Shalu Yadav Vs ITO (ITAT Delhi)
Patanjali Dealer Gets GP Estimation Relief: ITAT Delhi Curtails 69A Addition & Rejects 115BBE
The Delhi ITAT (SMC), in Shalu Yadav v. ITO (ITA No. 7973/Del/2025, AY 2017-18; order dated 24.12.2025), has partly allowed the Assessee’s appeal, substantially reducing the addition made on demonetisation cash deposits and holding that section 115BBE is inapplicable.
The Assessee, running a Patanjali retail dealership, had deposited ₹33.89 lakh in cash during the demonetisation period. The AO treated the entire amount as unexplained money u/s 69A and taxed it u/s 115BBE, which was affirmed by the NFAC.
The Tribunal observed that in an unorganised retail business, cash sales are a normal feature and cannot be ruled out altogether. At the same time, the Assessee failed to fully reconcile and substantiate the cash turnover before the lower authorities. Balancing these aspects, the ITAT held that estimating gross profit at 10% on the cash deposits—amounting to ₹3.39 lakh—would meet the ends of justice, with a clear caveat that the 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. Accordingly, the AO was directed to compute income under normal provisions.
The appeal was thus partly allowed, granting substantial relief to the Assessee
FULL TEXT OF THE ORDER OF ITAT DELHI
This assessee’s appeal ITA no. 7973/Del/2025 for assessment year
2017-18 arises against CIT(A)/ NFAC, Delhi’s order dated 16.09.2025 (DIN & Order No. ITBA/NFAC/S/250/2025-26/1080773758(1), in proceedings u/s 143(3) of the Income-tax Act, 1961, hereinafter referred to as the ‘Act’.
Heard both the parties. Case file perused.
2. Learned counsel appearing for the assessee vehemently argues during the course of hearing that both the learned lower authorities have erred in law and on facts in treating the assessee’s cash deposits during demonetization amounting to Rs. 33,89,500/- as unexplained money u/s 69A r.w.s. 115 BBE of the Act; in assessment order dated 24.12.2019 & upheld in the lower appellate discussion.
3. The assessee’s case is that her regular business activity of running a “Patanjali” dealership is not in dispute in principle. That being the case, this tribunal is of the considered view that cash sales in such unorganized retail business activities cannot be altogether ruled out. The fact also remains that the assessee has not satisfactorily discharged her onus of proving the necessary reconciliation and verification of the corresponding turnover of cash sales before the learned lower authorities. It is thus deemed appropriate in the larger interest of justice that a lump sum GP estimation @ 10% of the impugned cash deposits; coming to Rs. 3,39,000/- is deemed as just and proper with the rider that the same shall not be treated as a precedent. Necessary computation shall follow as per law. Ordered accordingly.
4. So far as the assessee’s assessment u/s 115BBE is concerned, the revenue could hardly dispute that hon’ble Madras high court in SMILE Microfinance Ltd. v. ACIT in WP(MD) No. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) has already settled the issue that Section 115BBE applies on transactions on or after 01.04.2017 only. I, accordingly direct the Assessing Officer to finalize the consequential computation under normal provisions than u/s 115BBE of the Act in very terms. Ordered accordingly.
5. This assessee’s appeal ITA No. 7973/Del/2025 is partly allowed in above terms.
Order pronounced in open court on 24.12.2025.
