Babaji Udyog Vs ACIT (ITAT Delhi)
Mustard Oil Trader Gets GP Estimation Relief: ITAT Delhi Rejects 115BBE on Demonetisation Cash
The Delhi ITAT (SMC), in Babaji Udyog v. ACIT (ITA No. 7958/Del/2025, AY 2017-18; order dated 24.12.2025), has partly allowed the Assessee’s appeal, scaling down the addition made on demonetisation cash deposits and holding that section 115BBE is not applicable.
The Assessee, engaged in wholesale and retail trading of mustard oil, had deposited ₹49.48 lakh in cash during the demonetisation period. The AO treated the entire amount as unexplained cash credit u/s 68 and subjected it to tax u/s 115BBE, which was affirmed by the CIT(A).
The Tribunal observed that in an unorganised edible oil trade, cash sales are common and cannot be ruled out altogether. At the same time, the Assessee failed to fully discharge the onus of explaining the source of cash deposits to the satisfaction of the lower authorities. Balancing these factors, the ITAT held that estimating gross profit at 5% on the alleged business turnover would meet the ends of justice, with a clear caveat that such estimation shall not be treated as a precedent.
On the applicability of section 115BBE, the Tribunal followed the Madras High Court ruling in SMILE Microfinance Ltd. v. ACIT and held that 115BBE applies only to transactions on or after 01.04.2017. The AO was accordingly 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
