Section 115BBE of Income Tax Act Applies on Transactions On or After 01.04.2017 Only: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi, held that the provisions of Section 115BBE of the Income Tax Act, 1961, are applicable only to transactions made on or after 01 April 2017. Accordingly, in appeals concerning additions made on account of cash deposits treated as unexplained money under Section 69A, the Tribunal examined the applicability of Section 115BBE and ruled that it could not be invoked retrospectively for earlier assessment years.

While the Tribunal recognized that the Revenue could not conclusively establish its stand, it also noted that the assessees failed to reconcile the deposits with precision. To balance both sides, the bench sustained lump sum additions of ₹10 lakhs and ₹5 lakhs, respectively, directing that the same shall not be treated as precedent.

The appeals were filed by the Deputy Commissioner of Income Tax, Central Circle-20, New Delhi (DCIT), against Resoursys Telecom and its related individual, Raghav Bansal, for the assessment year 2019-20. The Assessing Officer (AO) had treated cash deposits of ₹3,55,38,000 in the case of Resoursys Telecom and ₹1,46,02,000 in the case of Raghav Bansal as unexplained money.

These additions were made during assessment proceedings under Section 143(3) of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals)-27 had deleted the additions, prompting the Revenue to approach the Tribunal.

Appearing for the Department, Senior Departmental Representative, Anurag S. Daria argued that the Assessing Officer had rightly treated the deposits as unexplained money since the assessees failed to provide credible evidence or reconcile the sources of such large sums.

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It was contended that the explanation furnished did not sufficiently establish that the deposits originated from regular business activities. The Revenue, therefore, sought the restoration of the additions.

Appearing for the assessees, Pramod Jain, Chartered Accountant, and Mukul Gupta, Advocate, submitted that the deposits represented genuine business sales from retail communication and related activities. They said that all relevant details and explanations were furnished before the authorities, and importantly, the AO had neither rejected the books of accounts under Section 145(3) of the Income Tax Act, 1961, nor disturbed the entries in the profit and loss account.

Therefore, they urged that the deletion of the additions by the Commissioner of Income Tax (Appeals) was justified.

The bench comprising Judicial Member Satbeer Singh Godara and Accountant Member Naveen Chandra observed that neither the Revenue nor the assessees could establish their case conclusively. While the Revenue could not dismiss the business explanation, the assessees failed to reconcile the cash deposits with specificity before the Assessing Officer.

The Tribunal further pointed out that the Assessing Officer had neither invoked Section 145(3) of the Income Tax Act, 1961, to reject the books of accounts, nor disputed the entries in the profit and loss statements, thereby reinforcing the credibility of the explanation that the deposits reflected genuine business receipts.

The Tribunal held that lump sum additions of ₹10 lakhs in the case of Resoursys Telecom and ₹5 lakhs in the case of Raghav Bansal would suffice.

It further clarified that these additions shall not serve as precedent.

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