Inder Pal Dogra vs ITO

PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :

This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals) – NFAC, Delhi [‘CIT(A)’ in short] dated 17.10.2024 arising from the assessment order dated 16.12.2019, passed by the Income Tax Officer, Ward-60(4), Delhi under Section 143(3) of the Income Tax Act, 1961 (‘the Act’) concerning Assessment Year (A.Y.) 2017-18.

The solitary grievance of the assessee relates to the addition made u/s 69A of the Act treating the cash deposit as unexplained money.

Brief facts of the case are that the assessee is engaged in the business of trading in Edible Oil & Rice. The assessee has declared income from Business and Profession and Income from Other Sources. Assessee filed its return of income at Rs.8,55,510/- on 31.10.2017, which was processed u/s 143(1) of the Act. Subsequently, the case was selected under CASS for complete scrutiny on the ground of large cash deposited during demonetization period. Therefore, notice under section 143(2) of the Act was issued and served through e-portal to the assessee on 22.09.2019.

The AO, on examining the ITS detail and copy of ITR for F.Y. 2016-17, found that the assessee in its ITR has shown HDFC Bank account. It was also found that the assessee had deposited cash of Rs. 2,43,00,000/- during demonetization period in its account maintained with City Union Bank which was not declared in the ITR. The Assessing Officer not being satisfied with the explanation made the addition of Rs. 2,43,00,000/- on account of cash deposit during demonetization period as unexplained cash credit under section 69A read with section 115BBE of the Act.

When the aggrieved assessee went in appeal before the ld. CIT(A), the ld. CIT(A) confirmed the addition. The aggrieved Assessee is before us.

Before us, the ld. counsel for the assessee vehemently submitted that the Assessing Officer made the addition of cash deposited during the period of demonetization in different bank accounts of the assessee company, without rejecting the books of account and without there being any evidence and was made on the basis of conjectures and surmises.

Per contra, the ld. DR relied on the orders of the authorities below.

We have heard the rival submissions and have 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 period as being from cash sales. We also find that on the other hand, the Revenue’s endeavour to disbelieve the assessee’s contention that cash deposit has been made out of sales, cannot be fully justified. In this factual matrix, there is some element of failure to explain some of the cash deposit, cannot be ruled out. Be that as it may, it is deemed appropriate, in larger interest of justice, that a lump-sum addition of Rs. 12 lakhs only would be just and proper with a rider that the same shall not be treated as a precedent, so as to cover all loopholes. The assessee’s ground on this count is partly allowed.

In so far as 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.

In the result, appeal of the assessee in ITA No. 5716/DEL/2024 is partly allowed.