KEERTAN KUMAR SAHU,GUNDERDEHI V. INCOME TAX OFFICER-1(2), RAIPUR

ITA 368/RPR/2024

AI Insights

The case involves Keertan Kumar Sahu, a banking correspondent for Dena Bank (now Bank of Baroda), who appealed against the orders of the Commissioner of Income Tax (Appeal), NFAC, Delhi, and the Faceless Assessment Unit, Income Tax Department. The primary issues in the appeal were the additions made under sections 69A and 69C of the Income Tax Act, 1961, concerning unexplained cash deposits and withdrawals amounting to Rs. 1,17,00/- and Rs. 1,16,82,000/- respectively. The tribunal noted procedural lapses in the assessment process, particularly the inadequate time given for compliance with notices under section 148A(b), and the lack of proper jurisdiction under section 120 of the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 106793 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Other Referred Cases: Kankanala Ravindra Reddy vs. ITO, Hexaware Technologies Ltd. Vs. ACIT, M M Wonder Park Pvt. Ltd. Vs. Union of India & Others, Smt. Pinky Jhawar Vs. ITO, Ward-2(1)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: YOGESH SETHIA
• Keywords: Set aside; Opportunity of being heard; Unexplained expenditure; Principle of natural justice
• Section: 147; 148; 144; 250; 69C; 69A

Judgement Text

"आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR ŵी रिवश सूद, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं. / ITA No: 368/RPR/2024 (Ǔनधा[रण वष[ Assessment Year: 2018-19) Keertan Kumar Sahu, H. No.222, Deori, Kachanpur, Gunderdehi, Balod-491223, C.G. v s Income Tax Officer, Ward-1(2), Raipur, C.G. PAN: GTUPS9584N (अपीलाथŎ/Appellant) . . (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से /Assessee by : Shri Yogesh Sethia, CA राजˢ की ओर से /Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई की तारीख / Date of Hearing : 04.02.2025 घोषणा की तारीख/Date of Pronouncement : 05.02.2025 आदेश / O R D E R Per Arun Khodpia, AM: This appeal of the assessee is directed against the order of Commissioner of Income Tax (Appeal), NFAC, Delhi, [in short “Ld. CIT(A)”] under section 250 of the Income Tax Act, 1961 (in short “the Act”), dated 07.06.2024, for the Assessment Year 2018-19, which in turn arises from the order of Faceless Assessment Unit, Income Tax Department (in short “Ld. AO”) u/s 147 r.w.s. 144 r.w.s 144B of the Act, dated 16.03.2023. 2 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur 2. The grounds of appeal raised by the assessee reads as under: 1. In the facts and circumstances of the case and in law the Ld. CIT (Appeal) was unjustified by dismissing the appeal and sustaining the addition of Rs. 1,17,00/- as unexplained money u/s GUA of the Act on account of cash deposit made by the Assessee and imposing tax u/s 115BBE. 2. In the facts and circumstances of the case and in law the ld. CIT (Appeal) was unjustified by dismissing the appeal and sustaining the addition of Rs.1,16,82,000/- as unexplained expenditure u/s 69C of the Act and imposing tax u/s 115BBE, made by the ld. Assessing officer and passing an exparte order. 3. The assessee is a Banking Correspondents (BCs) engaged by a Dena Bank (now Bank of Baroda) and for providing banking services in unbanked / under- banked geographical territories. A banking correspondent works as an agent of the bank and substitutes for the brick and mortar branch of the bank. Banking correspondents were allowed by RBI vide a circular dated 25 January 2006. The concept of Banking Correspondent stemmed from a report of H R Khan. Dy Governor of RBI. Committee on Financial Inclusion Chaired by Dr. C. Rangarajan which in its report submitted had also recommended for the expansion of the BC model. The banks will be fully responsible for the actions of the BCs and their retail outlets / sub agents. 4. The appellant was not aware that the notices in relation to Appeal Proceedings are issued to him and was available in the Income Tax Portal. Even no SMS or email was received by email in this regard. Additional grounds: 1- In the facts and circumstances of the case and in law the assessment order is illegal, bad in law and without jurisdiction because the ld. Assessing Officer has no jurisdiction under section 120 of the Income-tax Act, 1961. 3 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur 2- In the facts and circumstances of the case and in law the assessment order is illegal, bad in law and without jurisdiction because the ld. Assessing Officer has provided only 6 (six) days' time to comply with notice issued under clause (b) of section 148A of the Income-tax Act, 1961 as against (7) seven days provided under the Act. 3- In the facts and circumstances of the case and in law the assessment order is illegal, bad in law and without jurisdiction because there is no valid approval required under section 151 of the Income-tax Act, 1961. 4- In the facts and circumstances of the case and in law the assessment order is illegal, bad in law and without jurisdiction because the notice under section 148 of the Act was issued by an authority other than the authority specified in section 151A read with CBDT's Notification dated 29/03/2022 while such notices issued were held to be invalid by the Hon'ble Telangana in the case of Kankanala Ravindra Reddy vs. ITO [(2023) 156 taxmann.com] and Hon'ble Bombay High Court in the case of Hexaware Technologies Lt. Vs. ACIT[(2024) 162 Taxmann.com 225]. 3. At the threshold, it is noticed that the appeal filed by the assessee is delayed by 1 day. On being confronted with this defect, Shri Yogesh Sethia, CA, Authorized Representative of the assessee (in short “Ld. AR”), submitted that the delay was occasioned for the reason that the office of counsel had committed a mistake in calculating the time available for filing of the appeal and, therefore, the appeal which should have been filed up to 06.08.2024 was filed on 07.08.2024. Be that as it may, as the delay of 1 day involved in filing of the present appeal is not inordinate, therefore, we deem it fit to condone the same. 4 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur 4. Briefly stated, the assessee is an individual, was appointed as “business correspondent” by Dena Bank (Now merged with Bank of Baroda). During the year under consideration, as mentioned by the Ld. AR that the assessee was functioning on behalf of the Bank as Business Correspondent, making cash payment to account holders mainly having account under Jan- dhan Account Scheme through POS machine after swiping their cards, and for such activities, the assessee was deriving commission income, besides having pension and agricultural income. It is stated that the income of assessee was below maximum amount not chargeable to tax. It is further clarified that during discharge of his duties as a business correspondent assessee was maintaining an overdraft account bearing no. 034213031395 with Dena Bank. Withdrawals from the said bank account aggregating to Rs.1,16,82,000/- are continued throughout the year for which the assessee had received commission from the bank. As per information available assessment proceedings are initiated against the assessee u/s 147 of the Act, a notice was issued u/s 148 on 31.03.2022. During the assessment proceedings, assessee remain non-complaint therefore, the assessment was culminated u/s 144 of the Act on best judgment assessment basis after obtaining information from Bank u/s 133(6), with additions u/s 69A for Rs.1,17,100/-, on account of unexplained cash deposited in the bank account 5 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur of the assessee and u/s 69C for Rs.1,16,82,000/- on account of unexplained cash withdrawals from the bank account of the assessee. 5. Aggrieved with the aforesaid order of Ld. AO, assessee preferred an appeal before the Ld. CIT(A), who after deliberating on the issues raised in the appeal have dismissed the appeal of the assessee, in absence of any representation by the assessee on various occasions when the matter was fixed for hearing / compliances. The decision and reasons thereto by the Ld. CIT(A) while dismissing the appeal of assessee, are extracted hereunder for the completeness of facts: 6 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur 7 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur 8 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur 9 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur 10 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur 6. Dissatisfied with the aforesaid order of Ld. CIT(A), assessee preferred an appeal, which is under consideration before us. 7. At the inception, referring to the additional ground of appeal no. 2, Ld. AR, raised the contention that Ld. AO failed to provide reasonable opportunity of being heard to the assessee as mandated under the provision of section 148A(b). To substantiate this contention Ld. AR placed before us copy of notice under clause (b) of section 148A of the Income Tax Act dated 20.03.2022, wherein the assessee was requested to submit his response with supporting documents on or before 26.03.2022 i.e. within next 6 days. Showing the aforesaid notice, Ld. AR argued that the assessee was permitted to respond only within 6 days of the aforesaid notice, whereas in accordance with the provisions of Act assessee should have been provide 11 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur the reasonable time to respond, being not less than 7 days, the assessee was therefore, remain bereft of adequate and reasonable opportunity of being heard, therefore, entire proceedings initiated u/s 148A are to be treated as illegal and void ab initio, consequently the order passed u/s 144 r.w.s. 147 on the foundation of such illegal proceedings is also illegal, bad in law and liable to be quashed. Copy of notice u/s 148A(b) dated 20.03.2022, furnished before us, is extracted hereunder for the sake of clarity: 12 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur 8. In support of aforesaid contention, that the assessee was not afforded with reasonable time to respond in compliance to the aforesaid notice dated 20.03.2022, Ld. AR placed his reliance on the order of Hon’ble Jurisdictional High Court in the case of M M Wonder Park Pvt. Ltd. Vs. Union of India & Othrs. WP(T) No. 172/2022 dated 17.06.2022, wherein the aforesaid issue is decided in favour of the assessee. 9. Per contra, Dr. Priyanka Patel, Sr. DR, vehemently supported the order of Ld. CIT(A) and submitted that in absence of any explanations or submissions before the revenue authorities, Ld. AO and Ld. CIT(A) had rightly made the addition and confirmed the same, therefore, the assessee’s contentions raising the legal additional grounds shall not be entertained at this stage. The order of Ld. CIT(A), therefore, deserves to be sustained. 10. We have considered the rival submissions, perused the material available on record and case laws relied upon by the assessee. Admittedly, the issue raised by the Ld. AR is squarely covered by the order of this Tribunal in the case of Smt. Pinky Jhawar Vs. ITO, Ward-2(1), in ITA No: 552/RPR/2024 vide order dated 31.01.2025, wherein the identical issue is decided by us, following observations of Hon’ble Jurisdictional High Court in the 13 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur case of M M Wonder Park Pvt Ltd Vs. UOI and Othrs. (supra), wherein the relevant findings of Hon’ble High Court are as under: \"5. I have heard Learned Counsel appearing for the parties and perused the above referred to documents/Annexures and other material available with due care. 6. From perusal of the documents/Annexures, it appears that the order dated 4.4.2022 (Annexure P2) passed under Section 148A(d) of the Act has been passed with regard to a transaction which occurred in the financial year 2014-15 after serving a notice dated 25.3.2022 (Annexure P1) and giving a mere 7 days' time to the Petitioner/assessee to furnish a reply to the said notice. The time granted to the Petitioner/assessee to submit reply to the said notice appears to be unreasonable short and the Petitioner/assessee cannot be blamed for not being able to file the reply within such a short period. Thus, it appears that there is a violation of principle of natural justice. Therefore, the prayer made on behalf of the Petitioner/assessee appears to be reasonable. Thus, the order dated 4.4.2022 (Annexure P2) passed under Section 148A(d) of the Act and the notice dated 5.4.2022 (Annexure P3) issued under Section 148 of the Act are quashed and the Respondents are directed to afford proper opportunity of hearing to the Petitioner/assessee and thereafter decide the matter afresh in accordance with law. 7. Accordingly, the instant writ petition is allowed\" 11. Based on aforesaid observations of Hon’ble High Court, our observations and decisions in the case of Smt. Pinky Jhawar Vs. ITO (supra), are as under: 9. We have considered the rival submissions, perused the material available on record and case laws relied upon by the assessee. Admittedly, the issue raised by the Ld. AR is squarely covered by the order of this Tribunal in the case of New Rajdhani Honda (supra), wherein date of issue of notice u/s 148A(b) are akin to the present case, i.e the notice was issued on 20.03.2022 and the assessee was called upon to put forth the response on or before 26.03.2022, accordingly, the matter of assessee in the instant case stands on the same footing, 14 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur therefore, our decision would also remain identical. Resultantly, ground no. 2(b) of the present appeal is partly allowed for statistical purposes, and the matter is restored to the file of Ld. AO with direction to afford proper opportunity of being heard to the assessee as per mandate of section 148A(b) of the Act and decide the matter afresh in accordance with law. Herein, we may also observe that as the matter is remitted back to the file of Ld. AO by the Ld. CIT(A) too, therefore, we approve the decision of Ld. CIT(A) in setting aside the matter to the file of Ld. AO, however, modify the same in terms of our observations to be adhered to during the set aside proceedings. 12. Following the aforesaid observations and the view adopted in the case of Pinky Jhawar (supra) under guiding observations of the Hon’ble Jurisdictional High Court in the case of M M Wonder Park Pvt Ltd Vs. UOI and Othrs. (supra), the matter in present case, having identical facts and circumstances, found to be stand on same footings, thus, is squarely covered by our decision in the case of Pinky Jhawar (supra), accordingly, the same is remitted back to the file of Ld. AO for fresh adjudication. Consequently, Additional Ground No. 2 of the present appeal of assessee is allowed for statistical purposes. 13. As we have set aside the matter to the file of Ld. AO with the directions to frame the assessment denovo in the present case after affording a reasonable opportunity of hearing to the assessee, therefore, we refrain from 15 ITA No.368/RPR/2024 Keertan Kumar Sahu Vs ITO, Ward-1(2), Raipur deliberating upon and to deal with the other grounds of appeal based on which the legality of the assessment as well as the merits of the additions are being assailed by the assessee before us, which thus, are left open. 14. In result, the appeal of the assessee in ITA No. 368/RPR/2024 is allowed for statistical purposes. Order pronounced in the open court on 05/02/2025. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 05/02/2025 Vaibhav Shrivastav आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur 1. अपीलाथŎ / The Appellant- Keertan Kumar Sahu 2. ŮȑथŎ / The Respondent- ITO, Ward-1(2), Raipur 3. The Pr. CIT, Raipur (C.G.) 4. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 5. गाडŊ फाईल / Guard file. // सȑािपत Ůित True copy // "