Vijay Kumar Gupta Vs ITO (ITAT Delhi)
Cash deposits during Demonetisation: Addition Sustained, But Tax Softened- Taxable u/s 69A, But 60% Rate u/s 115BBE applies only from AY 2018-19- ITAT Delhi
Delhi Tribunal partly allowed Assessee’s appeal by holding that though unexplained demonetisation cash deposits are taxable u/s 69A, the higher tax rate of 60% u/s 115BBE is applicable only prospectively from 01.04.2017.
Assessee, engaged in small business, filed return u/s 44AD declaring turnover. During demonetisation, deposited ₹78.95 lakh in cash in Canara Bank, HDFC Bank & Indian Bank accounts. AO treated entire deposits as unexplained money u/s 69A and taxed at 60% u/s 115BBE.
On appeal, Assessee furnished cash book, bank book & sales correlation. CIT(A) accepted explanation for ₹47.99 lakh as linked to business receipts. Balance ₹30.95 lakh remained unexplained & was confirmed u/s 69A.
Tribunal observed that Assessee failed to explain source of remaining deposits of ₹30.95 lakh. Tribunal upheld addition u/s 69A as unexplained cash. However, relying on Madras HC in S.M.I.L.E. Microfinance Ltd. vs. ACIT, ITAT held that 60% rate under section 115BBE applies only from 01.04.2017 (AY 2018-19 onwards). For AY 2017-18, tax on unexplained income u/s 69A must be computed at normal 30% rate.
