Manharlal Keshavlal Bhimjiyani Vs ITO (ITAT Rajkot)
Cash Deposit of ₹31 Lakh Largely Explained; ITAT Rajkot Restricts Addition to 10% on Estimation, Deletes Section 115BBE Levy
The Rajkot SMC Bench of the Income Tax Appellate Tribunal, Rajkot Bench partly allowed the appeal of Shri Manharlal Keshavlal Bhimjiyani for AY 2017-18, granting substantial relief from an addition of ₹31,00,000 made under section 69A read with section 115BBE on account of cash deposits.
The assessee had deposited ₹31 lakh during FY 2016-17. He explained that the cash originated mainly from earlier withdrawals of ₹40 lakh from fixed deposits with SBI in September 2015, intended for a family religious ceremony (Saptah) at Haridwar, which was later cancelled due to family disputes, leading to re-deposit of the unutilised cash. A part of the deposit was also stated to be from past savings and small trading activity. The AO rejected the explanation and made a full addition u/s 69A, which was confirmed by the CIT(A).
The Tribunal noted that:
- The cash withdrawals of ₹40 lakh were undisputed by the AO;
- There was no evidence of utilisation of the withdrawn cash elsewhere;
- A direct and proximate nexus existed between earlier withdrawals and subsequent re-deposit; and
- There was no material to suggest income from undisclosed sources.
While accepting the explanation in principle, the ITAT observed that some supporting evidence (like affidavit and claims of past savings) was self-serving. To balance equities and “plug possible leakage”, the Tribunal adopted an estimated approach, directing that only 10% of the cash deposit (₹3,10,000) be added as income.
Importantly, the Tribunal held that the residual addition should be taxed at normal rates and not under section 115BBE. The balance addition of ₹27.90 lakh was deleted. The order was passed considering the peculiar facts and was not to be treated as a precedent.
Accordingly, the appeal was partly allowed.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
