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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the cash deposits made during the demonetization period were liable to be treated in full as unexplained money, and whether the addition under section 69A was to be taxed at the enhanced rate under section 115BBE.
Analysis: The cash book for the relevant years showed some cash availability, including rental income already reflected in the return, but the withdrawals and drawings were found to be inconsistent and insufficient to fully explain the entire deposits. The pattern of repeated and odd cash withdrawals created doubt as to continued availability of the earlier withdrawn cash, while the household drawings were also considered too low. In these circumstances, a reasonable estimate was adopted and the addition was restricted to 50% of the disputed deposits. On the rate of tax, the enhanced rate under section 115BBE was held inapplicable for the assessment year involved, following the view that the higher rate applied only from assessment year 2018-19 onwards.
Conclusion: The addition was restricted to Rs. 11,49,000 as unexplained cash under section 69A of the Income-tax Act, 1961, and it was directed to be taxed at the maximum marginal rate without application of the enhanced 60% rate under section 115BBE.
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