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Judgment
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 24.06.2025 arising from the assessment order dated 19.12.2019 passed by the ITO, Ward-3(5), Gurgaon under Section 143(1) of the Income Tax Act, 1961 (‘the Act’) concerning Assessment Year (A.Y.) 2017-18.
The grounds raised by the assessee are as under :
Ground No. 1
That the Ld. Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) have erred in law and on facts in making and confirming the addition of Rs. 53,90,000/- under Section 69A of the Income Tax Act, 1961, without appreciating the true nature and source of the cash deposits.
Ground No. 2
That the Ld. Commissioner of Income Tax (Appeals) have erred in not considering an opening cash balance of Rs. 13,50,000/- аccumulated over the previous 10 years from savings out of declared income, which has been consistently reflected in the returns filed over the years which is a matter of record with the department.
Ground No. 3
That the Ld. CIT(A) has not afforded proper opportunity to the appellant to explain the matter and the whole order is arbitrary and against the principle of natural justice.
Ground No. 4
That in any view of the matter and in any case the order under appeal is bad in law and against the circumstances of the case.
Ground No. 5
That the appellant craves leave to add, modify, or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.
Brief facts of the case is that the assessee is engaged in the business of fruits and vegetables. Assessee e-filed his return of income on 31.03.2018 declaring an income of Rs.2,97,560/- u/s 143(1) of the Act. The case was selected for limited scrutiny through CASS. The learned AO observed that assessee had deposited cash of Rs.53,90,000/- in ICICI Bank during the F.Y. 2016-17, i.e., period of demonetization. The assessment u/s 143(3) was completed and Rs. 53,90,000/- was considered as unexplained money and added u/s 69A of the Act.
Aggrieved, the assessee preferred an appeal before the CIT(A) who considering the facts and circumstances, upheld the action of the Assessing Officer. Now the further aggrieved assessee is in appeal before us.
Before us, the ld. counsel for the assessee vehemently submitted that the cash deposits in bank were out of cash sales and the Assessing Officer made the addition of Rs.53,90,000/- as unexplained cash u/s 69A of the Act 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. 1 lakh 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. 7129/Del/2025 is partly allowed.