"आयकर अपीलȣय अͬधकरण Ûयायपीठ रायपुर मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 164/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2016-17 Rupesh Gupta M-4, Avanti Vihar, Telibandha, Raipur (C.G.)-492 001 PAN: BIJPG0585E .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer-3(1), Raipur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri R.B Doshi, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 01.10.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 08.10.2024 2 Rupesh Gupta Vs. ITO-3(1), Raipur ITA No. 164/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 19.02.2024, 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 02.11.2018 for the assessment year 2016-17. The assessee has assailed the impugned order on the following grounds of appeal before us: “1. The AO erred in making addition of Rs.1,38,20,222/- on account of deposits in bank account of appellant as unexplained cash credit invoking sec. 68. The deposits in bank account of appellant represented his business receipts and the AO erred in adding entire business receipts in place of the commission thereon earned by the appellant. The addition of Rs. 1,38,20,222/- made by AO is arbitrary and is not justified. 2. Without prejudice to ground no.1, no addition could have been made by the A.O u/s 68 as provisions of sec. 68 do not apply. 3. The appellant reserves the right to amend, modify or add any of the ground/s of appeal.” 2. Succinctly stated, the assessee who was engaged in the proprietary business of a general commission agent, viz. M/s. Shubh Auto, had e-filed his return of income for A.Y.2016-17 on 08.09.2016, declaring an income of Rs.2,90,000/-. Subsequently, the case of the assessee was selected for 3 Rupesh Gupta Vs. ITO-3(1), Raipur ITA No. 164/RPR/2024 “limited scrutiny” under CASS and notice u/s. 143(2) of the Act was issued to him. 3. During the course of the assessment proceedings, the A.O observed that an amount of Rs.1,41,50,222/- was deposited in the assessee’s bank account No.203000010060854 with Punjab National Bank, Branch :Chandkhudi, Raipur which comprise of cash deposits of Rs.95,86,421/-. As the assessee despite specific directions failed to come forth with any plausible explanation as regards the source of the aforesaid deposits of Rs.1.41 crore (approx.) made in his bank account during the year under consideration, therefore, the A.O proceeded with and framed the assessment to the best of his judgment u/s. 144 of the Act. 4. The A.O, observing that as the assessee had failed to come forth with any plausible explanation as regards the aforesaid cash deposits made in his bank account, therefore, after considering the gross receipts of Rs.3.30 lacs that was disclosed by him in his return of income, held the balance amount of Rs.1,38,20,222/- i.e. [Rs.1,41,50,222/- (total receipts) (-) Rs.3,30,000/- (gross receipts disclosed in the return of income)] as an unexplained cash credit u/s. 68 of the Act. Accordingly, the A.O vide his order passed u/s. 144 of the Act, dated 02.11.2018, after making the aforesaid addition, determined the income of the assessee at Rs.1,41,10,222/-. 4 Rupesh Gupta Vs. ITO-3(1), Raipur ITA No. 164/RPR/2024 5. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without success. As the assessee despite having been afforded sufficient opportunity had failed to participate in the proceedings before the CIT(Appeals), therefore, the latter finding no infirmity in the view taken by the A.O upheld the addition of Rs.1.38 crore (approx.) made u/s. 68 of the Act by the A.O. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: “8. The appellant could not submit any documentary evidence to substantiate the source of the cash and other deposits found in the bank account. Neither has the appellant produced any documents showing the source of such deposits nor has offered any explanation therefor. Though the appellant has stated in the grounds of appeal that the total deposits into the bank account were from the business receipts, in support of his claim the appellant has not filed any written submissions or produced documentary evidences. I find that even during the assessment proceedings, the appellant did not furnish any details with regard to the source of such deposits. The deeming provisions of Section 68 and 69A give powers to the Assessing Officer to deem any credit in the books of accounts or money which is not recorded in the books of accounts when the assessee does not offer any explanation on the nature and source of such credits or money. In the instant case, though the assessee has made deposits with the bank in his name, he has not offered any explanation therefor. In the above circumstances, the additions made by the Assessing Officer with regard to the cash and other deposits in the bank accounts is confirmed. All the grounds of appeal raised are dismissed accordingly. 9. In the result, the appeal is dismissed.” 6. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 5 Rupesh Gupta Vs. ITO-3(1), Raipur ITA No. 164/RPR/2024 7. We 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. 8. Shri R.B Doshi, Ld. Authorized Representative ( for short ‘AR’) for the assessee at the threshold submitted that the A.O had made the impugned addition of Rs.1.38 crore (supra) based on half-baked facts and premature observations. Elaborating on his contentions, the Ld. AR submitted that the A.O had most arbitrarily rejected the assessee’s explanation that the amount of cash deposits in his bank account were cash receipts from his customers which were collected by him as commission agent for booking of motor cycles ( Hero Honda) on behalf of dealers, a fact which could safely be gathered from a perusal of the assessee’s bank account No.203000010060854 with Punjab National Bank, Branch : Chandkhudi, Raipur. The Ld. AR in support of his aforesaid claim had taken us through the aforesaid bank account, Page 47 to 58 of APB. The Ld. AR submitted that a cursory glance over the aforesaid bank account revealed beyond doubt that the cash deposits in the assessee’s bank account were thereafter, in a short span of time primarily transferred to the account of M/s. Rajdhani Auto care, i.e. a dealer of Hero Honda Motor cycles. Elaborating on his contention, the Ld. AR submitted that as the assessee 6 Rupesh Gupta Vs. ITO-3(1), Raipur ITA No. 164/RPR/2024 merely in the capacity of a commission agent of M/s. Rajdhani Auto Care (supra) was collecting cash from the customers, i.e. purchase price of the motor cycles on behalf of the aforementioned dealer, viz. M/s. Rajdhani Auto Care, which, thereafter, was admittedly transferred to the latter’s account, therefore, there was no justification for the A.O to have held the entire amount of cash deposits as the assesseee’s unexplained cash credit u/s. 68 of the Act. Carrying his contention further, the Ld. AR submitted that even if the assessment was to be framed by the A.O to the best of his judgment u/s. 144 of the Act, he remained under a statutory obligation to have carried out necessary verification from M/s. Rajdhani Auto Care (supra) as regards the nature of payments which were consistently over the year remitted/transferred to its account by the assessee. It was, thus, the claim of the Ld. AR that the addition of Rs.1.38 crore made by the A.O as regards the cash deposits in the assessee’s bank account by treating the same as his unexplained cash credit u/s. 68 of the Act was uncalled for. 9. Per contra, Dr. Priyanka Patel, Ld. Sr. Departmental Representative ( for short ‘DR’) relied on the orders of the lower authorities. 10. Admittedly, it is a matter of fact that can safely be gathered on a perusal of the assessee’s bank account No. 203000010060854 with Punjab National Bank, Branch : Chandkhudi, Raipur that major part of the cash deposits/amounts received vide transfer entries in tranches in the said 7 Rupesh Gupta Vs. ITO-3(1), Raipur ITA No. 164/RPR/2024 bank account were thereafter transferred over the year to M/s. Rajdhani Auto Care. In fact, except for, on few stary occasions all the “debit entries” in the aforesaid bank account are towards the amounts transferred by the assessee to M/s. Rajdhani Auto Care, while for on few occasions there are certain debit entries towards transfer of amounts to M/s. Shubham Auto Care and M/s. Sanjay Automobiles. 11. Considering the nature of the credit/debit entries in the bank account of the assessee, we find substance in the claim of the Ld. AR that the cash deposits made in the assessee’s bank account were in the nature of collections carried out by the assessee on behalf of the aforementioned dealers, viz. (i) M/s. Rajdhani Auto Care; (ii) M/s. Shubham Auto Care; and (iii) M/s. Sanjay Automobiles. The A.O, in our view in the course of the assessment proceedings ought to have carried out necessary verification from the aforementioned parties to whom the entire amount of cash deposits/credit entries were transferred by the assessee during the year under consideration. As there is substance in the claim of the Ld. AR that the assessee as a commission agent had only collected the aforementioned amount on behalf of the aforementioned dealers, and in lieu thereof, was in receipt of commission income, therefore, we are of the view that the matter in all fairness requires to be restored to the file of the A.O to verify the authenticity of the said claim. Accordingly, we restore the matter to the file of the A.O with a direction to re-adjudicate the same after necessary 8 Rupesh Gupta Vs. ITO-3(1), Raipur ITA No. 164/RPR/2024 verification. Needless to say, the A.O shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee. 12. In the result, appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in open court on 08th day of October, 2024. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; Ǒदनांक / Dated : 08th October, 2024. ****SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. The Pr. CIT, Raipur-1 (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "