Harmony Forex And Travels Pvt. Ltd. Vs ITO (ITAT Delhi)
Delhi ITAT Grants Relief to Forex Dealer in Demonetisation Case; Restricts Addition to ₹2 Lakh and Rejects Application of Section 115BBE
The Delhi Bench of the ITAT partly allowed the appeal of a forex dealer engaged in money-changing business, where the Assessing Officer had treated cash deposits of ₹25.88 lakh made during the demonetisation period as unexplained money under section 69A and taxed them under section 115BBE. The CIT(A) had already granted partial relief by deleting ₹9 lakh and sustaining an addition of ₹16.88 lakh.
The Tribunal observed that the assessee was carrying on the business of foreign currency exchange and that the cash deposits were prima facie attributable to cash-in-hand generated from bank withdrawals and cash sales of foreign currency. Although the reconciliation was not fully satisfactory, the Tribunal held that the explanation could not be rejected in toto. Considering the facts and in the interest of justice, it restricted the sustained addition of ₹16.88 lakh to a lump sum of ₹2 lakh, granting further relief of ₹14.88 lakh, while specifically directing that the order shall not be treated as a precedent.
On the issue of taxation under section 115BBE, the Tribunal relied on the Madras High Court’s decision in SMILE Microfinance Ltd. v. ACIT and held that the amended provisions of section 115BBE apply only to transactions on or after 1 April 2017. Consequently, the Tribunal held that section 115BBE could not be invoked in the present case relating to AY 2017-18. The appeal was accordingly partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
