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Issues: (i) Whether the cash deposits treated as unexplained under section 68 of the Income-tax Act, 1961 could be sustained in full; (ii) whether section 115BBE of the Income-tax Act, 1961 could be applied to the assessee's assessment for the relevant period.
Issue (i): Whether the cash deposits treated as unexplained under section 68 of the Income-tax Act, 1961 could be sustained in full.
Analysis: The assessee was engaged in wholesale trading of grocery and provision items and had declared substantial turnover. In the facts and circumstances, the cash deposits during the demonetisation period were treated as linked to business turnover and accumulated savings, though not fully explained before the lower authorities. The Tribunal therefore found that a full addition was not justified and that a restricted addition would meet the ends of justice.
Conclusion: The addition was restricted to Rs. 1,00,000, giving substantial relief to the assessee.
Issue (ii): Whether section 115BBE of the Income-tax Act, 1961 could be applied to the assessee's assessment for the relevant period.
Analysis: The Tribunal applied the view that the amended statutory provision under section 115BBE would operate only for transactions on or after 01.04.2017. Since the transaction period predated that effective date, the special regime could not be applied to the assessee for the assessment in question.
Conclusion: The assessee was directed to be assessed under the normal provisions of law and not under section 115BBE.
Final Conclusion: The appeal succeeded in part, with the addition substantially curtailed and the special taxation provision held inapplicable for the relevant transaction period.
Ratio Decidendi: Where cash deposits are found to have a plausible nexus with declared business turnover and accumulated savings, the addition under section 68 may be restricted on estimation; the special regime under section 115BBE applies only from its stated effective date and cannot be invoked for earlier transactions.
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