Cash Deposits during Demonetization: ITAT directs Normal 30 % Tax Rate citing S. 115BBE not Retrospective

The Income Tax Appellate Tribunal (ITAT) has directed that cash deposits made during demonetization should be taxed at the normal 30% rate, citing Section 115BBE of the Income Tax Act, and clarified that this provision is not retrospective. The tax authorities had sought to apply a higher tax rate and penalty on unexplained cash deposits made during the demonetization period. However, the ITAT held that Section 115BBE, which prescribes a higher tax rate for unexplained income, cannot be applied retrospectively to deposits made before its amendment. This ruling provides relief to taxpayers who made cash deposits during demonetization, ensuring that their income is taxed at the prevailing rates applicable at that time, provided the source is explained.