Income Tax Officer Ward 45 (1) vs S R Timbers

1.

On the facts and circumstances of the case the Learned CIT(A) has erred deleting the addition of Rs. 1,01,96,500/- made by the AO under Section 68 of the Act, by ignoring the fact surge in cash deposits of Rs. 1,34,32,000/- during the demonetization period was abnormal and inconsistent with the assessee's past transaction patterns, thereby casting a duty upon the assessee to conclusively prove the nature and source of such deposits, which it failed to do during the assessment stage.

2.

On the facts and circumstances of the case, the Learned CIT(A) erred in accepting the assessee's explanation that the cash deposits were from past business sales, without considering that the AO had, through a comparative analysis of cash deposits in preceding and succeeding years, established a reasonable and logical pattern, and the deviation during the demonetization period was substantial and unexplained.

3.

On the facts and circumstances of the case, the Learned CIT(A) incorrectly applied the legal principle laid down in Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 (SC), as the Assessing Officer's addition was not based on mere 'suspicion' but on a logical inference drawn from verifiable data and the assessee's own bank statements, which constituted 'proper material' for making the addition. 3. At the outset, the ld. Counsel for the assessee submitted that the impugned appeal of the Revenue is hit by CBDT instruction bearing Circular No.09/2024 dated 17.09.2024 mandating non-prosecution of matters before ITAT where the tax effect is less than Rs.60 lakhs. It was submitted that if the invocation of section 115BBE of the Act is removed in compliance to decision of Hon’ble Madras High Court in Smile Microfinance case, then the tax on overall addition of Rs.1,01,96,500/- would be less than the prescribed limit of Rs.60 lakhs. Reliance was placed upon the decision of a co-ordinate Bench of this Tribunal dated 24.02.2025 in the case of Hajurilal and Sons Jewellers Pvt. Ltd. in ITA No.3497/Del/2023.

“….This Revenue’s appeal for Assessment Year 2017-18, arises against the CIT(A)-29, New Delhi’s in case No. CIT(A), Delhi29/10627/2016-17 dated 19.09.2023, in proceedings u/s 147 of the Income Tax Act, 1961 (in short “the Act”).

2.

Heard both the parties at length. Case file perused.

3.

It emerges at the outset during the course of hearing that the Revenue’s instant appeal is stated to be involving tax effect of Rs.77,25,000/- since seeking to revive addition of Rs.1,00,00,000/-representing alleged accommodation entry(ies) availed from various entry operators. Mr. Dhanesta further clarifies that the above stated tax effect of Rs.77,25,000/- has been quantified in light of section 115BBE of the Act applicable in the impugned assessment year 2017-18 stipulating higher rate of tax @ 60%.

4.

Faced with this situation, we note that hon’ble Madras high court recent decision in S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) has already settled the issue in assessee’s favour and against the department that section 115BBE applies on transactions carried out on or after 01.04.2017 i.e. A.Y. 201819 onwards than in A.Y. 2017-18 involved herein. That being the case, we quote CBDT recent landmark Circular No. 9/2024, dated 17.09.2024 prescribing minimum tax effect of Rs.60,00,000/- to conclude that the Revneue’s instant appeal deserves to be rejected for this precise reason alone. Ordered accordingly.

4.1

All other pleadings on merit stand rendered academic.

5.

This Revenue’s appeal is dismissed in above terms subject to all just exceptions….”