AI Structured Summary
Not yet generated for this judgment
Judgment
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
In this case, there is a delay of 51 days in the filing of the said appeal. This delay has been requested to be condoned on the basis of a detailed affidavit through which it has been averred that the delay occurred due to the assessee not being aware of tax procedures and also the fact that the appellate order was brought to his notice only when he attempted to file his return of income. It has also been averred that the former tax consultant did not inform the assessee of the notices issued by the Ld. CIT(A).
Considering the reasons given in the said petition the delay is hereby condoned and the appeal is admitted for adjudication.
This appeal filed by the assessee arises from order dated 15.12.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by Ld. CIT(A), New Delhi.
In this case, the Ld. AO noticed considerable cash deposits in the bank account of the assessee and thereafter has held that such cash deposits to the tune of Rs.90,33,500/- were unexplained, with the same being added u/s 68 of the Act.
The assessee approached the CIT(A) where also the cash deposits have been analyzed and it has been held that the reasons supplied by the assessee to justify the impugned cash deposits were not consistent and were not found backed by good evidence. There is discussion in this regard on pages 7 & 8 of the impugned order.
The aggrieved assessee has approached the ITAT with five grounds, through which the addition made u/s 68 of the Act has been challenged as also the fact that the assessee filed his return by declaring income on presumptive basis u/s 44AD of the Act.
Before us the Ld. AR argued that in case of income computed u/s 44AD of the Act, there was no requirement for any detailed accounts. It was the submission by the Ld. AR that the assessee was not interested in prolonged litigation and wanted the matter to be amicably settled at this stage. It was offered that a small fraction of the total addition could be considered for confirmation purely as a means to buy peace of mind and bring finality to proceedings. It was also the submission that section 115BBE could not be applied in the present assessment year due to the case of S.M.I.L.E. Microfinance Ltd. reported in 179 taxmann.com 65 (Mad.) [2025].
We have carefully considered the rival submissions and have gone through the records before us. We find that in this case the Ld. AO has done considerable fact finding to hold that the cash deposits were not explained. There is some discussion in the Ld. AO’s order that the assessee could not comply to requests for details (para 3 at page 2 of Ld. AO). Therefore, it is felt that there is a degree of strength in fact finding. The Ld. CIT(A) has relied exclusively on the Ld.AO’s finding. Be that as it may, we feel that the interests of justice would be served if Rs.4,00,000/- is sustained as an addition out of the impugned amount, with relief to the assessee on the remainder.
Though the Ld. AO has not explicitly mentioned section 115BBE but regarding the applicability of Section 115BBE of the Act in this case we are guided by the case of S.M.I.L.E. Microfinance Ltd. (supra) where the following finding is relevant: -
“In the aforesaid objects and reasons nowhere it is stated that due to "demonetization" the unaccounted money ought to be charged 60 per cent 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 has 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 1.4.2017. Therefore, this Court is of the considered opinion that the revenue is empowered to impose 60% rate of tax for the transactions from 1.4.2017 onwards and not prior to the said cut-off date. And for prior transaction the revenue is empowered to impose only 30 per cent rate of tax. [Para 17]”
Accordingly, it is clear that the assessee cannot be taxed @ 60 per cent rate of tax rather than at normal tax rates.
In the result, appeal of the assessee is partly allowed.