DCIT Vs Skates Trades & Agencies Pvt. Ltd. (ITAT Mumbai)
ITAT Mumbai: 60% Tax Rate u/s 115BBE Applicable for AY 2017-18 on Unexplained Cash Deposits – CIT(A) Erred in Reducing Rate & holding that higher rate is from AY 2018-19
Assessee, engaged in the business of liquor trading & operating 3-star resorts, filed its return of income declaring Nil income. The case was selected for scrutiny to examine large value of cash deposited during the demonetisation period. From AIMS data, it was noticed that during 09.11.2016 to 30.12.2016, the assessee deposited cash of ₹7,26,83,086 in its bank a/c. Assessee explained that the deposits represented cash sales in its liquor business in Haryana, where payments were generally in cash & that such collections were periodically deposited in bank after keeping aside amounts for expenses.
AO observed that cash sales during demonetisation (₹4,72,26,475) showed an abnormal rise of 64.27% over the comparable period in the previous year. Month-wise deposit details were not furnished. The AO treated the abnormal rise of ₹4,00,00,949 as unexplained cash u/s 68 & taxed the same at 60% u/s 115BBE.
CIT(A) upheld the addition u/s 68 in absence of contrary evidence but held that the amended provisions of section 115BBE, prescribing a higher rate of 60%, applied only from AY 2018-19 & not to AY 2017-18. AO was directed to recompute the tax as per the rates applicable prior to amendment.
