GAUTAMBHAI NANSINH CHAUHAN,ANAND V. THE ITO, WARD-1(3)(1), PETLAD

ITA 711/AHD/2025

AI Insights

The case involves Gautambhai Nansinh Chauhan, an individual resident of Khododhi, Gujarat, who was appointed as a Service Delivery Partner by SBI through its technology partner, NICT Technologies Pvt. Ltd. The assessee facilitated banking services in a remote area, including cash withdrawals and deposits. The Income Tax Department issued a notice under section 148 based on substantial cash withdrawals noted in the assessee's bank account. The Assessing Officer (AO) added the amount of Rs. 39,83,841 as unexplained under section 69A of the Act, which was upheld by the CIT(A). The Tribunal, however, found that the assessee had provided a plausible explanation and documentation supporting the legitimacy of the withdrawals, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717624 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2019-2020
• Appeal Filed On: 01-04-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Assessee Lawyers: TEJ SHAH
• Keywords: Reassessment proceedings
• Section: 147; 148; 142(1)

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘SMC’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD ]BEFORE MS.SUCHITRA R. KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER ITA No.711 /Ahd/2025 Asstt.Year : 2019-2020 Gautambhai Nansinh Chauhan At PO : Khododhi Ta., Khambhat Dist. Anand 388 610 PAN : ATSPC 8337 M Vs. ITO, Ward-1(3)(1) Petlad. (Applicant) (Responent) Assessee by : Shri Tej Shah, AR Revenue by : Shri Amit Pratap Singh, Sr.DR सुनवाई क तारीख/Date of Hearing : 29/07/2025 घोषणा क तारीख /Date of Pronouncement: 12/08/2025 आदेश आदेश आदेश आदेश/O R D E R PER MAKARAND V.MAHADEOKAR, AM: This appeal by the assessee is directed against the appellate order dated 13.03.2025 passed under section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] , for the assessment year 2019–20, arising out of the assessment order dated 28.02.2024 passed by the Assessment Unit, Income Tax Department [hereinafter referred to as “Assessing Officer or AO”] under section 147 read with section 144B of the Act. 2. Facts of the Case 2.1 The assessee is an individual and a resident of village Khododhi, Khambhat Taluka, District Anand, Gujarat. For the relevant assessment Printed from counselvise.com ITA No.711/Ahd/2025 2 year 2019–20, the assessee did not file return of income under section 139(1). Based on information received through the Insight Portal indicating substantial cash withdrawals amounting to Rs.39,83,841/- during the financial year 2018–19, a notice under section 148 was issued on 29.04.2023. 2.2 In response to the said notice, the assessee filed return of income declaring total income of Rs.1,03,100/-, including commission income from NICT Technologies Pvt. Ltd., interest on deposits, and other receipts. The Assessing Officer observed the following transactions based on third-party data and bank statements: Nature of Transaction Source Amount (Rs.) Interest on deposits (other than securities) Bank of Baroda 18,112/- Cash deposits in SB account Bank of Baroda 52,800/- Cash withdrawals from SB account Bank of Baroda 39,83,841/- 2.3 During the reassessment proceedings, notices under section 142(1) were issued on various dates calling for explanation regarding the source and nature of the high-value cash withdrawals. The assessee responded on 08.09.2023, submitting that he was appointed as an authorised agent of SBI’s Customer Service Centre (Grahak Seva Kendra) through its technology partner NICT Technologies Pvt. Ltd., and was providing basic banking services to residents of the village and surrounding areas. Since the nearest SBI branch was located about 20 km away at Khambhat, he operated via a Bank of Baroda account to facilitate withdrawals. He maintained a cash register and ledger to account for amounts paid to SBI customers. In addition, he claimed to be engaged in cattle trading, wherein the purchasers of cattle would deposit amounts into his account (often availing loans), and he would withdraw cash to pay to cattle sellers. 2.3 The AO, however, observed that there was no evidence of such cash inflows being credited to the assessee’s bank accounts commensurate with the cash withdrawals. Further, the assessee failed to produce any Printed from counselvise.com ITA No.711/Ahd/2025 3 supporting documentation, such as confirmations from parties, loan statements, invoices, or books substantiating the claimed cattle business. On this basis, the AO concluded that the cash withdrawals from Bank of Baroda were unexplained, and proceeded to make an addition of Rs.39,83,841/- under section 69A of the Act, taxing it under section 115BBE, and initiated penalty proceedings under section 271AAC. 2.4 The assessee filed an appeal before the CIT(A). Before the CIT(A) the assessee reiterated the factual background that he was engaged in CSC operations as a service delivery partner for SBI, and withdrew cash for disbursement to account holders based on Aadhaar-authenticated instructions. He also relied on the explanation that he was involved in the business of buying and selling cattle and needed cash for such transactions. In support, he submitted a copy of the cash register, bank statements, and the profit and loss account and balance sheet for F.Y. 2018–19. He contended that the AO had accepted his book results and that the cash withdrawals were duly reflected therein. It was argued that there was no rejection of books of account, and hence the addition under section 69A was not tenable. 2.5 The CIT(A), after reciting the facts and reiterating the AO’s findings, noted that although the assessee filed submissions in the assessment proceedings and the appellate stage, no credible, independent documentary evidence was furnished in support of the cattle trading business or cash movement vis-à-vis SBI customer disbursements. It was further recorded in para 5.2 of the appellate order that the appellant did not file any substantial written submission or supporting documents at the appellate stage to rebut the addition. On the basis of this reasoning, the addition of Rs.39,83,841/- under section 69A was confirmed by the CIT(A), and the appeal of the assessee was dismissed in full. 3. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal: Printed from counselvise.com ITA No.711/Ahd/2025 4 1. That the Ld. CIT(A) erred in law and in the facts of the case in confirming the order of the AO in making addition of Rs. 39,83,841/-u/s 69A of the act. 2. That the Ld. CIT(A) erred in law and in the facts of the case in confirming the order of the AO passing order exparte and without considering the evidence filed before it. 4. During the course of hearing before us, the learned Authorised Representative (AR) of the assessee reiterated the factual matrix and contended that both the Assessing Officer and the CIT(A) failed to appreciate the true nature of the assessee’s operations and the evidence furnished on record. The AR drew our attention to the detailed reply filed by the assessee under section 148A(b) of the Act, which forms part of the paper book at page nos. 4 to 6, wherein the assessee had explained in detail the scheme of operation of the Customer Service Centre (CSC) authorised by the State Bank of India (SBI) and managed through its technology partner, NICT Technologies Pvt. Ltd. It was submitted that the assessee was operating as a Service Delivery Partner (SDP) of SBI under a formal agreement (paper book page nos. 171 to 189) and was facilitating small-ticket banking services including cash withdrawal, deposit, account seeding, and remittance for villagers and pensioners in a remote area where no nearby SBI branch was available. For operational convenience, the assessee used a Bank of Baroda account at Badalpur, situated about 4 km from the village, to effect cash disbursements after receiving funds in his SBI account. 4.1 The AR submitted that the bank statements of multiple accounts (at page nos. 7 to 170 and 269 to 281), CSC transaction register (pages 195 to 221), and sample receipts (page 194) were all submitted to demonstrate that there were matching credits from SBI customers before each withdrawal, the cash withdrawn was used for disbursing to respective SBI account holders, and the assessee maintained a duly signed physical register, later endorsed by SBI during verification. It was further pointed out that the CIT(A), NFAC, in the impugned order dated 13.03.2025, did not adjudicate these factual submissions on merits and erroneously recorded that “no substantial written submission or documentary evidence” was filed in Printed from counselvise.com ITA No.711/Ahd/2025 5 support of the grounds of appeal, despite the entire compilation (running into 398 pages) being on record. 5. The learned Departmental Representative (DR), on the other hand, relied upon the findings recorded by the Assessing Officer as well as the CIT(A). 6. We have carefully considered the rival submissions and perused the material available on record, including the assessment order, the appellate order passed by the CIT(A), as well as the paper book filed by the assessee. The short issue for consideration in the present appeal is whether the cash withdrawals aggregating to Rs. 39,83,841/- from the assessee’s savings account with Bank of Baroda during F.Y. 2018–19 could be treated as unexplained money under section 69A of the Act, and whether the authorities below were justified in making and confirming the impugned addition. 6.1 It is not in dispute that the assessee was appointed by State Bank of India (SBI) through its technology partner NICT Technologies Pvt. Ltd. as a Customer Service Centre (CSC) operator in village Khododhi, District Anand, Gujarat. A copy of the CSC agreement and related documents placed at page nos. 171–189 of the paper book clearly establish that the assessee was duly authorised to carry out banking functions such as withdrawal and deposit of cash, Aadhaar seeding, passbook printing, and other basic services on behalf of SBI for customers residing in remote rural areas. The arrangement was operational for several years, including F.Y. 2018–19. In the course of providing such services, the assessee had opened and operated accounts with SBI and Bank of Baroda, as confirmed by the bank statements placed on record. It has been explained by the assessee that, since the nearest SBI branch was about 20 km away (Khambhat), he maintained a Bank of Baroda account at Badalpur (which was only 4 km from his location) and utilised the same for withdrawing cash to be paid to SBI customers whose instructions were authenticated via Aadhaar-based digital approvals. The assessee has placed on record a CSC Cash Printed from counselvise.com ITA No.711/Ahd/2025 6 Transaction Register (pages 195–221 of the paper book), along with sample receipts, and has explained the flow of funds, credit in the SBI account followed by transfer to Bank of Baroda and subsequent cash withdrawal. The assessee also submitted that SBI itself required him to maintain a physical register containing details of each transaction along with signatures of recipients, which was submitted during surprise verification visits by SBI officials. The explanation furnished by the assessee has not been rebutted by any contrary material or disproved by the revenue authorities. 6.2 The Assessing Officer, while making the addition under section 69A, did not dispute the genuineness of the bank accounts or the existence of the CSC arrangement. He also did not reject the assessee’s books of account or call for any further third-party verification. The addition appears to be made solely on the ground that the assessee failed to explain the source of cash withdrawals, and that there were no matching deposits immediately preceding such withdrawals. The CIT(A), in turn, confirmed the addition stating that no documentary evidence was furnished during appellate proceedings. 6.3 In our considered view, this reasoning is not sustainable in law. Cash withdrawals from disclosed bank accounts, duly reflected in the books of account, cannot per se be treated as unexplained money unless the revenue brings on record material to show that such withdrawals were not made for business purposes or were diverted for unaccounted activities. The statutory presumption under section 69A applies only to money found to be owned by the assessee, not to bank withdrawals which are already accounted for and explained. Provisions of section 69A confer a discretion on the Assessing Officer, and the mere fact that an explanation is not satisfactory does not automatically justify the addition unless there is independent material to hold that the amount represents income. Where entries are made in the regular books of account and are not disbelieved, the burden shifts to the revenue to prove otherwise. In our opinion, Printed from counselvise.com ITA No.711/Ahd/2025 7 withdrawals from bank accounts cannot be taxed as unexplained merely because matching cash deposits are not found, when the books of account are accepted and there is no evidence of suppression. 6.4 In the present case, the assessee has not only offered a plausible explanation backed by documentation but has also demonstrated the business exigency under which such transactions were carried out. The assessee’s activity was part of a regulated system supported by SBI under the Digital India Financial Inclusion initiative, and the flow of funds, even if involving multiple accounts, was duly explained. The revenue has not brought any evidence to show that the cash withdrawals were not used for legitimate CSC-related payouts or were diverted for any undisclosed purposes. We also find that the books of account were not rejected and the assessee’s income was accepted as per the return. The CSC cash register and allied documentation were maintained under a system prescribed by SBI and not found to be unreliable. In such a factual matrix, the impugned addition lacks foundational support either in fact or in law. 6.5 In view of the above discussion, we are of the considered opinion that the addition of Rs.39,83,841/- made under section 69A of the Income-tax Act, 1961 and confirmed by the learned CIT(A), is not sustainable. Accordingly, the same is directed to be deleted. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 12th August, 2025 at Ahmedabad. Sd/- Sd/- (SUCHITRA R. KAMBLE) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, dated 12/08/2025 vk* Printed from counselvise.com "