ARPIT FASHIONS PRIVATE LIMITED,PUNJABI BAGH EXTN. V. INCOME TAX OFFICER WARD - 3(2), NEW DELHI, NEW DELHI

ITA 919/DEL/2024

AI Insights

The case involves Arpit Fashions Pvt Ltd appealing against the order of the NFAC, Delhi, which taxed the company under section 115BBE for the A.Y 2017-18, despite the section being applicable from A.Y 2018-19 onwards. The company contested the tax levied on cash deposits during demonetization, which were added under section 68 of the Income Tax Act. The Tribunal found that while the company had partially explained the source of the cash deposits, a small unexplained amount remained, justifying a minor addition to income. The Tribunal also referenced a Madras High Court decision that supported the company's position on the applicability of section 115BBE.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 397007 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Other Referred Cases: NTPC 229 ITR 383, Smile Micro Finance Ltd Vs. ACIT [WP No. 2078 of 2020]
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH TIWARI
• Assessee Lawyers: M.P. RASTOGI
• Section: 68

Judgement Text

"ITA No. 919/DEL/2024 [A.Y 2017-18] Arpit Fashions Pvt Ltd Vs. The I.T.O Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘A’ BENCH, NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 919/DEL/2024 [A.Y 2017-18] Arpit Fashions Pvt Ltd Vs. The I.T.O 18/17, 3rd Floor, Ward -3(2) Punjabi Bagh Extension New Delhi New Delhi PAN: AAKCA 6484 B (Appellant) (Respondent) Assessee By : Shri M.P. Rastogi,Adv Shri Deepak Malik Adv Department By : Shri Rajesh Tiwari, Sr. DR Date of Hearing : 22.05.2025 Date of Pronouncement : 28.05.2025 ORDER PER NAVEEN CHANDRA, AM :- This appeal by the assessee is directed against the order of the ld. NFAC, Delhi dated 16.02.2024 for A.Y 2017-18. ITA No. 919/DEL/2024 Arpit Fashion [A.Y 2017-18] Page 2 of 5 2. At the very outset, the ld. counsel for the assessee submitted that a petition for admission of additional ground of appeal has been filed which reads as under: “That the provisions of section 115BBE is applicable from the A.Y 2018-19 onwards and consequently the levy of tax u/s 115BBE for the A.Y 2017-18 by the Assessing Officer is arbitrary, unjust and deserves to be deleted.” 3. It is the say of the ld. counsel for the assessee that the additional ground is a legal and jurisdictional ground which does not require any fact for its adjudication other than the facts already available on record. It is also the say of the ld. counsel that since the additional ground goes to the root cause of the case, the same may be admitted and adjudicated upon in view of the judgment of the Hon'ble Supreme Court in the case of NTPC 229 ITR 383 and in the judgment in the case of Smile Micro Finance Ltd Vs. ACIT [WP No. 2078 of 2020], the Hon'ble Madras High Court has held that section 115BBE is applicable only from A.Y 2018- 19. 4. The fact of the matter in the instant case is the cash deposits during the period of demonetization added u/s 68 of the Income Tax Act. The AO has sought to tax the cash deposited in the bank of Rs 33,75,933/- which is stated to be out of withdrawals and cash deposited out of disclosure under IDS 2016, invoking the provisions of section 115 ITA No. 919/DEL/2024 Arpit Fashion [A.Y 2017-18] Page 3 of 5 BBE of the Act. The AO has also rejected the trading result and adopted a G.P. of 9% instead of 7.20% declared by the assessee resulting into addition of Rs 16,17,387/-. The CIT(A) confirmed the amount of addition u/s 68 but allowed the appeal of the assessee with regard to the GP addition. 5. Per contra, the ld. DR heavily relied upon the orders of the authorities below. 6. We have heard the rival submissions and have perused the relevant material on record. In the instant case, we find that the assessee has attempted to prove the entire source of cash deposit during demonetization as cash sales and cash withdrawals. Although the assessee, prima facie, appears to have discharged its onus of explaining source of cash deposit, it’s contentions to prove the source, hardly deserves to be accepted in entirety especially when the AO found negative cash balance in the cash book. On the other hand, the Revenue’s endeavour to disbelieve the assessee’s contention that cash deposit has been made out of sales and disclosure under IDS scheme, cannot be fully justified. In this factual matrix, there is some element of failure to explain some of the cash deposit, cannot be ruled out. Be that as it may, it is deemed appropriate, in larger interest of justice, that a lump-sum addition of ₹ 1 lakh only would be just and proper with ITA No. 919/DEL/2024 Arpit Fashion [A.Y 2017-18] Page 4 of 5 a rider that the same shall not be treated as a precedent, so as to cover all loopholes. The ground of appeal no 1 to 6 is partly allowed. 8. In so far as assessee's levy of tax at a higher rate under section 115BBE of the Act is concerned, we find that the Madras High Court in the Writ petition in the case of S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No.2078 of 2020 & 1742 of 2020, dated 19.11.2024 (Madras) has held that the impugned statutory provision would come into effect on the transaction done on or after 01.04.2017 only. Accordingly, we direct the AO to tax the addition under normal provisions of tax and not under the provisions of 115BBE. The additional ground raised by the assessee is allowed. 9. In the result, appeal of assessee in ITA No. 919/DEL/2024 is partly allowed. Order pronounced in open court on 28.05.2025. Sd/- Sd/- [SATBEER SINGH GODARA] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 28th MAY, 2025. VL/ ITA No. 919/DEL/2024 Arpit Fashion [A.Y 2017-18] Page 5 of 5 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) Asst. Registrar, 5. DR ITAT, New Delhi Sl No. PARTICULARS DATES 1. Date of dictation of Tribunal Order 2. Date on which the typed draft Tribunal Order is placed before the Dictation Member 3. Date on which the typed draft Tribunal Order is placed before the other Member 4. Date on which the approved draft Tribunal Order comes to the Sr. P.S./P.S. 5. Date on which the fair Tribunal Order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr. P.S./P.S 7. Date on which the final Tribunal Order is uploaded by the Sr. P.S./P.S. on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal Order 9. Date of killing off the disposed of files on the judiSIS portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes for xerox 12. The date on which the file goes for endorsement 13. The date on which the file goes to the Superintendent for checking 14. The date on which the file goes to the Assistant Registrar for signature on the Tribunal order 15. Date on which the file goes to the dispatch section 16. Date of Dispatch of the Order "