2023 (12) TMI 515 - AT - Income Tax

Unexplained cash deposit from undisclosed sources u/s 69A r.w.s. 115BBE - assessee has made cash deposit during demonetization period in her bank account - HELD THAT - As perused the orders of the lower authorities, find that the assessing officer recorded that in the return of A.Y. 2015-16, the assessee shown gross receipt of Rs. 3,78,000/- and profit of Rs. 3,62,780/- and under the column of cash balance mentioned at Zero. Such finding of the assessing officer is not countered by ld AR for the assessee by showing any adverse evidence. AO itself held that for A.Y. 2016-17 the assessee filed return of income on 24.12.2016 i.e. after demonetization the assessee has shown gross receipt under Section 44AD of the Act of Rs. 12,45,600/- and net income of Rs. 10,00,180/-. The assessee also claimed deduction under Chapter VIA of Rs. 1,75,560/- and paid tax of Rs. 96,130/-. Thus, out of total Rs. 10,00,180/-, the assessee incurred Rs. 2,71,690/- as per return of income and considering the household expenses of assessee at Rs. 1.00 lacs, the assessee was hardly having cash balance of Rs. 6.00 lacs. From the aforesaid observation of assessing officer, find that the assessing officer has accepted the case balance of Rs. 6.00 lacs with assessee and disbelieved the remaining cash balance. Thus, the assessing officer accepted the availability of cash of RS. 6.00 lacs with the assessee. Since, the assessee was showing business income from several years, for the year under consideration the assessee has shown income of about Rs. 10.00 lacs (Approx) therefore, the assessee is also given benefit benefits of Rs.200 lacs, thereby the additions to the extent of Rs. 8.00 lacs are deleted and remaining addition of Rs. 2.90 lacs is upheld. Taxing of the addition under amended provisions of section 115BBE we find that division bench of this Tribunal in Samir Shantilal Mehta 2023 (5) TMI 1279 - ITAT SURAT , Arjunsinh Harisinh Thakor Vs 2023 (6) TMI 770 - ITAT SURAT and in JItendra Nemichand Gupta (supra) 2023 (6) TMI 1338 - ITAT SURAT and Indore Bench in DCIT Vs Punjab Retain Pvt Ltd 2021 (11) TMI 405 - ITAT INDORE and Sandesh Kumar Jain 2022 (11) TMI 126 - ITAT JABALPUR held that applicability of amended provision of section 115BBE in not retrospective. Thus, the assessing officer is directed to tax the remaining addition @ 30% and applicable surcharges if any. In the result, the ground of appeal raised by the assessee is partly allowed.

Summary

Issues Involved:
1. Addition of Rs. 10,90,000 as unexplained cash deposit under Section 69A read with Section 115BBE of the Income Tax Act, 1961.
2. Application of amended Section 115BBE retrospectively.

Summary:

Issue 1: Addition of Rs. 10,90,000 as unexplained cash deposit
The assessee filed her return of income for AY 2017-18 declaring an income of Rs. 9,95,440. During scrutiny, the Assessing Officer (AO) noted a cash deposit of Rs. 10.90 lakhs during the demonetization period. The assessee provided a cash flow statement showing cash in hand of Rs. 13,84,872 as of 01/04/2016. However, the AO found discrepancies in the cash balance reported in previous years and rejected the explanation, treating Rs. 10,90,000 as unexplained cash deposit under Section 69A read with Section 115BBE of the Act.

On appeal, the CIT(A) upheld the AO's decision, noting that the assessee's income showed a sudden increase post-demonetization and that the cash book and cash flow statements were not sufficient to substantiate the source of cash deposits. The CIT(A) found the case laws cited by the assessee inapplicable.

Before the Tribunal, the assessee argued that the cash deposits were from the opening cash balance and business income. The Tribunal found that the AO had accepted a cash balance of Rs. 6 lakhs and disbelieved the remaining amount. Given the assessee's consistent business income, the Tribunal allowed a further benefit of Rs. 2 lakhs, thereby deleting Rs. 8 lakhs from the addition and upholding the remaining Rs. 2.90 lakhs.

Issue 2: Application of amended Section 115BBE retrospectively
The Tribunal examined the applicability of the amended Section 115BBE, which imposes a higher tax rate on unexplained income. Citing precedents, the Tribunal held that the amended provisions are not retrospective. Therefore, the AO was directed to tax the remaining addition of Rs. 2.90 lakhs at the standard rate of 30% plus applicable surcharges.

Conclusion:
The appeal was partly allowed. The Tribunal deleted Rs. 8 lakhs from the addition of Rs. 10.90 lakhs and upheld the remaining Rs. 2.90 lakhs. The AO was directed to tax the remaining addition at the standard rate under the unamended provisions of Section 115BBE.