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2024 (11) TMI 820 - AT - Income TaxUnexplained cash credits u/s 68 - Addition invoking provisions of Section 115BBE (Enhanced Rate of Tax) - AO as well as Ld. CIT(A) doubted the source of cash deposits by taking view that assessee has not shown cash-in-hand in the ITR for assessment years 2015- 16 and 2016-17 - HELD THAT - Considering the overall facts and circumstances of the case, and the facts that no independent investigation of fact was carried out about agricultural holding nor discarded / rejected the receipt of agricultural produce. Thus in order to avoid the possibility of revenue leakage at reasonable disallowance would be sufficient to avoid the possibility of revenue leakage. Thus, considering the various heads of income of assessee, find that ad hoc disallowance @ 10% of addition would be sufficient to avoid the possibility of revenue leakage. In the result, ground No.1 of appeal is partly allowed. Enhanced Rate of Tax u/s 115BBE - Divisions Bench as well as SMC Bench of this Tribunal in a series of case has held that enhance rate prescribed under section 115BBE is not applicable for AY 2017-18, reference is made in case of 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 In the result, ground of the appeal is partly allowed.
Issues Involved:
1. Addition of Rs. 27,14,000/- as unexplained cash credits under Section 68 of the Income Tax Act, 1961. 2. Application of enhanced tax rate under Section 115BBE for taxing unexplained cash credits. 3. Condonation of delay in filing the appeal. Issue-wise Detailed Analysis: 1. Addition of Rs. 27,14,000/- as Unexplained Cash Credits: The primary issue in this appeal was the addition of Rs. 27,14,000/- as unexplained cash credits under Section 68 of the Income Tax Act, 1961. The assessee, an individual with declared income from agricultural activities and a partnership firm, deposited substantial cash during the demonetization period. The Assessing Officer (AO) noted discrepancies in the cash book and found no satisfactory evidence for the cash deposits, leading to the addition of Rs. 27,14,000/- as unexplained cash credits. The assessee contended that the cash was derived from agricultural income and cash-in-hand, substantiated by previous income tax returns and agricultural bills. However, the AO and the CIT(A) rejected these claims due to lack of documentary evidence for the opening cash balance and discrepancies in the cash book. The Tribunal, considering the overall facts, found that a reasonable disallowance would suffice to prevent revenue leakage, thus allowing a partial relief by disallowing 10% of the addition. 2. Application of Enhanced Tax Rate under Section 115BBE: The second issue was the application of the enhanced tax rate under Section 115BBE for the unexplained cash credits. The assessee argued that the enhanced rate, introduced in December 2016, should not apply retrospectively to the transactions made before its enactment. The Tribunal noted that various benches have consistently held that the enhanced rate under Section 115BBE is not applicable for the assessment year 2017-18. Consequently, the Tribunal sided with the assessee, ruling that the enhanced tax rate should not apply to the unexplained cash credits for that assessment year. 3. Condonation of Delay in Filing the Appeal: The appeal also involved a delay of 74 days in filing, which the assessee attributed to not receiving the order through post or email and not regularly checking the ITBA portal. The Tribunal accepted the explanation, noting that the delay was neither intentional nor unreasonable, and condoned the delay to allow the appeal to be heard on merits. Conclusion: The Tribunal partially allowed the appeal, granting relief by disallowing only 10% of the addition under Section 68 and ruling against the application of the enhanced tax rate under Section 115BBE for the assessment year 2017-18. The decision reflects a balanced approach, acknowledging the assessee's explanations and the procedural challenges faced in the faceless assessment system.
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