PRADEEP KUMAR GUPTA, BALRAMPUR,BALRAMPUR V. .INCOME TAX OFFICER-1, AMBIKAPUR, AMBIKAPUR

ITA 425/RPR/2024

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The case involves Pradeep Kumar Gupta, the appellant, who contested the order of the Income Tax Officer-1, Ambikapur, which treated a sum of Rs. 7,98,500 deposited in his bank account during the demonetization period as unexplained income. The appellant argued that these deposits were from his business activities as a dealer of mobile recharge coupons for M/s. Idea Cellular Pvt. Ltd., and not unexplained income. The lower authorities had rejected his claims, leading to the appeal before the Tribunal. The Tribunal, after examining the bank statements and the nature of the transactions, sided with the appellant, highlighting inconsistencies in the treatment of similar transactions by the Assessing Officer.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 46705 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: Sumati Dayal vs. CIT, 214 ITR 801 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: G.S. AGRAWAL
• Keywords: FORM 26AS
• Section: 144; 119; 133(6); 69A

Judgement Text

"आयकर अपीलीय अधिकरण न्यायपीठ “एक-सदस्य” मामला रायपुर में IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR श्री रवीश सूद, न्याययक सदस्य क े समक्ष BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकर अपील सं. / ITA No. 425/RPR/2024 यििाारण वर्ा / Assessment Year : 2017-18 Pradeep Kumar Gupta House No.100/1, Babu Para, P.O. Chando, Tahsil : Samrikusmi Dist. Balrampur (C.G.)-497 119 PAN: AVLPG0236A .......अपीलार्थी / Appellant बिाम / V/s. The Income Tax Officer-1, Ambikapur (C.G.) ……प्रत्यर्थी / Respondent Assessee by : Shri G.S. Agrawal, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई की तारीख / Date of Hearing : 13.12.2024 घोषणा की तारीख / Date of Pronouncement : 20.12.2024 2 Pradeep Kumar Gupta Vs. ITO-1, Ambikapur ITA No. 425/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the ADDL/JCIT(A)-1, Pune dated 01.08.2024, which in turn arises from the order passed by the A.O under Sec. 144 of the Income-tax Act, 1961 (in short ‘the Act’) dated 18.12.2019 for the assessment year 2017- 18. The assessee has assailed the impugned order on the following grounds of appeal: “1.That under the facts and the law, the Ld. Commissioner of Income Tax (Appeals) erred in dismissing the ground that the Order passed by the Ld. Assessing Officer u/s 144 cannot be said to be best judgement as the Ld. Assessing Officer has failed to consider the debits in the Bank Account and to appreciate the nature of the business of the Appellant which was available from the Return of Income filed as well as the Bank Statement. Prayed to annul the assessment. 2. That under the facts and the law, the Ld. Commissioner of Income Tax (Appeals) further erred in dismissing the ground that the deposit of Rs. 7,98,500/- into Bank A/c was from trading receipts towards cash received from various small customers who paid cash for recharge of Mobile SIMs called \"Top-up\". Appellant is doing above business in a small tribal naxal hit area in village \"Chando\" whose population is about 2000. The cash or other deposit was remitted to M/s. Idea Cellular Private Limited from whom the recharge coupons were purchased which is apparent from Bank Statement and was available with AO. Prayed to delete the addition of Rs. 7,98,500/- . 3. That under the facts and the law, the Ld. CIT (Appeals) further erred in dismissing the ground that provisions of Sec. 115BBE are not applicable being deposits from Trading Receipts. 3 Pradeep Kumar Gupta Vs. ITO-1, Ambikapur ITA No. 425/RPR/2024 4. That under the facts and the law, the deposits during demonetization period was Rs. 3,93,300/- and deposits from 9th November, 2016 to 31st March, 2017 was Rs. 7,98,500/-. Prayed to delete the addition of Rs. 7,98,500/-.” 2. Succinctly stated, the A.O in the course of “Operation Clean Money” was in receipt of information that though the assessee during the demonetization period i.e. 09.11.2016 to 30.12.2016 had made cash deposits of Rs.19,32,750/- in his bank account No.7002155306 held with Chhattisgarh Rajya Gramin Bank, Branch: Ambikapur, but had neither for the year under consideration nor for the preceding year filed his return of income. Accordingly, the A.O issued notice u/s.142(1) of the Act, dated 10.03.2018, wherein the assessee was called upon to file his return of income. As the assessee failed to comply with the aforesaid notice and did not file any return of income, therefore, the A.O was constrained to proceed with and frame the assessment to the best of his judgment u/s. 144 of the Act. 3. As per the information gathered by the A.O from Chhattisgarh Rajya Gramin Bank, Branch: Ambikapur in exercise of his powers u/s. 133(6) of the Act, there were total deposits of Rs.24,42,377/- in the bank account of the assessee, as under: 4 Pradeep Kumar Gupta Vs. ITO-1, Ambikapur ITA No. 425/RPR/2024 The assessee, in the meantime, filed his return of income for the year under consideration on 02.12.2019, declaring an income of Rs.2,43,600/-. As the assessee had failed to come forth with any explanation based on supporting documentary evidence as regards the source of cash deposits aggregating to Rs.7,98,500/- made in his bank account during the demonetization and post demonetization period i.e over the period 09.11.2016 to 31.03.2017, viz. (i) 10.11.2016 : Rs.88,000/-; (ii) 15.11.2016 : Rs.10,000/-; (iii) 28.11.2016 : Rs.10,000/-; (iv) 29.11.2016 ; Rs.1,11,500/-; (v) 06.12.2016 :40,000/-; (vi) 14.12.2016 : Rs.31,500/-; (vii) 17.12.2016 : 20,000/-; (viii) 22.12.2016 : Rs.28,000/-; (ix) 23.12.2016 : 16,000/-; (x) 30.12.2016: Rs.38,000/-; (xi) 05.01.2017 : Rs.1,20,000/-; (xii) 13.01.2017 : Rs.60,000/- 5 Pradeep Kumar Gupta Vs. ITO-1, Ambikapur ITA No. 425/RPR/2024 ; (xiii) 20.02.2017: Rs.10,000/-; (xiv) 21.02.2017 : Rs.50,000/-; (xv) 23.02.2017 : 10,500/-; (xvi) 01.03.2017 : Rs.60,000/-; (xvii) 10.03.2017 : Rs.30,000/-; (xviii) 17.03.2017: Rs.5000/-; (xix) 20.03.2017 : Rs.20,000/-; (xx) 20.03.2017: Rs.25,000/- and (xxi) 27.03.2017 : Rs.15,000/-, therefore, the A.O held the said amount as the unexplained money of the assessee u/s. 69A of the Act. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) who, however, upheld the addition made by the A.O, observing as under: “6.2.2 During remand proceedings, the bank account was examined and it is found that there are debit entries made to Idea Cellular Ltd. but as stated above, the appellant had not made any compliance to substantiate as to for what purpose the payment has been made to Idea Cellular Ltd. The appellant had also failed to produce any documents received from Idea Cellular Ltd, which will highlight that he was authorized by the Idea Cellular Ltd to make recharge of voucher on their behalf. The onus lies on the appellant to substantiate with evidence to proof that he was authorized by the Idea Cellular Ltd for retail marketing, which he failed to do so. Further as claimed by the appellant, he had received commission for his retail trading, this fact was also not reflected in Form 26AS. Appellant couldn't substantiate the nature of his business as well as receipt of commission income from idea cellular Ltd. In absence of documentary evidences with regards to nature of business, the claim of appellant that the cash deposited during the period of demonetization which has been added by the AO during the course of assessment proceedings is the cash received by the appellant from his business is unacceptable . Appellant hasn't produced any register or bills or vouchers or any other evidence to substantiate the nature of business . The onus lies on the appellant to prove that appellant is commission agent of idea cellular ltd with the help of sufficient documentary evidences . I cant ascertain nature of business of the appellant merely relying on the bank statement . In view of the above explanation of the 6 Pradeep Kumar Gupta Vs. ITO-1, Ambikapur ITA No. 425/RPR/2024 appellant that the source of cash deposits during the period of demonetization is the cash sales of SIM cards being authorized agent of Idea Cellular Ltd cant be accepted. Due to inability of the appellant to prove his nature of business, I am not inclined to accept the explanation of the appellant about source of cash. Hence, the source and nature of cash deposit remains unexplained before me. Hence, I am not inclined to interfere with the order of the AO.” 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the Tribunal. 6. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 7. Shri G.S. Agrawal, Ld. Authorized Representative (for short ‘AR’) for the assessee, at the threshold of hearing, submitted that the assessee resides in a Naxalite hit area, viz. Village: Chando, Tehsil: Samri Kusmi. The Ld. A.R submitted that the assessee during the year had as a matter of self- employment taken up a dealership of selling mobile recharge coupons/SIM’s of M/s Idea Cellular Pvt. Ltd. and used to cater to small retailers, local laborers, pan vendors etc. The Ld. AR submitted that the cash deposits in the bank account No.7002155306 held by the assessee with Chhattisgarh Rajya Gramin Bank, Branch: Ambikapur were the sale proceeds of the recharge coupons/SIM’s that were collected by him in the course of his 7 Pradeep Kumar Gupta Vs. ITO-1, Ambikapur ITA No. 425/RPR/2024 aforesaid retail business for and on behalf of his principal, viz. M/s Idea Cellullar Pvt. Ltd. which, thereafter, was remitted by him to the latter. The Ld. AR to fortify his aforesaid contention had taken me through the aforementioned bank account, Page 2 to 17 of APB, which revealed that the cash deposits in the aforementioned bank account of the assessee (after being accumulated) were thereafter immediately transferred to M/s. Idea Cellular Pvt. Ltd. Elaborating further, the Ld. AR submitted that though the assessee being a small time businessman had wayback closed his aforesaid business and had not retained any documents which would substantiate his aforesaid claim, but a cursory perusal of the said bank account in itself revealed that the entire cash collections/deposits in the said bank account had thereafter found its way to the coffers of M/s. Idea Cellular Pvt. Ltd. Carrying his contention further, the Ld. AR submitted that though the A.O had accepted the aforesaid factual position for the pre-demonetization period i.e. 01.04.2016 to 08.11.2016 but without any reason had adopted an inconsistent approach and held the similarly placed cash deposits of Rs. 7.98 lacs (supra) made in the bank account during the demonetization/post- demonetization period i.e. 09.11.2016 to 31.03.2017 as the assessee’s unexplained money u/s. 69A of the Act. Once again, the Ld. AR had taken me through the bank statement of the assessee, which fortified his claim that no adverse inferences were drawn regarding the similarly placed cash 8 Pradeep Kumar Gupta Vs. ITO-1, Ambikapur ITA No. 425/RPR/2024 deposits made in the aforementioned bank account during the pre- demonetization period i.e. 01.04.2016 to 08.11.2016. 8. Per contra, Dr. Priyanka Patel, Ld. Sr. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. 9. I have given thoughtful consideration to the contentions advanced by the Ld. Authorized Representatives of both the parties in the backdrop of the orders of the lower authorities. On scrutinizing the aforementioned bank account No.7002155306 held by the assessee with Chhattisgarh Rajya Gramin Bank, Branch: Ambikapur, I find that there were cash deposits aggregating to Rs. 9,60,250/- during the pre-demonetization period i.e. 01.04.2016 to 08.11.2016 which under identical set of circumstances were transferred to M/s. Idea Cellular Pvt. Ltd. I am unable to comprehend that now when the A.O had accepted the aforesaid version of the assessee i.e. the cash deposits in the aforesaid bank account were the cash sale proceeds/collections of recharge coupons/SIM’s that were remitted /transferred by him to M/s. Idea Cellular Pvt. Ltd., then as to why a different view had been adopted by him with respect to similarly placed cash deposits of Rs.7.98 lacs (supra) made during in his bank account during the demonetization/post-demonetization period i.e. 09.11.2016 to 31.03.2017. 10. Admittedly, it is a matter of fact borne from record that the assessee had not been able to substantiate his claim that the cash deposits of Rs.7.98 9 Pradeep Kumar Gupta Vs. ITO-1, Ambikapur ITA No. 425/RPR/2024 lacs (supra) made in his bank account during the demonetization/ post- demonetization period were sourced from the sale proceeds of recharge coupons/SIM’s of M/s Idea Cellular Pvt. Ltd. on the basis of supporting documentary evidence but at the same time, I cannot remain oblivion of the fact that the position remains the same even during the pre-demonetization period. Also, I am of a firm conviction that the aforesaid claim of the assessee i.e. cash deposits in his bank account were the sale proceeds of recharge coupons/SIM’s of M/s Idea Cellular Pvt. Ltd. can inescapably be gathered from a perusal of the bank account. The assessee’s claim that the cash deposits in the bank account of the assesssee is thereafter followed by immediate transfer of the said amounts (after accumulation) to M/s Idea Cellular Pvt. Ltd. supports his claim that the said amounts were the cash sale proceeds of recharge coupons/SIM’s is supported by the principle of preponderance of human probabilities as had been emphasized by the Hon’ble Apex Court in the case of Sumati Dayal vs. CIT, 214 ITR 801 (SC), wherein the Hon’ble Apex Court had held as under: “13. This, in our opinion, is a superficial approach to the problem. The matter has to be considered in the light of human probabilities. The Chairman of the Settlement Commission has emphasised that the appellant did possess the winning ticket which was surrendered to the Race Club and in return a crossed cheque was obtained. It is, in our view, a neutral circumstance, because if the appellant had purchased the winning ticket after the event she would be having the winning ticket with her which she could surrender to the Race Club. The observation by the Chairman of the Settlement Commission that \"fraudulent sale of winning ticket is not an usual practice but is very much of an unusual practice\" ignores the prevalent malpractice that was noticed by the District 10 Pradeep Kumar Gupta Vs. ITO-1, Ambikapur ITA No. 425/RPR/2024 Taxes Enquiry Committee and the recommendations made by the said Committee which led to the amendment of the Act by the Finance Act of 1972 whereby the exemption from tax that was available in respect of winnings from lotteries, crossword puzzles, races, etc. was withdrawn. Similarly the observation by the Chairman that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleger to prove that it is so, ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase would be rarely available. An inference about such a purchase has to be drawn on the basis of the circumstances available on the record. Having regard to the conduct of the appellant as disclosed in her sworn statement as well as other material on the record an inference could reasonably be drawn that the winning tickets were purchased by the appellant after the event. We are, therefore, unable to agree with the view of the Chairman in his dissenting opinion. In our opinion, the majority opinion after considering surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant's claim about the amount being her winning from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably and that the finding that the said amounts are income of the appellant from other sources is not based on evidence.” 11. The facts involved in the present case before me, wherein the cash deposits of Rs.7.98 lacs (supra) made in the bank account of the assessee during the demonetization and post-demonetization period are followed by transferring of amounts aggregating to Rs.9,10,088/- to M/s. Idea Cellular Pvt. Ltd., speaks for itself about the “nature” and “source” of the said cash deposits. I, thus, in terms of the aforesaid observations am of a firm conviction that the cash deposits of Rs.7.98 lacs (supra) made in the bank account of the assessee during the demonetization and post-demonetization period i.e. 09.11.2016 to 31.03.2017 were the cash sale proceeds of recharge coupon/SIM’s which, thereafter, had been remitted/transferred by him to 11 Pradeep Kumar Gupta Vs. ITO-1, Ambikapur ITA No. 425/RPR/2024 M/s. Idea Cellular Pvt. Ltd. Accordingly, I herein based on my aforesaid firm conviction vacate both the treating of the amount of Rs.7,98,500/- as the unexplained money of the assessee and the consequential addition made by the A.O. Thus, the Grounds of appeal Nos. 1 to 4 raised by the assessee are allowed in terms of the aforesaid observations. 12. In the result, appeal of the assessee is allowed in terms of the aforesaid observations. Order pronounced in open court on 20th day of December, 2024. Sd/- (रवीश सूद /RAVISH SOOD) न्याययक सदस्य/JUDICIAL MEMBER रायपुर/ RAIPUR ; ददनाांक / Dated : 20th December, 2024. **SB, Sr.PS आदेश की प्रयिललपप अग्रेपर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ववभागीय प्रयतयनधि, आयकर अपीलीय अधिकरण,रायपुर बेंच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गार्ड फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण, रायपुर / ITAT, Raipur. 12 Pradeep Kumar Gupta Vs. ITO-1, Ambikapur ITA No. 425/RPR/2024 Date 1 Draft dictated on Sr.PS/PS 2 Draft placed before author Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order "