Rajinder Singh Jain Vs ITO (ITAT Delhi)
Demonetisation Deposits Partly Sustained: ITAT Delhi Restricts 69A Addition to ₹2 Lakh; 115BBE Held Inapplicable
The Delhi ITAT (SMC), in Rajinder Singh Jain v. ITO (ITA No. 7297/Del/2025, AY 2017-18; order dated 24.12.2025), has partly allowed the Assessee’s appeal, substantially reducing the addition made on account of demonetisation cash deposits and directing that section 115BBE shall not apply.
The Assessee had deposited ₹14.21 lakh in cash during the demonetisation period, which was treated by the AO as unexplained money u/s 69A and taxed at the penal rate u/s 115BBE. The addition was upheld by the first appellate authority.
Before the Tribunal, it was noticed that the Assessee had withdrawn cash aggregating to ₹69.71 lakh from his bank accounts between July 2016 and November 2016, i.e., prior to demonetisation. The ITAT observed that although the Assessee could not conclusively establish one-to-one correlation, the possibility that the deposits represented redeposit of earlier withdrawals could not be ruled out.
Balancing the facts, the Tribunal held that restricting the addition to a lump sum of ₹2 lakh would meet the ends of justice, granting relief of ₹12.21 lakh to the Assessee, with a clear caveat that the estimation shall not be treated as a precedent.
On the applicability of section 115BBE, the ITAT followed the Madras High Court ruling in SMILE Microfinance Ltd. and held that 115BBE applies only to transactions on or after 01.04.2017. Accordingly, the AO was directed to compute income under normal provisions and not under section 115BBE.
The appeal was thus partly allowed, granting substantial relief to the Assessee
FULL TEXT OF THE ORDER OF ITAT DELHI
