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Judgment
This assessee’s appeal for Assessment Year 2017-18 arises against the Commissioner of Income Tax(Appeals)/National Faceless Appeal Centre (for short, ‘CIT(A)/NFAC’), Delhi’s DIN & order No. ITBA/NFAC/S/250/2025-26/1084867656(1), dated 16.01.2026, involving proceedings u/s 143(3) of the Income Tax Act, 1961; hereinafter referred to as, “the Act”.
Heard both the parties at length. Case file perused.
It transpires during the course of hearing that the assessee/appellant herein raises his twin substantive grounds inter alia challenging both the learned lower authorities’ action, assessing his cash deposits during demonetization amounting to Rs. 85,22,500/- as unexplained u/s 68 r.w.s. 115BBE followed by section 40A(3) disallowance of cash purchases to the tune of Rs. 1,99,63,810/- in assessment order dated 10.12.2019, as upheld in the lower appellate discussion.
Both the parties vehemently reiterate their respective stands against and in support of both the aforesaid issues. Coming to the assessee’s cash deposits, there does not appear to be much a dispute between the parties that he is admittedly engaged in country liquor business predominantly serving rural strata of the society wherein possibility of the same representing cash sales in such a segment could not be altogether ruled out. It is further made clear as a matter of abundant caution that both the learned lower authorities have very fairly not rejected his books of accounts treating these cash deposits as regular business sales although he has failed to plead and prove the same in the entirety in both the lower proceedings. Faced with this situation and in the larger interest of justice, we deem it appropriate to conclude that a lumpsump addition of Rs. 3 lakhs only shall cover the assessee’s all short-falls with a rider that the same shall not be treated as a precedent. He gets relief of Rs. 82,22,500/- regarding the above former addition in other words.
Learned counsel quotes S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No.2078 of 2020 & 1742 of 2020, dated 19.11.2024 (Madras) wherein their lordship has settled the issue that the impugned statutory provision of section 115BBE would come into effect on the transaction done on or after 01.04.2017. The assessee shall be assessed under “normal” provisions therefore.
The very analogy ought to be followed regarding the assessee’s latter substantive ground challenging the impugned section 40A(3) disallowance of cash purchases of the relevant liquor stock as well what all he appears to have done is to utilise his regular business sales in making cash purchases from the authorised distributors duly approved by the state government. Deleted accordingly.
No other ground or argument has been pressed before us.
This assessee’s appal is partly allowed in above terms
Order Pronounced in the Open Court on 06.07.2026.