BABAJI UDYOG,DELHI V. DCIT, DELHI

ITA 7958/DEL/2025

AI Insights

The case involves M/s Babaji Udyog, which appealed against the order of CIT(A)-29, New Delhi, concerning the assessment of unexplained cash credits amounting to Rs. 49,48,190 during the demonetization period. The primary legal contention was the treatment of these cash deposits under section 68 read with section 115BBE of the Income-tax Act, 1961. The Tribunal acknowledged the possibility of cash sales in the assessee's mustard oil business but noted the assessee's failure to satisfactorily prove the source of the cash deposits. Consequently, a 5% GP estimation on sales was deemed appropriate. Additionally, the Tribunal corrected the application of section 115BBE, directing that it applies only to transactions on or after 01.04.2017, following the Madras High Court's decision in a similar case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822719 (ITAT-DELHI)
• Duration Of Justice: 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 28-11-2025
• Other Referred Cases: SMILE Microfinance Ltd. v. ACIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Onus to prove; Gross profit estimation
• Section: 143(3); 68

Judgement Text

"1 ITA No. 7958/Del/2025 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER ITA No. 7958/Del/2025 Assessment Year: 2017-18 M/s Babaji Udyog, Plot No. 1, Khasra No. 3/1, Nangli Sakrawati Industrial Area, Nazafgarh, New Delhi-110043. PAN:AAHFB 6118 M Vs ACIT, Circle-43(1), New Delhi. APPELLANT RESPONDENT Assessee represented by Ms. Ruchika Gupta, CA Department represented by Shri Amit Shukla, Sr. DR Date of hearing 24.12.2025 Date of pronouncement 24.12.2025 O R D E R PER SATBEER SINGH GODARA, JM: This assessee’s appeal ITA no. 7958/Del/2025 for assessment year 2017-18 arises against CIT(A)-29, New Delhi’s order dated 16.09.2025 [Case No. CIT(A), delhi-15/10607/2019-20 – DR No. 247/71], in proceedings u/s 143(3) of the Income-tax Act, 1961, hereinafter referred to as the ‘Act’. Heard both the parties. Case file perused. 2. It transpires during the course of hearing that the assessee/appellant is aggrieved against both the learned lower authorities’ respective findings treating it’s cash deposits during demonetization amounting to Rs. 49,48,190/- as Printed from counselvise.com 2 ITA No. 7958/Del/2025 unexplained cash credits u/s 68 r.w.s. 115BBE of the Act, in assessment order dated 23.12.2019 & upheld in the lower appellate discussion. 3. That being the case, this tribunal finds from a perusal of the case records that the assessee is engaged in mustard oil wholesale and retail business wherein possibility of predominant cash sales in such an unorganized edible oil sector could not be altogether ruled out. The fact also remains that the assessee has not satisfactorily discharged its onus to prove the source of the impugned cash deposits to the entire satisfaction of both the learned lower authorities. Be that as it may, it is thus deemed appropriate in the larger interest of justice that a lump sum GP estimation of 5% in such regular business sales in the assessee’s hands is deemed as just and proper with a rider that the same shall not be treated as a precedent. Necessary computation shall follow as per law. Ordered accordingly. 4. So far as the assessee’s assessment u/s 115BBE is concerned, the revenue could hardly dispute that hon’ble Madras high court in SMILE Microfinance Ltd. v. ACIT in WP(MD) No. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) has already settled the issue that Section 115BBE applies on transactions on or after 01.04.2017 only. I, accordingly direct the Assessing Officer to finalize the consequential computation under normal provisions than u/s 115BBE of the Act in very terms. Ordered accordingly. Printed from counselvise.com 3 ITA No. 7958/Del/2025 5. This assessee’s appeal ITA No. 7958/Del/2025 is partly allowed in very terms. Order pronounced in open court on 24.12.2025. Sd/- (SATBEER SINGH GODARA) JUDICIAL MEMBER Dated: 29.12.2025. *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "