is reproduced as under: “ Assessee is an elderly women of age 68 year who has filed ROI for AY 17-18 with total income of Rs 14,590/- With ITO, Ward 41(1) Delhi (Pg no. 5) Case of assessee for AY 2017-18 was selected for limited scrutiny to verify cash deposit during demonetization period and ultimately made addition of Rs 70 lakhs being cash deposited by the assessee during demonetization period. Ground 2 is legal ground against jurisdiction of Assessing Officer passing assessment order is withdrawn Other grounds are on merits, Fact on merits is as under:
1.
During the AY 2017-18, Assessee has withdrawn Rs. 43.18 lakh besides she was holding cash in hand of Rs. 32.64 lakh (total Rs. 75.82 lakh) out of which Rs. 70.00 lakh was deposited back in the bank account on 21.12.2023 (sic- the correct date of deposit was 01.12.2016) Source of which is duly explained by the assessee being the cash withdrawals from bank with all possible supporting documents such as cash flow statement, bank statement, cash book etc. (Page 60-75) Even, the main source of deposited in bank being Rs. 1.50 Cr received through banking transactions against the loan given to M/s Action Ispat & Power Private Limited (Pq. 52) was specifically verified from ITR, Balance Sheet, Confirmation (Pq. 76-83) and source of opening cash balance which was mainly cash withdrawal of Rs. 48 lakhs in FY 2015-16 (Pg. 72) is also been explained with supporting document, in terms of notices u/s 142(1) (39-41) Various replies filed with evidences are on records (46-59). So much so even before proceedings online response to query about cash deposit raised by IT department, assessee explained the source being opening cash and cash withdrawal proving consistency of explanation right from beginning (16-17).
2. Ld. AO summarily rejected the explanation by doubting the holding of cash in hand as per last para on page 4. He commented adversely on holding period as per 8-10 months as per last para page 2 and purpose of withdrawal.
3. Ld. CIT(A) simply repeated contents of AO, on pages 17-19 and sustained the view of AO by invoking case of Sumati Dayal 214 ITR 801(Sc) on the basis of probabilities on page 20 4. Assessee's Contentions On Record:
ITA No.- 1233/Del/2024 Usha Devi a. The source of such cash deposited on 01.12.2016, being the cash available in hand out of cash withdrawals from banks/opt. cash in hand is duly supported with evidences on record. b. None of the evidences are found defective/faulty and/or are rejected even after examination whereby there is no evidence against assessee c. Whole India was depositing cash available during demonization period where over 15.30 lakh crore cash deposited in banks which is in public domain thus such deposit is as per the very purpose of Govt. itself beside there was no alternative as such cash currency in hand would have no legal tender after demonetization d. Keeping cash at home by Indians specially ladies is very common who are specially have all urge to buy and invest in jewelry (Pg 55/89-90) e Assessee does not even hold cash for 8-10 month as alleged by AO, where as a major portion of cash deposited (Rs. 43 lack) was withdrawn in the month of June 16-Sep 16 and held for 3-5 months before depositing in the bank. CASES RELIED UPON: A. Where assessee had explained source of such cash deposit to be amount earlier withdrawn by her from bank account and said cash amount was redeposited than duration/purpose of holding cash not relevant: S.R. Venkata Ratnam V CIT [1981] 127 ITR 807 (Karnataka)-(79-80)--Once the petitioner-assessee disclosed the source as having come from the withdrawal made on a given date from a given bank, it was not for respondents Nos 1 and 2 to concern themselves with what the assessee did with that money, i.e. whether he had kept the same in his house or utilized the services of a bank by depositing the same The ITO had only two choices before him. One was to reject the explanation as not believable for the reason that on his investigation no such pigmy deposit was ever made in the bank. In the alternative he ought to have called upon the assessee- petitioner to substantiate his claim by documentary evidence. Having exercised neither of the choices. it was not open to the ITO to merely surmise that it would not be probable for the assessee to keep Rs. 15,000 unutilized for a period of two years... Jaya Aggarwal V ITO [2018] 92 taxmann.com 108 (Delhi) (81-84) -AY 98-99 8. We find it difficult to accept the approach and findings recorded for several reasons. The brief order does not examine and consider the entire explanation and material on record as withdrawal of Rs. 2,00,000/- in cash was undisputed Naturally, the huge withdrawal was for a purpose and objective. From the beginning the explanation given was that withdrawal 9 ITA No.- 1233/Del/2024 Usha Devi was to pay earnest money for purchase of immovable property, which deal did not fructify Explanation given was not fanciful and sham story It was perfectly plausible and should be accepted, unless there was justification and ground to hold to the contrary Delay of some months in redeposit of part amount is the sole and only reason to disbelieve the appellant. Persons can behave differently even when placed in similar situations. Due regard and latitude to human conduct and behavior has to be given and accepted when we consider validity and truthfulness of an explanation. One should not consider and reject an explanation as concocted and contrived by applying prudent man's behavior test. Principle of preponderance of probability as a test is to be applied and is sufficient to discharge onus. Probability means likelihood of anything to be true. Probability refers to appearance of truth or likelihood of being realized which any statement or event bears in light of the present evidence (Murray's English Dictionary). Evidence can be oral and cannot be discarded on this ground. Assessment order and the appellate orders fall foul and have disregarded the preponderance of probability test. Jaya Aggarwal V ITO (2018) 92 taxmann.com 108 (Delhi) (81-84)-1555- 99Assessing Officer observed that sum was redeposited after more than 7 months, thus treated same as unexplained cash credit and addition was made under section 68-Whether explanation given by assessee that deposit was made out of sum withdrawn earlier to buy property was not fanciful and sham story-Different person may act differently-Oral evidence is also evidence Exp. can't be rejected by applying prudent men's behavior test- Principle of preponderance of probability as a test is to be applied and is sufficient to discharge onus Rajesh Mangla V DCIT [2024] 162 taxmann.com 324 (Delhi-Trib.) 85-91 31. We have considered rival submission and perused material available on record. From the material placed on record, it is observed that in the year under consideration, the assessee had opening cash balance of Rs.6,62,200/- and cash withdrawals from bank account amounting to Rs. 8,00,000/-. Thus, the total cash available with the assessee was to the tune of Rs. 14,62,200/- Whereas, the assessee has deposited cash in the bank account to the tune of Rs. 11,72,000/-. As could be seen from the aforesaid facts and figures, out of the total cash deposit, the Assessing Officer has disputed the source of cash deposit amounting to Rs. 7,22,000/- Whereas, he has accepted the balance amount. As discussed earlier, the assessee had total cash available with him to the tune of Rs. 14,62,200/-. Thus, assessee's explanation that the cash deposits were out of cash available cannot be disbelieved in absence of any material brought on record by the Departmental Authonties to establish that the cash available with the assessee was utilized for some other purpose. In view of the aforesaid, we delete the addition of Rs. 7,22,000/- -Mrs. Pushpa Rai v. Income-tax Officer 7 [2024] 159 taxmann.com 1585 (Delhi - Trib.) (92-96)
ITA No.- 1233/Del/2024 Usha Devi 7. From the above, it could be seen that the source of cash deposits is clearly explainable from the cash withdrawal made earlier which is reflected in the same bank account. The reason for holding huge cash of Rs.15 lakhs for a period of 14 months had also been explained by the assessee as she had to pay the requisite fees to the medical college within three days from the date of intimate on by the College management. Further, the assessee had also explained the source of withdrawal of cash to be out of maturity proceeds of fixed deposits which is also evident from the bank statement reproduced supra. Hence, I have no hesitation in deleting the addition made on account of cash deposit u/s 69A of the Act in the instant case. Accordingly, grounds raised by the assessee on merits are hereby allowed.
3. Where assessee made a possible explanation and department is not accepting the same then onus is on revenue to prove that apparent is not real, CIT V. DAULATRAM RAWATMULL 87 ITR 349 (SC) (97-105) CIT V Salek Chand Agarwala -300 ITR 426(ALL) (106-107)”
8.1 Further, the Ld. AR without prejudice to the above contention submitted relying upon the decision of Hon’ble Madras High Court in the case of SMILE Microfinance Limited vs. ACIT, writ petition (MD) No. 2078 of 2020 and 1742 of 2020 (order dated 19.11.2024), which held that the revenue is empowered to impose 60% rate of tax for the transactions from 01.04.2017 onwards and not prior to the said cut-off date and for prior transaction the revenue is empowered to impose only 30% rate of tax and stated that the AO had wrongly imposed tax @ 60% under Section 115BBE of the Act, on Rs. 70,00,000/- added under Section 69A of the Act.
The Ld. Sr. DR, on the other hand, supported the orders of authorities below. 11 ITA No.- 1233/Del/2024 Usha Devi 10. We have heard the rival contentions and perused the material available on record. In this case, cash of Rs. 70,00,000/- was deposited by the assessee in her bank account no. 62281307938, with State Bank of Hyderabad during the demonetization period on 01-12-2016, which was added as unexplained income u/s 69A of the Act r.w.s. 115BBE of the Act. During the assessment proceedings and appellate proceedings, the assessee submitted that the source of the said cash deposit was out of her opening cash balance of Rs. 32,63,873/- as on 01.04.2016 and out of cash withdrawals of Rs. 43,18,000/- during F.Y. 2016-17 from her disclosed bank accounts. However, we note that the assessee did not file any documentary evidence to substantiate the opening cash balance of Rs. 32,63,876/- as on 01.04.2016, despite asked by the AO vide notice issued u/s 142(1) of the Act dated 05.08.2019. The said relevant query has already been reproduced earlier in this order on page 3. In reply vide its letter dated 02.09.2019 (placed at pg. no. 51 of the P.B.), the assessee submitted the copy of cash book showing cash balance of Rs. 32,63,876/- as on 01.04.2016 alongwith copy of ITR for A.Y. 2016-17 in support of her claim. She further submitted that cash book of F.Y. 2015-16 was self-explanatory for transactions.
ITA No.- 1233/Del/2024 Usha Devi 10.1 The query of the AO and the reply of the assessee as stated in letter dated 02-02-2019 (on page no. 51 of the P.B.) of the assessee is reproduced as under: Q. 1. (3). Furnish a copy of complete copy of I.T.R for A.Y. 2016-17 for claiming cash in hand of Rs.3,263,876/- as on 01-04-2016 or any other documentary evidence in support of opening cash balance. Ans. Enclosed copy of cash book showing cash balance as on 01-04- 2016 of Rs. 3,263,878/- and copy of Complete ITR for A.Y 2016-17 in evidence of support of our claim. Q. 1. (6). Furnish a cash book/ledger copy for the period 01-04-2015 to 31-03-2016. Ans. Cash book of F.Y 2015-16 which is self-explanatory for transactions.”
10.2 In this regard, the cash book for the F.Y. 2015-16, placed at page 72 of the Paper Book, is reproduced as under:
ITA No.- 1233/Del/2024 Usha Devi 10.3 However, the above cash book does not explain the closing cash balance of Rs. 32,63,876/- as on 31.03.2016 with any intelligible narration and thus the source of the same is not explained with this cash book. Further, the assessee was also unwilling to furnish any explanation for the said opening cash balance of Rs. 32,63,876/- during the hearing before us and as noted above, no explanation was furnished by the assessee before the Assessing Officer during the assessment proceedings. Therefore, in absence of any explanation about the said opening cash balance on 01.04.2016, no credence of the said opening balance can be given, with respect to the claim of the assessee that the source of the total cash deposits in her bank account to the extent of Rs. 32,63,876/- out of total cash deposits of Rs. 70,00,000/- in her bank account was out of the opening cash balance of Rs. 32,63,876/- as on 01.04.2016. Therefore, the addition to the extent of Rs. 32,63,876/- of Rs. 70,00,000/-under section 69A of the Act is confirmed. 10.4 Further, the assessee has claimed to have withdrawn a sum of Rs. 43,18,000/- during the current Financial Year, thereby claiming of cash balance of Rs. 75,81,876/-, out of which it was claimed that a sum of Rs. 70,00,000/- was deposited. A tabular chart showing the 14 ITA No.- 1233/Del/2024 Usha Devi cash flow statement at page no. 73 of the Paper Book is reproduced as under:
10.5 Regarding the source of cash withdrawal of Rs. 43,18,000/- during the Financial Year 2016-17, it was submitted that the same was withdrawn out of the various cheques amounts received by the assessee from Action Power Ltd in which the assessee had a credit balance of Rs1,52,50,000/-and out of self -deposit cheques. In this regard, the assessee referred to the cash book of F.Y. 2016-17, (placed at pg. no. 74-75 of the P.B.) which is reproduced as under:
ITA No.- 1233/Del/2024 Usha Devi ITA No.- 1233/Del/2024 Usha Devi 10.6 It was further submitted that the purpose of the said withdrawal was for the purchase of jewellery. The relevant reply of the assessee in response to question no. 2 & 3 in this regard vide letter dated 02.0902019 on pg. no. 52 of the P.B. is reproduced as under: “Q.
Furnish the purpose of amount received from Action Ispat & Power Pvt. Ltd along with relation with the party and their bank statements, ITR, Balance Sheet and P&L account. Ans. Myself had given amount to Action Ispat & Power Private Limited in the previous years and was outstanding of Rs. 15,250,000/- as at 01-04-2016 and received back Rs. 17 ITA No.- 1233/Del/2024 Usha Devi 15,000,000/-during F.Y. 2016-17. Copy of ITR, Balance Confirmation, Balance Sheet along with Profit & Loss Account for the year ending 2016-17 showing the payment received by myself, Bank statement not available since company is under official liquidator of Hon'ble Delhi High court. Q.
Purpose of frequent & huge cash withdrawal from Axis Bank Account No. 53140. Ans. I have withdrawn huge cash to buy the jewelry of heavy value from unknown jewelers in located in city / outside the city. Since not purchased the jewelry and redeposit the cash in hand in the bank accounts.”
The details of cash withdrawals from 01.04.2016 to 30.11.2016 which has been considered prior to the cash deposit of Rs. 70,00,000/- on 01.12.2016 are as under. (A/c no.- 096010100153140 Axis Bank)
Srl. Date of credit RTGS deposit from Date of cash withdrawal Pg. no. of No. Action Ispat & Power Pvt. Ltd. in from assessee bank account Paper Book his bank account and amount and amount 1 07.06.2016 07.06.2010 64 Rs. 10,00,000/- Rs. 10,00,000/- 2. 10.06.2016 10.06.2016 64 Rs. 2,00,000/- Rs. 2,00,000/- 3. 04.07.2016 05.07.2016 65 Rs. 11,00,000/- Rs. 11,00,000/- 4. 30.08.2016 30.08.2016 66 Rs. 7,00,000/- Rs. 7,00,000/- 5. 11.11.2016 11.11.2016 67 Nil Rs. 10,000/- 6. 30.11.2016 30.11.2016 Nil Rs. 10,000/- Total Rs. 30,20,000/- ITA No.- 1233/Del/2024 Usha Devi SBBJ Lawrence road, - A/c No.- 51025610996 – Details Srl. Source of credit amount Date of cash withdrawal Pg. no. of No. of amount Paper Book 1. 26.08.2016 own cheques – 26.08.2016 60 Rs. 5,00,000/- Rs. 5,00,000/- 2. Nil 08.09.2016 60 Rs. 1,00,000/- 3. 08.09.2016 own cheque- 08.09.2016 60 Rs. 4,90,000/- Rs. 5,00,000/- 4. Nil 28.11.2016 62 Rs. 10,000/- Total 11,10,000/- (State Bank of Hyderabad- the withdrawal of Rs. 72,000/- claimed by the assessee from the bank account no. 62281307938 on page no. 73 of the Paper Book has not been considered in the above details as the same has been withdrawn after 01.12.2016 as per details on pg. no. 69 of the Paper Book) 11.1 Thus, the total cash withdrawal made by the assessee from her above 2 bank accounts during 01.04.2016 to 30.11.2016 (the date of cash deposit of Rs. 70,00,000/- in her bank account being 01.12.2016) amounts to Rs. 41,18,600/- (Axis Bank- Rs. 30,20,000/- + SBBJ Rs. 11,10,000/- - cash deposit of Rs. 7200/- on 01.08.2016 and Rs. 4200/- on 24.10.2016). Thus, after excluding the opening cash balance of Rs. 19 ITA No.- 1233/Del/2024 Usha Devi 32,63,876/-, the balance amount of cash deposit remains to be explained out of Rs. 70,00,000/- amounts to Rs. 37,36,124/- (Rs. 70,00,000/- - Rs. 32,63,876/-). In this regard, the assessee claimed that the cash of Rs. 30,20,000/- and Rs. 11,10,000/- was withdrawn from her Axis Bank Account and her SBBJ Account to purchase jewellery, but the same is not supported by any evidence. However, considering that the gap between the cash deposit of Rs. 70,00,000/- on 01.12.2016 out of the said net cash withdrawals of Rs. 41,18,600/- on various dates as detailed in the two tables on page no. 18 and 19 of this order, being not so inordinate in the given facts of the case, and in absence of any contrary evidence on record and further, that the source of withdrawal of Rs. 30,20,000/- was from the immediate cheque deposits received from Action Power Ltd., and similarly, the source of withdrawal of Rs. 11,10,000/- was out of deposits of own cheques, the source of the balance amount of cash deposit amounting to Rs. 37,36,124/-, out of said cash withdrawal of Rs. 41,18,600/- as claimed by the assessee is found to be acceptable. 11.2 The claim of the assessee that the source of the entire cash deposit of Rs. 70,00,000/- in her bank account was out of the opening cash balance of Rs. 32,63,876/- as on 01.04.2016 and the net cash available 20 ITA No.- 1233/Del/2024 Usha Devi of Rs. 41,18,600/- out of the total cash withdrawal of Rs. 41,30,000/- during F.Y. 2016-17, relying upon various case laws is not acceptable, in view of the facts, as discussed above. 11.3 Therefore, in view of the above discussion, the addition to extent of Rs. 37,36,124/- (Rs. 70,00,000 – Rs. 32,63,876) is deleted and the balance amount of Rs. 32,63,876/- is confirmed. 11.4 As noted above, the AO had made an addition of Rs. 70,00,000/- under Section 69A of the Act r.w.s. 115BBE of the Act, by levying tax @ 60% on the said addition. Out of the, said addition as per our order, an amount of Rs. 37,36,124/- has been deleted and the balance amount of Rs. 32,63,876/- has been confirmed. In this regard, we have carefully considered the submission of the Ld. AR, relying upon the decision of the Hon’ble Madras High Court in the case of SMILE Microfinance Limited vs. ACIT (supra), wherein it was held that the revenue is empowered to impose 60% rate of tax for the transactions from 01.04.2017 onwards and not prior to the said cut-off date and for prior transaction the revenue is empowered to impose only 30% rate of tax. In this regard, the relevant findings of the Hon’ble Court in para no. 16 and 17 are reproduced as under:
ITA No.- 1233/Del/2024 Usha Devi “16. The next contention raised by the Learned Senior Counsel is that the under section 115BBE the rate of tax imposed is increased from 30% to 60% and the same is applicable with effect from 01.04.2017 onwards as per the amendment. Therefore, the same is applicable to any transaction from 01.04.2017 onwards and nor prior to any transactions prior to 01.04.2017. Since in the present case all alleged transactions are for the period from 08.11.2016 to 30.12.2016, hence the erstwhile rate of tax 30% only is applicable. But the contention of the revenue is that the amendment was with effect from 01.04.2017 and hence the same is applicable for the financial year 2016-2017 and the assessment year 2017-2018. xxx.
In the aforesaid objects and reasons nowhere it is stated that due to “demonetization” the unaccounted money ought to be charged 60% rate of tax. It only states that step had been taken to curb black money by withdrawing Specified Bank Notes of denomination of Rs.500 and Rs.1000. And also states the people may find illegal ways of converting their black money into black again, hence as per experts advice heavy penalty ought to be levied. From the language of the object “that instead of allowing people to find illegal ways of converting their black money into black again”, it is evident that the government is intended to impose the same for future transactions. Especially the use of word “again” in the object would clearly indicate it is for future transactions i.e. from 01.04.2017. Therefore, this Court is of the considered opinion that the revenue is empowered to impose 60% rate of tax for the transactions from 01.04.2017 onwards and not prior to the said cut- off date. And for prior transaction the revenue is empowered to impose only 30% rate of tax.”
11.5 The facts in the present case, are identical to the facts in the above cited case, as in the present case also, the cash deposit of Rs. 70,00,000/- out of which Rs. 32,63,876/- has been sustained in this order was deposited in the bank account of the assessee on 01.12.2016. 22 ITA No.- 1233/Del/2024 Usha Devi Therefore, respectfully following the above order of the Hon’ble Madras High Court, the AO is directed to impose only 30% rate of tax, on the sustained addition of Rs. 32,63,876/- and not @ 60% as was done in the assessment order. Ground nos. 3 and 4 of the appeal are partly allowed as above.
In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 19th September, 2025.