Bhanu Pratap Gohel Vs ITO (ITAT Rajkot)
ITAT Gives Major Relief in Demonetisation Cash Deposit Case – Only 5% Estimated Profit Taxable, Section 115BBE Not Applicable
Assessee deposited ₹13.50 lakh in cash during demonetisation (Nov–Dec 2016). She explained that the funds came from earlier bank withdrawals, supported by cash books, bank statements, Hathu account & affidavit citing old age/medical needs. AO ignored these documents & added the entire ₹13.50 lakh u/s 69A, which was confirmed by CIT(A) without identifying any defects.
Before ITAT, Assessee proved a clear nexus between withdrawals & deposits. Tribunal held that natural justice was violated as evidence was not rejected on valid grounds. It also relied on Gujarat HC in Swati Malove Divetia holding that when withdrawals match deposits, addition is unjustified.
However, since some documents were self-serving, ITAT adopted a balanced approach & estimated profit @ 5% of deposits = ₹67,525, to cover any minor inconsistencies.
Most Important Finding:
Since source of cash was explained, Section 115BBE is NOT applicable. The 5% addition will be taxed at normal rates.
Result: Addition of ₹13,50,000 deleted except ₹67,525. Major relief to assessee.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
Captioned appeal filed by the assessee, pertaining to Assessment Year 2017-18, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income-tax (Appeals), dated 31/01/2025, which in turn arises out of an order passed by the Assessing Officer dated 27/11/2019 u/s 143(3) of the Income Tax Act, 1961.
