MS. RASHIDA YAHYA BANGALOREWALA,BENGALURU V. INCOME TAX OFFICER, WARD-6(2)(1), BENGALURU

ITA 1701/BANG/2025

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Ms. Rashida Yahya Bangalorewala appealed against the reassessment order which added Rs.76,81,000 to her income under section 69A of the Income Tax Act, 1961, for the Assessment Year 2020-21. The addition was based on cash deposits in her bank account, which the AO disbelieved as legitimate income from sales of electronic goods. The assessee argued that these were proceeds from her son's business of selling electronic goods purchased through credit cards. The Tribunal found merit in the assessee's explanation and directed the AO to consider 8% of the turnover as income, thus deleting the addition under section 69A.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779504 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2020-2021
• Appeal Filed On: 30-07-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N. BALUSAMY
• Assessee Lawyers: IREDDY DODDAMANI; HER
• Keywords: Business income; Application of stay
• Section: 147; 148; 144; 44AD

Judgement Text

"SP No.138/Bang/2025 Ms. Rashida Yahya Bangalorewala, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “B’’ BENCH: BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.1701/Bang/2025 Assessment Year: 2020-21 Ms. Rashida Yahya Bangalorewala No.6, JP Nagar 5th Phase Ramaswamy Layout 20th Main, 18th Cross Bangalore 560 079 PAN NO : AYOPB5704C Vs. ITO Ward 6(2)(1) Bangalore APPELLANT RESPONDENT SP No.138/Bang/2025 (Arising out of ITA No.1701/Bang/2025) Assessment Year: 2020-21 Ms. Rashida Yahya Bangalorewala No.6, JP Nagar 5th Phase Ramaswamy Layout 20th Main, 18th Cross Bangalore 560 079 PAN NO : AYOPB5704C Vs. ITO Ward 6(2)(1) Bangalore APPELLANT RESPONDENT Appellant by : Sri Ireddy Doddamani, A.R. Respondent by : Sri N. Balusamy, D.R. Date of Hearing : 17.10.2025 Date of Pronouncement : 17.10.2025 O R D E R PER PRASHANT MAHARISHI, VICE PRESIDENT: 1. This appeal in ITA No.1701/Bang/2025 is filed by Rashida Yahya Bangalorewala for AY 2020-21 along with stay application, seeking stay of outstanding demand of Printed from counselvise.com SP No.138/Bang/2025 Ms. Rashida Yahya Bangalorewala, Bangalore Page 2 of 7 Rs.1,28,98,070/-. The assessee has already deposited a sum of Rs.95,940/- on 28.6.2025 for which credit is not given. 2. At the time of hearing of the stay petition, with the consent of both the parties, the ITA No.1701/Bang/2025 looking at the facts of the case, was also heard. Both the parties waived the service of notice. 3. Brief facts of the case shows that assessee is an individual who did not file any return of income. As per the information available, under Risk Management Strategy (RMS), it was found that in her savings bank account with State Bank of India, assessee has deposited in cash a sum of Rs.76,81,000/- and therefore, notice u/s 148A(b) of the Income Tax Act, 1961 (in short “The Act”) was issued and subsequently order u/s 148A(d) of the Act was passed on 15.3.2024 and subsequently notice u/s 148 of the Act was issued on 15.3.2024. 4. In response to the above reassessment notice, the assessee filed her return of income showing that she has the total sales of Rs. 82,50,200/- and income @ 5% thereon under the provisions of section 44AD of the Act were at Rs.4,95,012/-. The assessee submitted the details during the assessment proceedings. 5. According to the assessee it was stated that she has made cash deposit of Rs.76,62,000/- to clear credit card purchases of her son. She has stated that assessee is procuring mobile phones and electronic goods which are purchased from 7 credit cards of his son. This was done during the financial adversity of Covid-19. In these credit cards assessee has shown purchases of Rs.53 lakhs from 6 credit cards in her son's name of HDFC, Yes Bank, RBL Bank, ICICI Bank and IndusInd Bank. Printed from counselvise.com SP No.138/Bang/2025 Ms. Rashida Yahya Bangalorewala, Bangalore Page 3 of 7 The modus operandi of the business was that assessee purchases mobile phones from Amazon, Flipkart, Reliance Digital and Croma. These mobile phones are billed in the name of 9 persons, who are friends of the son of assessee for the reason that in one name assessee could not brought these electronic goods i.e. mobile phones. As soon as these mobile phones are received, the son of the assessee was selling these mobile phones in the local grey market at the margin of Rs.100/- or Rs.150/- per phone. On sale of these mobile phones, cash is received by the son of the assessee who in turn deposit cash in the State Bank of India account of the assessee. From that State Bank of India account, the 7 credit cards of the son of the assessee were paid. Therefore, she has offered 5% of the income on presumptive basis. The sale of Rs.80,50,200/- was determined on the basis of the bank statement submitted by the assessee by her. 6. The ld. AO disbelieved the above transaction and made an addition of Rs.76,81,000/- u/s 69A of the Act and passed a reassessment order u/s 147 r.w.s. 144 r.w.s. 144B of the Act on 8.3.2025. The total income of the assessee was determined at Rs.81,76,010/-. 7. Aggrieved with the assessment order, the assessee preferred an appeal before the ld. CIT(A), where the contentions were reiterated and assessee also submitted the summary of bank credits as per Annexure-2 based on the savings bank account of the assessee. The assessee submitted that a sum of Rs.96,82,537/- is deposited in her bank account, out of which cash sale proceeds of Rs.77,00,450/- and cheque sale proceeds of Rs.5,50,005/- was deposited. Further, she has also earned the bank interest of Rs.3,276/- and also received Printed from counselvise.com SP No.138/Bang/2025 Ms. Rashida Yahya Bangalorewala, Bangalore Page 4 of 7 loan of Rs.36,182/-. Thus, it was submitted that when assessee has disclosed the profit @ 5% no further addition deserves to be made. 8. The ld. CIT(A) recorded the above facts in para 5.3.2 of the appellate order. However, as the assessee did not furnish party-wise details to whom the sales were made with name, address and account number along with details of sales, the submission of assessee was rejected. Accordingly, he confirmed the action of the ld. AO and passed an appellate order dismissing the appeal of the assessee on 31.5.2025. 9. The assessee is in appeal before us. The ld. AO along with assessee’s contention were heard. The son of the assessee explained the modus operandi of the business carried on by the assessee and also submitted that his earning from the sale of mobile phones is to the extent of Rs.50/- or Rs.100/- per mobile hand set. He further submitted that due to the high transaction in the bank account of cash deposited in the mother’s account and also transaction in the credit card, he closed the business. He further agreed that actually he has offered the income @ 5% of the turnover but he should have offered income @ 8% of the turnover. Such rectification application is made before the AO and due tax thereon was also paid. 10. The ld. D.R. supported the order of the ld. Lower authorities. The ld. D.R. also stated that if the assessee can demonstrate that this is the business of the assessee, the matter needs to be restored back to the file of AO. 11. We have carefully considered the rival contentions of the ld. Lower authorities. The facts involved in this case is that the Printed from counselvise.com SP No.138/Bang/2025 Ms. Rashida Yahya Bangalorewala, Bangalore Page 5 of 7 son of the assessee used to buy the electronic goods such as mobile phones etc. from various e-commerce websites by using his 6 credit cards. The bills were booked in the name of his near relatives and friends. As soon as these mobile phones are received, he used to sell the same in the grey market and received the cash from the customers. This cash was deposited in the State Bank of India account of his mother. From the bank balance so accumulated, the outstanding credit card dues of his 6 credit cards were cleared. The amount of cash deposited, which is as stated by the assessee is sale consideration of these electronic goods. The assessee offered income @ 5% which now the assessee has rectified before the AO @ 8%. Now the issue that arises is whether the income earned by the assessee is from sale of electronic goods or not? To support this the assessee has submitted the details of 6 credit cards where the total purchases are stated to be Rs.53,73,850/- of credit card purchases are generally in the range of Rs.10,000/- to Rs.30,000/-. In the credit card statement all purchases are made from either directly from MI Gurgaon or from Reliance Digital, Flipkard, Amazon, Xiomi, etc. Thus, it shows that for the purpose of purchase of electronic gadgets, these credit cards are used by the assessee. Thus, it is apparent that assessee has purchased these electronic goods. This is based on the evidence of extract of credit cards. The assessee has deposited cash in the State Bank of India account No. XXXX554 of the assessee. The amount deposited in cash in the bank account is also mostly in small amounts of less than Rs. 20,000/-. Therefore, the ld. AO has noted that the assessee has deposited a sum of Rs.76,81,000/- in cash in this bank account. According to the assessee, the actual cash sale is Rs.77,01,000/-. Thus, it is higher than amount of cash deposit mentioned by the AO. Printed from counselvise.com SP No.138/Bang/2025 Ms. Rashida Yahya Bangalorewala, Bangalore Page 6 of 7 Assessee has further stated that there are also sales recorded in the bank account through UPI payments and her total turnover is Rs. 80,50,200/-. On the basis of the above circumstantial evidences, it is the plausible argument of the assessee that when it purchases the electronic goods naturally the amount credit received in the bank account is from the sale of those goods. This is also linked from the fact that amount deposited in the State Bank of India in cash goes to repay dues of the same credit card statement from which these goods have been purchased. In view of the above facts, the addition made by the AO of Rs.76,81,000/- u/s 69A of the Act does not survive. 12. When the issue reached before the ld. CIT(A), the appeal of the assessee was dismissed as assessee failed to submit the copies of the bills and the name, address, account numbers of the parties who have purchased the goods. Naturally, assessee did not have these kinds of evidences at all. Further, when the provisions of section 44AD of the Act are applied, the assessee could not have maintained atleast the sales bills. The assessee has disclosed gross receipt and appropriate profit on that. According to the explanation (f) of section 139(9) of the Act, the requisite details are also shown in the form of bank statement, bank balance and gross receipt. Accordingly, the finding of the ld. CIT(A) for rejecting the explanation of the assessee was also not proper looking at the provisions of section 44AD of the Act. 13. However, the assessee is also supposed to pay tax on the income earned from the sale of goods. The assessee has offered a sum of 5% on its own. The assessee has stated that correct figure should be 8% of the total turnover, which is accepted by the assessee. The AO is directed to adopt the above percentage i.e.e 8 % as the income of the assessee. Printed from counselvise.com SP No.138/Bang/2025 Ms. Rashida Yahya Bangalorewala, Bangalore Page 7 of 7 14. In view of the above facts, we direct the ld. AO to adopt 8% of the total turnover shown by the assessee of Rs.80,50,200/- and consequently delete the addition u/s 69A of the Act. Accordingly, appeal filed by the assessee is partly allowed as indicated above. 15. Since we have partly allowed the appeal of the assessee the stay petition filed by the assessee in SP No.138/Bang/2025 becomes infructuous and dismissed. Order pronounced in the open court on 17th Oct, 2025 Sd/- (Keshav Dubey) Judicial Member Sd/- (Prashant Maharishi) Vice President Bangalore, Dated 17th Oct, 2025. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. Printed from counselvise.com "