INCOME TAX OFFICER, FARIDABAD V. AMIT SINGLA, FARIDABAD

ITA 4017/DEL/2025

AI Insights

The case involves Amit Singla, who was assessed for the Assessment Year 2018-19 by the Income Tax Officer (ITO) for high-value cash deposits. The ITO made an addition of Rs.4,76,24,755 under section 68 of the Income Tax Act, treating it as undisclosed income. Amit Singla appealed this decision, and the CIT(A) partly allowed the appeal, leading to the deletion of the addition. The revenue challenged this decision, leading to the current appeal. The Tribunal examined the nature of the business conducted by Amit Singla, which involved acting as a Customer Service Point for banks, handling cash deposits and withdrawals, and found that the cash deposits were part of legitimate business transactions.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841415 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2026
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2018-2019
• Appeal Filed On: 20-06-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: SHYAM SUNDER MANGLA
• Keywords: Set aside; Rejection of books of accounts; Income from undisclosed sources; Principle of natural justice; Procedural lapse
• Section: 143(3); 142(1); 68; 37(1)

Judgement Text

"P a g e | 1 ITA No.4017/Del/2025 CO No.185/Del/2025 Amit Singla (AY: 2018-19) IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, DELHI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER & SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 4017/Del/2025 (Assessment Year: 2018-19) Income Tax Officer New CGO Complex, NH-IV, Faridabad, Haryana – 121001 Vs. Amit Singla FCA 904, Yadav Colony, Mohna Road, Faridabad Haryana – 121004 \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: AKEPA0535E Appellant .. Respondent C.O. No. 185/Del/2025 (Arising out of ITA No. 4017/Del/2025) (Assessment Year: 2018-19) Amit Singla FCA 904, Yadav Colony, Mohna Road, Faridabad Haryana – 121004 Vs. Income Tax Officer New CGO Complex, NH-IV, Faridabad, Haryana – 121001 \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: AKEPA0535E Appellant .. Respondent Assessee by : Sh. Shyam Sunder Mangla, CA Department by : Sh. Manish Gupta, Sr. DR Date of Hearing 26.11.2025 Date of Pronouncement 23.02.2026 Printed from counselvise.com P a g e | 2 ITA No.4017/Del/2025 CO No.185/Del/2025 Amit Singla (AY: 2018-19) O R D E R PER VIMAL KUMAR, JM: The appeal and cross objection filed by the revenue and assessee are against order dated 13.03.2025 of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, (NFAC), Delhi (hereinafter referred to as ‘The CIT(A)’) u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of assessment order dated 22.02.2021 of Ld. AO/NFAC, (hereinafter referred to as ‘Ld. AO’), u/s 143(3) r.w.s 143(3A) & 143(3B) of the Act for AY: 2018-19. 2. Brief facts of the case are that assessee filed return of income on 22.07.2018 declaring gross income of Rs.4,12,748/-. The case was selected for limited scrutiny assessment for “high value cash deposits reported in SFT (Business cases)”. Notices u/s 143(2) dated 28.09.2019 was issued which was partially complied by the assessee. The detailed questionnaire u/s 142(1) dated 02.12.2019 along with reminders dated 26.02.2020 & 22.12.2020 were issued for submission of documentary evidence along with the explanation assessee was issued show cause notice dated 04.02.2021. The assessee filed Printed from counselvise.com P a g e | 3 ITA No.4017/Del/2025 CO No.185/Del/2025 Amit Singla (AY: 2018-19) his reply dated 05.02.2021. On completion of proceedings ld. AO vide order dated 22.02.2021 made addition of Rs.4,76,24,755/- u/s 68 of the Act. 3. Against the order dated 22.02.2021 of Ld. AO the assessee filed appeal before the ld. CIT(A) which was partly allowed vide order dated 13.03.2025. 4. Being aggrieved revenue filed above captioned appeal and assessee filed cross objection. 5. ITA No.4017/Del/2025 mentions following grounds: “i. Whether the impugned Order given by the Ld. CIT (A) is perverse both on the law and the facts of the case. ii. Whether the impugned Order given by the Ld. CIT (A) is perverse both on the law and the facts by ignoring the remand report submitted by this office and not considered while passing the judgment. iii. Whether the impugned Order given by the Ld. CIT (A) is perverse both on the law and the facts by not carrying out independent enquiries as per power vested in the said authority as per provisions of the Income Tax Act, 1961 and given decision on assumptive basis rather than appreciating the fact the assessee failed to provide details of customers whose cash was deposited by him. iv. Whether the impugned Order given by the Ld. CIT (A) is perverse both on the law and the facts by ignoring the facts that the Hermes i-Ticket Private Limited is suspected to be engaged in money laundering and document forgery as investigated by ED and the matter is sub-judice. Therefore, the genuineness of transactions undertaken by the assessee with Hermes i-Ticket Private Limited are also doubtful.” 6. Cross Objection No. 185/Del/2025 mentions following grounds: Printed from counselvise.com P a g e | 4 ITA No.4017/Del/2025 CO No.185/Del/2025 Amit Singla (AY: 2018-19) Ground No. 1 That the Ld. CIT(A) has rightly deleted the addition of 74,76,24,755/- made u/s 68 by holding that the entire cash deposit represented business transactions as a Customer Service Point of Business Correspondents and could not be treated as undisclosed income of the assessee. Ground No. 2 That the Ld. CIT(A) rightly held that the assessment order suffered from serious procedural lapses, including failure to issue a proper show cause notice and denial of an opportunity for personal hearing as mandated under section 144B, violating principles of natural justice. Ground No. 3 That the Ld. CIT(A) has correctly observed that rejection of books of accounts by the AO was not supported by specific defects or material inconsistencies and such blanket rejection, in law, cannot justify addition under Section 68. Ground No. 4 That the Ld. CIT(A) has already wholly accepted the assessee's explanations and annulled the relevant addition, no further challenge on these specific issues is necessary or maintainable. The AO's assumption of illegal business and the related Section 37(1) expense disallowance, these grounds do not survive in view of the principal relief granted (deletion of the full addition). Ground No. 5 That the Ld. CIT(A) has rightly appreciated the factual matrix, the business model (as a commission agent/Customer Service Point, and the legal position as per settled judicial precedents and thus, the relief granted should be affirmed in full. Ground No. 6 That the learned Assessing Officer (AO) erred in passing the final assessment order without first issuing a mandatory draft assessment order proposing the variation to the returned income, as required under Section 144B of the Income Tax Act, 1961. The absence of a draft assessment order deprived the respondent of a legitimate opportunity to object to the proposed variations, contravening statutory procedures and principles of natural justice. Ground No. 7 That the learned AO has failed to offer and grant the respondent a meaningful opportunity of personal hearing via video conferencing, as mandated by Section 144B(7)(vii) and relevant CBDT circulars. Despite specific requests made for personal hearing, the same was not accorded prior to passing the assessment order, resulting in substantial prejudice to the respondent.” Printed from counselvise.com P a g e | 5 ITA No.4017/Del/2025 CO No.185/Del/2025 Amit Singla (AY: 2018-19) 7. The ld. Departmental Representative submitted that ld. CIT(A) erred in ignoring the facts in the remand report. The Ld. CIT(A) erred in ignoring the facts that Hermes i-Ticket Private Limited is suspected to be engaged in money laundering and document forgery as investigated by ED and the matter is sub-judice. 8. Ld. Authorized Representative for the assessee submitted that ld. CIT(A) appreciated business model of assessee and the nature of income. 9. From the examination of record in light of aforesaid rival contention it is crystal clear that ld. CIT(A) vide order dated 13.03.2025 set aside addition of Rs.4,76,24,755/- u/s 68 made by ld. AO vide order dated 22.02.2021. Ld. CIT(A) in para 6 held as under: “6.1 Ground of appeal 1 is against addition of cash deposit amounting to Rs.4,76,24,755/- u/s 68. The AO in his assessment order after making his observations came to conclusion that the appellant has nothing to offer to prove his claim of receiving cash from various customers and further transferring to the respective beneficiary through the above mentioned two agencies i.e. Hermes I Tickets Pvt. Ltd. and Apna Money Pay portal. Therefore amount deposited in cash by the appellant in two Bank Accounts i.e. SBI, Mumbai (Rs.85,13,500/-) and Bank of Baroda, Ballabhgarh (Rs. 3,91,11,255/-) totaling Rs. 4,76,24,755/- has been held as income from undisclosed sources and treated as unexplained cash under section 68 of the Act. 6.2 The appellant in his written submission during the present appellate proceedings has tried to explain his nature of business. He submitted that in case of deposit, he receive cash from customers and deposit it in his account. The money in his account is now then transferred into agents' account and from there in to customers' account. Further, in case of cash withdrawal, the amount is withdrawn from customer's account and then cash provided to customer through Kiosk banking. 6.3 I have examined the submissions of the appellant. It is a fact that various banks in India have appointed Business Correspondents acting as their intermediaries. On closer scrutiny of the type Printed from counselvise.com P a g e | 6 ITA No.4017/Del/2025 CO No.185/Del/2025 Amit Singla (AY: 2018-19) and nature of business of the appellant it is found that entities like Hermes I-Tickets Pvt Ltd, Apna Money etc are Business Correspondents(BCs) acting as intermediaries of various banks in India. They offer services like Account opening, cash deposits and withdrawals, fund transfers, bill payments and micro-insurance and other financial products. They are usually employed by banks for services in rural and undeserved areas where banking facilities are in far off places. The BCs further appoint Customer Service point on a commission basis. 6.4 Appellant in his submission dated 15/07/2024 furnished annexure which is a copy of journal entries of transactions. A sample test check on the submission of appellant with regards to money transfer as recorded in journal entries from 04-04-2017 to 14-11-2017 reveals that different amounts of money have been transferred from XXXXXX11925 to different accounts regularly. The amounts transferred are small amounts ranging from Rs.200 to Rs.20,000/-. 6.5 In view of the findings above and various submissions of the appellant which have been examined, the conclusion which can be made is that the appellant is in the business of acting as Customer service point of Business Correspondents of banks. In this type of business, the Customer service point earns on a commission basis from remittances from customers. 6.6. In para 5.5, 5.6 and 5.7, I have discussed the business model of the appellant and the appellant being a customer service point who earns income from commission from Business Correspondents of banks. This being the case, the entire amount of cash deposit of Rs.4,76,24,755/- cannot be the income of the appellant. Thus, addition of Rs.4,76,24,755/- u/s 68 is liable to be deleted. Accordingly, addition u/s 68 is hereby deleted. Ground of appeal 1 is hereby allowed.” 10. From perusal of above discussion and findings it is apparent on record that during the appellate proceedings the assessee had submitted nature of business, in case of cash deposit, receipt of cash from customers and deposit in his account. The money in his account was then transferred to the agents account and from where into customers account. In case of cash withdrawal the amounts is withdrawn from customers account and then cash provided to customers through Kiosk banking. The type and nature of business of the assessee was found that like Harmes I-Tickets Pvt. Ltd., apna money etc. are business correspondence acting as intermediaries of various banks in India. In Printed from counselvise.com P a g e | 7 ITA No.4017/Del/2025 CO No.185/Del/2025 Amit Singla (AY: 2018-19) view of above material facts apparent on record, in absence of anything to the contrary, the grounds of appeal of the revenue being devoid of merit are untenable. Accordingly, grounds of appeal of the Revenue are rejected and Cross Objections of the assessee are accepted. 11. In the result, the appeal filed by the revenue is dismissed and Cross Objection filed by the assessee is allowed. Order pronounced in the open court on 23.02.2026 Sd/- (S Rifaur Rahman) Sd/- (Vimal Kumar) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 23.02.2026 Rohit, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "