2023 (12) TMI 543 - AT - Income Tax

Unexplained cash deposits u/s 68 - Addition made invoking provisions of Section 115BBE - time gap between the withdrawal and the deposit of cash withdrawal - addition made during demonetization period - contention of assessee that the assessee was regularly making withdrawal from bank for incurring some expenses so they will not keep such huge cash in safe from October, 2012 and to deposit during demonetization period only - HELD THAT - The only basis for doubting is the long period, therefore, keeping in view the return of income offered by assessee and the cash deposit during demonetization period, the assessee is given benefit of doubt to the extent of 50% of cash deposit made available with the assessee as no adverse material is brought on record by the AO - also explanation offered by the assessee is also not cogent and does not find suitable space in human probabilities. Therefore, keeping in view the entire fact and circumstances, the addition to the extent of 50% is deleted and rest of the addition is confirmed/upheld. In the result, ground No.1 of the appeal is partly allowed. Addition under amended provisions of Section 115BBE - Division Bench of this Tribunal in Samir Shantilal Mehta 2023 (5) TMI 1279 - ITAT SURAT , Arjunsinh Harisinh Thakor 2023 (6) TMI 770 - ITAT SURAT and in Jitendra Nemichand Gupta 2023 (6) TMI 1338 - ITAT SURAT and Punjab Retail 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 is 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. 15,35,000/- on account of unexplained cash deposits under Section 68 of the Income Tax Act.
2. Levying tax on the addition amount by invoking provisions of Section 115BBE.
3. Application of the newly substituted Section 115BBE retrospectively.

Summary:

Issue 1: Addition of Rs. 15,35,000/- on account of unexplained cash deposits under Section 68 of the Income Tax Act:
The assessee, an HUF, filed its return for AY 2017-18, declaring an income of Rs. 11,82,250/-. The case was selected for scrutiny due to large cash deposits during the demonetization period. The Assessing Officer (AO) noted cash deposits of Rs. 2.00 lacs in HDFC Bank and Rs. 13,35,000/- in Bank of Baroda. The AO found the source of cash deposits mainly from withdrawals in October 2012 and monthly withdrawals for household expenses. The AO did not accept the explanation that the cash was kept for emergencies, treating it as unexplained cash credit under Section 68 and adding it to the total income. The CIT(A) upheld the AO's decision. The Tribunal found that while the explanation of the assessee was not entirely plausible, there was no material evidence from the AO to prove the cash was spent elsewhere. Therefore, 50% of the addition was deleted, and the rest was confirmed.

Issue 2: Levying tax on the addition amount by invoking provisions of Section 115BBE:
The AO taxed the unexplained cash credit under the amended provisions of Section 115BBE at 60%. The assessee argued that the amended provisions should not apply retrospectively. The Tribunal agreed, citing various case laws, and directed the AO to tax the remaining addition at 30% plus applicable surcharges.

Issue 3: Application of the newly substituted Section 115BBE retrospectively:
The Tribunal held that the amended provisions of Section 115BBE are not retrospective, aligning with decisions from other benches, including Samir Shantilal Mehta Vs ACIT and others.

Conclusion:
The appeal was partly allowed. The addition of Rs. 15,35,000/- was reduced by 50%, and the remaining addition was to be taxed at 30% under the unamended Section 115BBE. The judgment was announced on 30th November 2023.