Sanya Dawar vs Income Tax Officer

PER MANISH AGARWAL, AM:

This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [‘CIT(A)’ in short] in Appeal No. CIT(A), Delhi-12/10237/2019-20 dated 05.11.2025 passed u/s 250 of the Income Tax Act, 1961 (the Act, in short) arising out of the assessment order dated 30.12.2019 passed u/s 144 of the Act for Assessment Year 2017-18.

Briefly stated the facts are that assesse is an individual and filed its return of income declaring total income at Rs.4,23,080/-. The case of the assessee was selected for complete scrutiny for the reason that cash was deposited during demonetization period. Notice u/s 143(2) of the Act was issued on 24.09.2018, however, before the AO assessee has not made any compliance to any of the notices issued, accordingly, the AO has passed the order u/s 144 of the Act an income of Rs.55,02,130/- by making various additions which include the cash deposited during the demonetization period of Rs.40,75,000/- holding as unexplained money u/s 69A of the Act.

Against the said order, the assessee filed an appeal before the Ld. CIT(A) and filed additional evidences under Rule 46A of Income Tax Rules, 1962 (the Rules). The Ld. CIT(A) vide impugned order had not admitted the additional evidence filed by assessee by holding that the assessee has not discharged the statutory onus of making a formal application and establishing the reasons for which it was prevented for filing these details before the AO and thus partly allowed the appeal of the assessee.

Aggrieved by the said order, the assessee has filed the appeal before the Tribunal wherein various grounds of appeal were taken as per appeal memo.

Grounds of appeal No.1 is general in nature needs no separate adjudication.

Grounds of appeal No.2 & 2.1 are with respect to the action of CIT(A) of not admitting the additional evidence filed by the assessee.

Grounds of appeal No. 3,4, 4.1 and 5 are with respect to the challenging the merits of the additions/disallowances made and further against the invocation of provisions of section 115BBE of the Act.

Heard both the parties at length and perused the materials available on record. It is observed from both the orders of lower authorities that before the AO, despite of providing opportunities, no details were filed by the assessee. Before the Ld. CIT(A), the assessee has filed all the details under Rule 46 of the Rule, however, no separate prayer was made under Rule 46A for admission of additional evidence, therefore, the Ld. CIT(A) has not admitted the same. It is true that the assessee has not participated before the AO during the assessment proceedings however, before the Ld. CIT(A), all the relevant details were filed with respect to the source of cash deposited in the bank account during demonetization period in SBN and further filed ledger accounts in respect of the expenditures claimed in Profit & Loss account. All these evidences are crucial for the deciding the case of the assessee. The Hon’ble Delhi High Court in the case of CIT (Central)-1 vs. Manish Buildwell Pvt. Ltd. in ITA No.928/2011 has held that though the assessee should show the conditions for admission of the additional evidences, and Rule 46A has to be applied strictly. In the instant case, the sole reason for not admitting the additional evidence filed by the assessee was that no separate prayer as provided under Rule 46A was made to eplain the circumstances for not appearing before the AO. Before us, assessee has explained the circumstances and prayer was made that the additional evidences filed being goes to the root of matter and, therefore, in the larger interest of justice, same should be admitted.

Considering the judgment of Hon’ble Jurisdictional High Court that though the assessee had failed to file the application before the Ld. CIT(A) under Rule 46A, however before us, it was requested that the additional evidences should be admitted without which justice cannot be done. Under these circumstances, we admit the additional evidences filed by the assessee and remand the matter back to the file of AO for verification of said additional evidences filed and direct the AO to decide the issue in accordance with law.

It is further observed that the assessee has made cash deposit in SBN during demonetization period and addition was made by the AO of the amount so deposited holding the same as unexplained and had invoked the provisions of section 115BBE for charging special rate of tax. In case, during the remand proceedings, the AO proceeded to make the addition for the cash so deposited, the provisions of section 115BBE should not be applied as the same are applicable on or after 01.04.2017 i.e. from A.Y.2018-19 onwards and, therefore, in such event, the tax has to be charged at the normal rate and not u/s 115BBE. In this regard, reliance is placed on the judgment of Hon’ble Madras High Court in the case of Smile Microfinance Ltd. vs ACIT in (WP)MD No.2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.). The Hon’ble Rajasthan High Court in the case of Deepak Maratha Vs. Union of India in DB CWP No. 3625/2020 vide order dt. 27.05.2026 has held as under:

Thus, by following the aforesaid judgements of hon’ble high courts and considering the fact that the year under appeal before us is AY 2017-18 thus, we are of the view that the provision of section 115BBE of the Act are not applicable for AY 2017-18 and are applicable from AY 2018-19 and onwards. Therefore, we direct the AO to charge the tax at normal rate of tax. The grounds of appeal No. 3 to 5 of the assessee are partly allowed for statistical purposes.

In the result, the appeal of the assessee is partly allowed for statistical purposes.