Unexplained cash deposits and amended tax rate provisions: partial relief granted where pre-amendment deposits could not be taxed under the revised rate.

Unexplained cash deposits in bank accounts were sustained only to the extent not supported by credible evidence, because the assessee's cash book and opening balance lacked independent verification, while relief was accepted for car sale proceeds and part of the deposits attributable to past and current savings. The addition was therefore deleted in part and upheld only for the unexplained balance. The amended section 115BBE was held applicable to the relevant assessment year but not to cash deposits already made before the amendment came into force on 15.12.2016. The amended rate could not be applied to pre-amendment transactions, and relief was granted on that issue.

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Issues: (i) whether the addition made on account of cash deposits in bank accounts as unexplained income was sustainable in full; (ii) whether the amended provision of section 115BBE could be applied to cash deposits made before the amendment date.

Issue (i): whether the addition made on account of cash deposits in bank accounts as unexplained income was sustainable in full.

Analysis: The assessee's cash book and opening cash balance were not supported by independent or verifiable evidence, and the explanatory entries were treated as uncorroborated and unreliable. At the same time, the record supported relief for the car sale proceeds and, on a reasonable appreciation of the material, part of the cash deposits could be accepted as explained from past and current savings.

Conclusion: The addition was not sustainable in full and was upheld only to the extent of the unexplained balance, with partial relief granted to the assessee.

Issue (ii): whether the amended provision of section 115BBE could be applied to cash deposits made before the amendment date.

Analysis: The amendment to section 115BBE was held to govern the relevant assessment year, but not transactions already completed before the amendment was brought into force. The amended rate could therefore not be fastened on deposits made prior to 15.12.2016.

Conclusion: The amended provision of section 115BBE was held inapplicable to the pre-amendment cash deposits, and the assessee succeeded on this issue.

Final Conclusion: The appeal succeeded in part, with partial deletion of the cash-deposit addition and relief from taxation under the amended rate provision for pre-amendment deposits.

Ratio Decidendi: An unexplained cash-deposit addition may be sustained only to the extent not supported by credible evidence, and an amended tax provision cannot be applied to completed transactions that occurred before the amendment came into force.

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