DCIT, INCOME TAX DEPARTMENT vs. PACE TEL SYSTEMS PVT LTD, DELHI

The solitary grievance raised by the Revenue is the deletion of addition of Rs. 2,88,38,262/- by the ld. CIT(A) made by the Assessing Officer on account of unexplained cash deposit u/s 68 of the Act.

During the assessment proceedings, the Assessing Officer found abnormal increase in the cash deposit made in different bank accounts of the Assessee Company during the demonetization period as compared to the rate of cash deposit during the pre-demonetization. The assessee explained that total cash deposited during the period of demonetization in different bank accounts maintained by the assessee on PAN India basis was Rs. 2,88,38,262/- out of which cash in old currency SBN was Rs. 50,72,500/. The Assessee also filed certificate from HDFC Bank and email from ICICI Bank for deposit of cash with breakup of old currency notes SBN.

When the aggrieved assessee went in appeal before the ld. CIT(A), the ld. CIT(A) deleted the addition.

Aggrieved, the Revenue is in appeal before us.

We have heard the rival submissions and perused the relevant material on record. In the instant case, we find that the assessee has attempted to prove the entire source of cash deposit during demonetization as cash sales from 274 centers in different cities providing exclusive service cum retail sales of the big mobile manufacture i.e. OPPO Mobiles India Private Limited. Although the assessee, prima facie, appears to have discharged its onus of explaining source of cash deposit, its contentions to prove the source, hardly deserves to be accepted in entirety especially when the Assessing Officer found that the assessee did not submit any comparable of the cash deposit made in FY 2015-16 vis a vis cash deposit made in the FY 2016-17. Further, the AO also found that the corresponding purchases for the said sales and the sources of cash deposits remained unverifiable.

In so far as assessee's levy of tax at a higher rate under section 115BBE of the Act is concerned, we find that the Madras High Court in the Writ petition 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 (Madras) has held that the impugned statutory provision would come into effect on the transaction done on or after 01.04.2017 only. Accordingly, we direct the AO to tax the addition under normal provisions of tax and not under the provisions of 115BBE. allowed.