Appeal Details
Counselvise Citation
[2024] 100 COUNSELVISE.COM (IT) 1642 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 4 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-06-2024
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
19-03-2024
Assessment Year
2017-2018
Appeal Filed On
22-01-2023
Judgement Text
आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद यायपीठ अहमदाबाद यायपीठअहमदाबाद यायपीठ अहमदाबाद यायपीठ ‘B अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No.300/Ahd/2023 Assessment Year : 2017-18 Niranjanaben Jayesh Patel Legal Heir of Late Shri Jayeshbhai Chandubhai Patel 19-I, Nita Nagar Society Kanjari Road, Halol-389 350, Gujarat PAN : AKZPP 6950 P. Vs. ITO, Ward-3(1)(2) Vadodara. ITA No.48/Ahd/2023 Assessment Year : 2017-18 Yogendrabhai Bhogilal Patel Shri Yogendrabhai Bhogilalbhai Patel 82, Sri Nath Vihar Society Behind Vallabhcharya Hospital Baroda 390025 PAN : BJXPP 0850 J. Vs. ITO, Ward-3(1)(2) Vadodara. Assessee by : Shri Sakar Sharma, AR Revenue by : Shri H. Phani Raju, CIT-DR सुनवाई क तारीख/D a t e o f He a r in g : 20 /0 3 / 2 0 2 4 घोषणा क तारीख /D a t e o f P r o no u nc e me nt : 1 4 / 0 6 / 2 0 2 4 आदेश आदेशआदेश आदेश/O R D E R PER SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER These appeals are by two assessees against separate orders of the ld.CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 29.11.2022 and 16.3.2023 passed under section 250 of the Income Tax Act, 1961 (“the Act” for short) for the assessment year 2017-18. ITA No.48 AND 300/Ahd/2023 2 2. The grounds raised by the assesesses in their respective appeals are as under: ITA No.48/Ahd/2023 1. The Ld. NFAC erred on facts and in law in upholding action of the Assessing Officer invoking provisions of section 69A of the Act which has no application in the case of the appellant. 2. The Ld. NFAC erred on facts and in law in upholding the action of the Assessing Officer in making substantive addition ignoring the past history as well as position of law settled by the Tribunals and the Courts. 3. The Ld. NFAC erred on facts and in law in not appreciating and admitting the additional evidences furnished under Rule 46A in the interest of justice and to determine the real and true income of the appellant. 4. The Ld. NFAC erred on facts and in law in upholding addition of Rs.16,44,12,820/- u/s 69A r.w.s. 115BBE made by the Assessing Officer by considering only the credit entries and ignoring the debit entries in relation to the same transaction and ignoring the explanations and submissions of appellant before the Assessing Officer as well as before the appellate authority. 5. The Ld. NFAC erred on facts and in law in not adjudicating substantive ground with regard to applicability of provisions of section 115BBE of the Act and qua assessment year under reference when deeming provisions invoked by the Assessing Officer have no application in the case of the appellant. ITA No.300/Ahd/2023 1. The Ld. NFAC erred on facts and in law in holding the appeal of the appellant to be infructuous on account of order u/s 263 passed by the Ld. PCIT 2. The Ld. NFAC erred on facts and in law in not adjudicating any of the grounds of appeal on merits despite exhaustive and elaborate submissions made by the appellant in the course of appellate proceedings. 3. The Ld. NFAC erred on facts and in law in not adjudicating the ground relating addition u/s 69A r.w.s. 115BBE of Rs.1,16,13,90,797/-made by Assessing Officer on account of deposit of cash in the bank accounts without appreciating the nature of business carried on by the appellant The Ld. NFAC erred on facts and in law in not adjudicating substantive ground with regard to applicability of provisions of section 115BBE of the Act qua nature of income of appellant and qua assessment year under reference when deeming provisions invoked by the Assessing Officer have no application in the case of the appellant. ITA No.48 AND 300/Ahd/2023 3 4. The Ld. NFAC erred on facts and in law in not adjudicating substantive ground with regard to applicability of provisions of section 115BBE of the Act qua nature of income of appellant and qua assessment year under reference when deeming provisions invoked by the Assessing Officer have no application in the case of the appellant. 5. The Ld. NFAC erred on facts and in law in not taking cognisance of the past history of appellant as well as position of law settled by the Hon'ble Tribunals and the Courts.” 3. Since largely common facts and issues raised for consideration are involved in both the appeals, the same are being taken up together. We shall first take up the appeal in the case of Shri Yogendrabhai B. Patel in ITA No.48/Ahd/2023, and our observation would apply to the other appeal as well in the case of Shri Niranjanaben Joyeshkumar Patel, L/H of late Shri Jayeshbhai Chandubhai Patel. 4. Brief facts of the case are that the assessee filed return of income declaring total income at Rs.2,52,880/-. The case of the assessee was selected for scrutiny for the reason of examining large cash deposits and cash withdrawals made by the assessee during the impugned year under consideration. During the course of assessment proceedings, the AO observed that huge cash amounting to Rs.16,44,12,280/- was deposited in the bank account of the assessee during the impugned year under consideration. The assessee was asked to furnish the nature of source of cash deposits with supporting evidence. The assessee was asked to submit ledger copy of the person who deposited cash in his bank account and persons to whom the assessee had paid the cash after withdrawals. The submissions of the assessee was that, he is engaged in the business of earning commission and the amounts so deposited/withdrawn by the assessee did not belong to the assessee, and the assessee has only ITA No.48 AND 300/Ahd/2023 4 earned commission income on such amount. The assessee was asked to submit the nature and source of cash deposits with evidences. The AO asked the assessee to submit ledger copies of the parties, who had deposited cash in his bank accounts, and the persons to whom, he paid cash after withdrawals. The AO issued notice under section 133(6) of the Act, and summons under section 131 to those persons whose addresses seemed to be complete. Notices under section 133(6) of the Act were issued in eleven cases, out of which eight notices returned with postal remark “insufficient address”. Only three parties complied with the notices in the pattern in which the details were called for. 5. On perusal of the replies, the AO noticed that none of the parties had admitted that they had deposited cash in the bank account of the assessee. The parties only stated that the cash was deposited by the traders all over India. Hence, as per the AO even the identity of the parties who deposited cash in the bank accounts of the assessee could not be established by the assessee. Further, summons under section 131 of the Act were issued to twelve persons from the ledger given by the assessee, out of which nine summons were returned with postal remarks “insufficient address”, and also none of the remaining parties (three in numbers) appeared before the AO. Hence, as per the AO, identity of the parties, genuineness of the transaction and credit- worthiness of the parties could not be verified. The AO held that the assessee did not submit ledger copy of the actual depositors. Since the assessee failed to justify his claim that the cash was deposited by other parties, and paid after withdrawing the same from the bank account, the AO called for further details from the assessee. The AO observed that some confirmations of the parties to whom notices under section 133(6) of the Act and summons under section 131 were issued were received. However, as per the AO, the so-called ITA No.48 AND 300/Ahd/2023 5 confirmations filed by these parties were addressed to the AO, but was submitted from the assessee’s income-tax e-portal. The AO was of the view that it was beyond logical understanding, how could a third- party know the details called for vide the notices and summons, which were unserved on them and the reply could be submitted through the assessee’s income-tax e-portal. The AO observed that all the parties had only stated that they had not deposited cash in the bank account of the assessee. Also the concerned parties did not submit any details with regard to the cash depositors who purchased the goods from them. The AO held that confirmation/clarification of the local parties which were not depositors, is an after-thought, and prepared by the assessee himself which were submitted by the assessee himself, through his own income-tax e-proceeding portal. Accordingly, the AO held that contention of the assessee that some of the persons depoised cash in the bank account, and he only earned commission income was not acceptable. Accordingly, the AO added a sum of Rs.16,44,12,820/- to the income of the assessee under section 69A of the Act. Aggrieved by the same, the assessee filed appeal before the ld.CIT(A). 6. During the course of appellate proceedings, the assessee submitted that the AO had wrongly invoked the provisions of section 69A of the Act in the instant case. The assessee stated that the amount found deposited in the bank account were actually withdrawn immediately and delivered to the beneficiaries after retaining the requisite amount of commission. The commission so retained has been offered for taxation and there exists no dispute with regard to the same. The assessee submitted that the in line of Angadia business, commission is at the rate of 0.10%. The assessee submitted that he has maintained books of accounts, and has also recorded all the transactions in the books of accounts in respect of which addition ITA No.48 AND 300/Ahd/2023 6 has been made by the AO. Secondly, the assessee submitted that he was not the owner of the cash which came to be deposited in his bank account by the beneficiaries who paid commission to the assessee. Since the assessee was not the owner of the cash deposited in his bank account, the same cannot be assessed in the hands of the assessee under section 69A of the Act. The assessee submitted before the ld.CIT(A) that the AO ought to have appreciated that the assessee is earning commission income on account of money transferred by various parties located pan India to the parties located at Halol (i.e. business place of the assessee) by using the bank account of the assessee for which the assessee charged commission and paid the residual amount to the concerned beneficiaries/parties after retaining the commission amount which the assessee in turn offered as business income and which has been assessed in the hands of the assessee, without any dispute by the tax authorities with regard to the nature of such income being commission income and nor was there any dispute with regards to the quantum of such commission earned by the assessee and offered to tax by him. However, the ld.CIT(A) dismissed the appeal of the assessee on the ground that the assessee, in the instant fact has failed to prove that the cash deposited in his bank account did not bear the character of income of the assessee, and accordingly confirmed the addition made by the AO. While passing the order, the ld.CIT(A) made the following observations: ITA No.48 AND 300/Ahd/2023 7 ITA No.48 AND 300/Ahd/2023 8 ITA No.48 AND 300/Ahd/2023 9 ITA No.48 AND 300/Ahd/2023 10 7. The assessee is in appeal before us against the aforesaid order passed by the ld.CIT(A) confirming addition in the hands of the assessee. 8. Before us, the ld.counsel for the assessee took various arguments. Firstly, he submitted that the assessee has maintained ITA No.48 AND 300/Ahd/2023 11 regular books of accounts, and all bank accounts are duly recorded in the books of accounts of the assessee, and therefore, the provisions of section 69A of the Act have no application. Secondly, the assessee is only a commission agent, and therefore, the cash deposited by the customers and delivered back to the customers cannot be held to be belonging to the assessee, and only commission earned by the assessee on such transaction can be taxed as the income of the assessee. Thirdly, the customers of the assessee deposited cash/RTGS/NEFT from different locations across the country in the bank account and the assessee which were subsequently withdrawn and delivered to the respective persons as per the instructions of the customers. It was submitted before us that Halol is an industrial hub, and therefore, customers across India made purchases from the units located in Halol and adjoining areas. The assessee carried out three specific activities as part of his business viz. (i) deposits were made in the bank account of the assessee through RTGS/NEFT/Cheque by the customers and payment by withdrawing cash from the bank accounts, (ii) cash deposits were made in the bank account of the assessee by customers of the assessee, and payments were made by the assessee by remitting the fund through RTGS/NEFT as per the customer’s instructions, and (iii) cash was deposited in the bank account of the assessee by the customers and payment was made by the assessee by withdrawing cash from the bank account. In all three circumstances, the assessee had charged commission to provide aforesaid services and commission income had been offered to tax by the assessee. The ld.counsel for the assessee submitted that even units located at Halol used services of the assessee by depositing cash in his account and directing him to make payment online to Gas Authority of India ltd. towards supply of gas to their units. The ld.counsel for the assessee submitted that various details like copies ITA No.48 AND 300/Ahd/2023 12 of ledger account of the parties, cash book, affidavit explaining the nature of activities, confirmations of some of the persons, etc. were submitted before the tax authorities, were submitted during the course of assessment proceedings. However, such evidence was not appreciated by the AO. Additionally, the information disclosed by the assessee under Rule 46A of the Income Tax Rues was also not admitted by the ld.CIT(A), which should have been admitted looking into the substantial quantum of addition made in the hands of the assessee. Therefore, the order passed by the ld.CIT(A) was against the principle of natural justice. The ld.counsel for the assessee submitted that tax authorities have erred in taxing the entire amount of deposits in the hands of the assessee, without giving any credit for the withdrawal made from the bank accounts in the hands of the assessee, which is erroneous, since the assessee is only engaged in the business of earning commission income. 9. In response, the ld.DR pointed out that despite several opportunities, the assessee has miserably failed to prove the source of cash deposits in the bank account of the assessee, and neither the assessee has been able to prove that the he was actually engaged in the business of earning commission income, and no evidence has been furnished by the assessee to demonstrate that the cash deposits made in the bank account held by the assessee are not unaccounted income of the assessee. Notably, the books of accounts of the assessee are not audited. Further, the ld.DR submitted that the assessee did not furnish ledger account during the course of proceedings before the tax authorities, and the assessee only produced cash book/bank statement during the course of proceedings. The ld.DR submitted that in the entire proceedings, no books of accounts were produced ITA No.48 AND 300/Ahd/2023 13 by the assessee except the cash book. Accordingly, the ld.DR submitted that the books of accounts have not been maintained/audited. The identity and credit-worthiness of the parties, who had deposited cash has not been established. The assessee has failed to furnish any corroborative evidence to show that the assessee is engaged in the business of earring commission income and, therefore, there is no infirmity in the order of the ld.CIT(A) wherein such additions have been rightly confirmed in the hands of the assessee. 10. We have heard rival contention and perused the material available on record. On going through the facts of the present case, we agree with the Department that the assessee has failed to prove identity of the depositors, as also failed to furnish any concrete evidence with regard to the fact that the assessee is engaged in the business of earning only commission income and that the aforesaid amount did not belong to the assessee. Notably, the assessee has submitted very few details during the course of assessment proceedings, which would establish the identity and credit-worthiness of the parties, who had deposited money in the bank account of the assessee, and further from the details placed on record, the assessee has also not able to establish that he was engaged in the business of only earning the commission income. However, we equally note that during the course of assessment proceedings, a substantial sum of Rs.16,44,12, 820/-was added as unexplained income in the hands of the assessee, and all deposits in the bank account of the assessee were added as unexplained income of the assessee, without giving credit of withdrawals made by the assessee from his bank account. ITA No.48 AND 300/Ahd/2023 14 Accordingly, looking into the instant facts, in the interest of justice, we hereby set aside the matter to file of the AO for de novo consideration, and the assessee is hereby allowed an opportunity of producing additional details with regard to the source of cash deposits in his bank account, and also to furnish identity of the depositors, which the assessee could not do during the course of original assessment. Further, the AO is also directed to give due credit of withdrawals made from the bank account of the assessee; and only peak credit may be added in the hands of the assessee, after detailed analysis of the facts of the case, in the light of the additional evidence, which may be furnished by the assessee. We observe that similar issues are involved in the case of other assessee before us i.e Niranjanaben Jayeshkumar Patel. In this case, it was submitted before us that original assessment order was passed with certain additions by the ld.Assessing Officer. Thereafter 263- proceeidngs were initiated in which time, original assessment was set aside by the ld.Pr.CIT. In appeal, the ld.CIT(A) dismissed the appeal of the assessee. Meanwhile, the 263-order was also quashed by Hon’ble ITAT. It was submitted that the ld.CIT(A) did not decide the appeal on merits. Accordingly, the matter may be restored to the file of the ld.CIT(A) for de novo consideration, after giving due opportunity of hearing to the assessee to present it’s case on merits. Accordingly, the interest of justice, the said appeal is also restored to the file of the AO for de novo consideration after giving due opportunity of hearing to the assessee to present its case on merit, and file any additional evidence in support of its case. ITA No.48 AND 300/Ahd/2023 15 11. In the combined result, both the appeals of the assessees are allowed for statistical purpose. Order pronounced in the Court on 14 th June, 2024 at Ahmedabad. Sd/- Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER Ahmedabad,dated 14/06/2024
Other Referred Cases
-
Laws Referred To
-
1:1 Consultation on Tax Litigation
₹1
Guide to Charitable Trusts: Formation, Benefits, and Compliance
₹0
Consultation on Entity Formation
₹0
Income Tax Act 2025
₹0
Convertible Note Agreement
Mehul₹5000
Finance Bill, 2026: Key Direct Tax Amendments on Assessments and Appeals
Team Counselvise - February 06, 2026
Finance Bill, 2026: Key GST Reforms that will Reshape Compliance and Cash Flows
Team Counselvise - February 03, 2026
When Global Talent Meets GST: The Huawei Secondment Ruling explained
Team Counselvise - March 09, 2026