NIDESH JAIN,HYDERABAD V. ACIT, CIRCLE-12(1), HYDERABAD

ITA 1621/HYD/2025

AI Insights

Shri Nidesh Jain, a Chartered Accountant, appealed against the addition of Rs.20,65,000 to his income for the Assessment Year 2017-18, which was treated as unexplained cash deposits under section 68 read with section 115BBE of the Income Tax Act, 1961. The Assessing Officer had added this amount after Jain failed to satisfactorily explain the source of the cash deposits in his bank account. The Tribunal admitted additional evidence provided by Jain, which included summaries and reconciliations of bank statements and an affidavit from his father, explaining the cash management practices. The Tribunal found partial merit in Jain's explanations and reduced the addition by Rs.5,00,000 while sustaining the balance amount. Furthermore, the Tribunal corrected the tax rate applied to the addition from 60% to 30%, aligning with the legal provisions applicable for the transactions in question before April 1, 2017.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822313 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 18 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: 06-10-2025
• Other Referred Cases: National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC), S.M.I.L.E Microfinance Ltd. vs. ACIT W.P. (MD) No.2078 of 2020 and W.M.P. (MD) No.1742 of 2020 dated 19th November 2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: Y V BHANU NARAYAN RAO
• Keywords: Additional evidence; Reasonable cause
• Section: 143(3); 68

Judgement Text

" ITA No 1621 of 2025 Nidesh Jain Page 1 of 10 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ SMC‘ Bench, Hyderabad ŵी रिवश सूद,Ɋाियक सद˟ एवं ŵी मधुसूदन साविड़या लेखा सद˟ समƗ | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.1621/Hyd/2025 (िनधाŊरण वषŊ/Assessment Year: 2017-18) Shri Nidesh Jain Hyderabad PAN:AGTPJ4773C Vs. Assistant Commissioner of Income Tax Circle 12(1) Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: CA Y V Bhanu Narayan Rao राज̾ व Ȫारा/Revenue by:: Shri T. Venkanna, Sr. DR सुनवाई की तारीख/Date of hearing: 16/12/2025 घोषणा की तारीख/Pronouncement: 24/12/2025 आदेश/ORDER Per Madhusudan Sawdia, A.M.: This appeal is filed by Shri Nidesh Jain (“the assessee”), feeling aggrieved by the order passed by the ADDL/JCIT(A)-2 NOIDA (“First Appellate Authority”) dated 22.09.2025 for the A.Y.2017-18. 2. The assessee has raised the following grounds of appeal: Printed from counselvise.com ITA No 1621 of 2025 Nidesh Jain Page 2 of 10 3. The assessee has raised the following Additional ground: “1. Whether on the facts and in the circumstances of the case, the revenue is empowered to impose 60% tax under section 115BBE of the Act for transactions before 1.4.2017, Printed from counselvise.com ITA No 1621 of 2025 Nidesh Jain Page 3 of 10 especially for transactions that took place before demonetization?. It is prayed the above additional ground may be kindly admitted in the interest of justice”. 4. The Learned Authorized Representative (“Ld. AR”) submitted that additional grounds so raised is admissible in view of judgment rendered by the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC). The Learned Departmental Representative (“Ld. DR”) did not raise any objection for admission of the additional ground. The prayer for admission of additional ground is being admitted for adjudication in terms of Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 owing to the fact that objections raised in additional ground is legal in nature for which relevant facts are stated to be emanating from the existing records. 5. The brief facts of the case are that the assessee is an individual, employed as a Chartered Accountant. The assessee filed his return of income for the Assessment Year 2017–18 on 17.06.2017, declaring a total income of Rs.18,75,420/-. The case of the assessee was selected for scrutiny under CASS and accordingly a notice under section 143(2) of the Income Tax Act, 1961 (“the Act”) was issued by the Learned Assessing Officer (“Ld. AO”). During the course of assessment proceedings, the Ld. AO observed that the assessee had deposited cash of Rs.20,65,000/- in his ICICI Bank account during the year under consideration. When called upon to explain the source of the said cash deposits, the assessee submitted that the same represented past savings accumulated over a period of several years out of regular withdrawals from his bank account. The Ld. AO, not being Printed from counselvise.com ITA No 1621 of 2025 Nidesh Jain Page 4 of 10 satisfied with the explanation, treated the cash deposits as unexplained and made an addition of Rs.20,65,000/- under section 68 r.w.s. 115BBE of the Act. The assessment was completed under section 143(3) of the Act vide order dated 16.12.2019, determining the total income of the assessee at Rs.39,40,420/-. 6. Aggrieved with the order of the Ld. AO the assessee filed appeal before the Ld. CIT (A). The Ld. CIT(A) dismissed the appeal of the assessee, confirming the addition made by the Ld. AO. 7. Aggrieved with the order of the Ld. CIT (A), the assessee is in appeal before this Tribunal. The Ld. AR submitted that the assessee had filed a petition under Rule 29 of the ITAT Rules, 1963 seeking admission of additional evidence. It was submitted that the additional evidence does not introduce any new facts but merely explains and summarizes the material already available on record. It was submitted that the additional evidence is crucial for proper adjudication of the issue and deserves to be admitted in the interest of justice. 8. The Ld. AR submitted that the only issue arises out of the grounds of appeal filed by the assessee is the addition of Rs.20,65,000/- made by the Ld. AO under section 68 r.w.s. 115BBE of the Act. The Ld. AR further submitted that the assessee is a salaried professional, consistently assessed to tax for more than ten years. The Ld. AR submitted that the assessee was in the habit of expending more without making any savings for future. Therefore, to develop a habit of saving, the assessee’s father used to instruct the assessee to withdraw cash periodically Printed from counselvise.com ITA No 1621 of 2025 Nidesh Jain Page 5 of 10 and hand over the same to him for safe keeping. In support of the explanation, the assessee filed an affidavit from his father confirming that the cash withdrawn by the assessee from time to time was kept with him. It was submitted that the assessee generally used credit cards for day-to-day expenses and, therefore, substantial cash withdrawals done in the earlier years were not immediately spent. The Ld. AR further submitted that during the year under consideration, the assessee purchased a residential house, partly financed through Bajaj Finance Limited, and the balance amount towards purchase consideration and registration expenses was met by depositing the accumulated cash into the bank account out of the cash kept with the father of the assessee. Accordingly, the Ld. AR prayed before the Bench to delete the addition of 20,65,000/-. 9. The Ld. AR further submitted that the issue arises out of the additional ground of the assessee is the alternate submission of the assessee regarding applicability of the rate of tax under section 115BBE of the Act. The Ld. AR submitted that the case of the assessee is related to A.Y 2017-18 for which tax rate of 30% is applicable under section 115BBE of the Act. However, the Ld. AO has levied the tax rate @ 60%. The Ld. AR relied upon the decision of the Hon’ble Madras High Court in the case of S.M. I. L. E Microfinance Ltd. vs. ACIT W.P. (MD) No.2078 of 2020 and W.M.P. (MD) No.1742 of 2020 dated 19th November 2024 and submitted that for Assessment Year 2017–18, tax could be levied only at 30% and not at 60%. 10. Per contra, the Ld. DR strongly opposed the admission of additional evidence and submitted that the assessee failed to Printed from counselvise.com ITA No 1621 of 2025 Nidesh Jain Page 6 of 10 produce the same before the lower authorities without any reasonable cause. On merits, the Ld. DR submitted that most of the cash withdrawals were in small denominations and were normally meant for household expenditure. Therefore, the explanation that such cash was accumulated over several years is not believable. He accordingly relied on the orders of the lower authorities. 11. We have heard the rival submissions and perused the material available on record including the case law relied upon. At the outset, we find that the additional evidence sought to be admitted consists of summaries and reconciliations prepared from bank statements which were already on record before the lower authorities, along with an affidavit of the assessee’s father explaining the custody of cash. We further find that these documents do not bring on record any new source of income or fresh factual matrix but merely seek to explain the assessee’s spending pattern and cash management in a more coherent manner. Considering that the issue before us relates to appreciation of factual explanation and human probabilities, and that the additional evidence is necessary for proper adjudication of the appeal, we are inclined to admit the same in the interest of justice. Accordingly, the additional evidence filed by the assessee is admitted. 12. As regards the first issue of the assessee regarding the addition of Rs. 20,65,000/- under section 68 r.w.s. 115BBE of the Act, we have gone through the cash-flow summaries, withdrawal statements, and the affidavit of the assessee’s father filed as additional evidence. As submitted by the Ld. AR, in order to Printed from counselvise.com ITA No 1621 of 2025 Nidesh Jain Page 7 of 10 develop a habit of saving, the assessee’s father used to instruct the assessee to deposit some cash every year with him. If this explanation is accepted in entirety, there ought to be a broadly consistent and identifiable pattern of cash withdrawals over the years. In this regard, we have gone through summary of cash withdrawals filed by the assessee as additional evidence which is to the following effect: 13. On perusal of the above, we find that for Financial Year 2010–11, the assessee had withdrawn cash of Rs.10,50,700/-, which is significantly higher and not in consonance with the withdrawal pattern in other years. This abnormal spike weakens the assessee’s claim of uniform and systematic cash accumulation over the years. Further, the explanation that cash was retained either by the assessee or with his father for several years does not fully align with normal human conduct. At the same time, it is also undisputed that the assessee is a regularly employed professional, consistently assessed to tax, and it would be unrealistic to hold that he had no cash in hand at all. Taking into account the totality of circumstances, including the admitted additional evidence, the professional background of the assessee, Printed from counselvise.com ITA No 1621 of 2025 Nidesh Jain Page 8 of 10 and the inconsistencies noted in the withdrawal pattern, we are of the considered view that partial relief is warranted. Accordingly, we direct the Ld. AO to allow a benefit of Rs.5,00,000/- towards reasonable cash in hand. Thus, the addition of Rs.20,65,000/- is reduced by Rs.5,00,000/-, and the balance addition of Rs.15,65,000/- is sustained. 14. As regards the rate of tax applicable under section 115BBE of the Act, we find merit in the contention of the Ld. AR. In this regard we have gone through para nos.16 and 17 of the order of the Hon’ble Madras High Court in the case of S.M.I.L.E Microfinance Ltd. vs. ACIT (Supra), which is to the following effect: Printed from counselvise.com ITA No 1621 of 2025 Nidesh Jain Page 9 of 10 15. On perusal of the above, we find that the Hon’ble High Court has categorically held that the amendment enhancing the rate of tax from 30% to 60% is applicable for the transactions entered w.e.f. 1st April 2017 and not prior to the said cutoff date. Printed from counselvise.com ITA No 1621 of 2025 Nidesh Jain Page 10 of 10 Since the year under consideration is Assessment Year 2017–18, and the transactions has been entered before 1st April 2017, the sustained addition is liable to be taxed only at the rate of 30% under section 115BBE of the Act. We accordingly direct the Ld. AO to apply tax at 30% only under section 115BBE of the Act for the A.Y under consideration. 16. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the Open Court on 24th December 2025. Sd/- Sd/- (RAVISH SOOD) JUDICIAL MEMBER (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER Hyderabad, dated 24th December 2025 Vinodan/sps Copy to: S.No Addresses 1 Shri Nidesh Jain, Flat No.501, Manbhum Avalon, 10-4-15 to 18, 20 to 22 Tarakarama Nagar, East Marredpally, Secunderabad 500026 2 Assistant Commissioner of Income Tax Circle 12(1) Aayakar Bhavan, Basheerbagh, Hyderabad 500004 3 Pr. CIT – Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order Printed from counselvise.com "