Nidesh Jain Vs ACIT (ITAT Hyderabad)
Cash Deposit Explained Partly, 60% Tax Denied: ITAT Hyderabad Restricts s.115BBE to 30% for AY 2017-18
partly allowed the assessee’s appeal involving cash deposits and the harsh tax rate u/s 115BBE.
The Assessee, a Chartered Accountant, had deposited ₹20.65 lakh in cash in his bank account. AO treated the same as unexplained cash credit u/s 68 and taxed it u/s 115BBE @ 60%. The explanation that the deposits represented past savings accumulated over years and kept with his father (supported by an affidavit and cash-flow summaries) was rejected by the lower authorities.
The Tribunal admitted additional evidence and, applying the test of human probabilities, held that while the explanation of uniform accumulation over many years was not fully convincing (noting an abnormal spike in withdrawals in one year), it would also be unrealistic to presume that a regularly-assessed salaried professional had no cash in hand at all. Accordingly, the Tribunal granted partial relief of ₹5 lakh as reasonable cash availability and sustained the balance addition of ₹15.65 lakh u/s 68.
On the crucial tax-rate issue, the Tribunal accepted the additional legal ground and followed the Madras High Court ruling in S.M.I.L.E. Microfinance Ltd. to hold that the enhanced tax rate of 60% u/s 115BBE applies only to transactions on or after 01.04.2017. Since the impugned cash deposits related to transactions prior to 01.04.2017 (AY 2017-18), the sustained addition could be taxed only @ 30% and not @ 60%. The AO was directed accordingly.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
