UMERABANU,HOSUR V. ITO, WARD-1, HOSUR

ITA 1791/CHNY/2024

AI Insights

The case involves Umerabanu, an individual who acted as a distributor in a commission-based money transfer scheme, who appealed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of substantial cash deposits to her income under section 69A of the Income Tax Act, 1961. The Assessing Officer had added the entire cash credit to the income of the assessee under section 69A and charged it under section 115BBE, following which the CIT(A) confirmed this addition. The Tribunal noted that the assessee had not filed a return of income for the assessment year 2017-18, as her income did not exceed the basic exemption limit, and she was not required to maintain formal books of account due to minimal turnover. The Tribunal found that the Assessing Officer and the CIT(A) had not adequately considered the assessee's explanations and the documents provided, leading to the decision to remand the matter for fresh assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 107445 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 25-06-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GOUTHAMI MANIVASAGAM
• Assessee Lawyers: C. SATHISH
• Keywords: FORM 26AS
• Section: 147; 144; 69A; 139

Judgement Text

"आयकर अपीलीय अिधकरण, ’बी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी एस.आर. रगुनाथॎ, लेखा सद˟ क े समƗ Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri S.R. Raghunatha, Accountant Member आयकर अपील सं./I.T.A. No.1791/Chny/2024 िनधाŊरण वषŊ/Assessment Year: 2017-18 Umerabanu, D. No. 1, KM Complex via Gokul Nagar, Hosur, Tamil Nadu 635 109. [PAN: ABIPU9911H] Vs. The Income Tax Officer, Ward 1, Hosur. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri C. Sathish, C.A. ŮȑथŎ की ओर से/Respondent by : Ms. Gouthami Manivasagam, JCIT सुनवाई की तारीख/ Date of hearing : 17.10.2024 घोषणा की तारीख /Date of Pronouncement : 29.10.2024 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 26.04.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2017-18. 2. Ground No. 1 is general in nature and requires no adjudication. 3. Ground Nos. 2 & 3 raised by the assessee in challenging the action of the ld. CIT(A) in confirming the addition made under section 69A of the Income Tax Act, 1961 [“Act” in short]. I.T.A. No.1791/Chny/24 2 4. We note that the assessee is an individual and no return of income filed. According to the Assessing Officer, the assessee made substantial cash deposit in her bank accounts during demonetization period. The Assessing Officer formulated the said details in tabular form, which is in page 2 of the assessment order. The Assessing Officer observed that the assessee deposited ₹.95,31,000/- during demonetization period. A letter dated 29.07.2019 was issued to the assessee requesting to furnish the details of her income, copies of bank accounts, details of cash deposits and also to explain the nature and source of cash deposits. There was no response to the said notice. The Assessing Officer added the entire cash credit to the income of the assessee under section 69A of the Act and charged the same under section 115BBE of the Act and also addition of ₹.95,82,427/- by adopting 10% of total credits other than cash deposits during demonetization by order dated 16.12.2019 under section 144 of the Act. The ld. CIT(A) confirmed the same. 5. Before us, the ld. AR Shri C. Sathish, CA submits that the assessee is a proprietor of Hibah Traders, appointed as a distributor in a commission-based money transfer scheme run by Oxigen Services India Private Limited (“Oxigen), Spice Money Limited (“Spice”), Vodafone M- PESA Limited (“Vodafone”) and money on Mobile (“Mobile”). He submits that the said business held permission from the Reserve Bank of India. I.T.A. No.1791/Chny/24 3 He narrated the business activities as money transfer scheme facilitated by the assessee allowed customers to transfer funds between accounts. The assessee acting as a distributor, received cash from retailers/ customers, which was deposited into assessee’s own bank accounts. The assessee transferred the deposited funds from her bank account to the wallet account provided by Oxigen/Spice/Vodafone/Mobile (wallet). Further, he submits that once the amount is credited in the wallet account, the distributor could transfer the money from her wallet to the retailer/customers’ family/friends’ accounts based on their instructions. The assessee derived marginal commission for facilitating the said transactions. He submits that the assessee acting as a distributor earned an amount of ₹.1,27,187/- in the year under consideration and produced 26AS statement. He explained how the commission income arises with an example, which reads as under: Let's say Mr. X wants to send an amount of Rs. 1,000 to his family. He will approach the retailer and hand over cash Rs. 1,005 to the retailer. The retailer will hand over Rs. 1,005 to the Appellant. The assessee will deposit this money in her savings bank account. Once the amount is credited in the assessee’s savings bank account, the assessee will transfer the amount to the wallet account provided by Oxigen/Spice/Vodafone/Money-on-Mobile, thereby I.T.A. No.1791/Chny/24 4 recharging it to the extent of Rs. 1,005. The assessee will then recharge this amount to the retailer, debiting her wallet account by Rs.1,005, and crediting the retailer's wallet account by Rs. 1,005. Once the retailer sends the money through his wallet to the family of Mr. X, the amount of Rs. 1,000 will be credited to the bank account of Mr. X's family, and the retailer's wallet account will be debited by Rs. 1,005. Out of this transaction, there is a surplus of Rs. 5 (Rs.1,005-Rs.1,000) with Oxigen/Spice/Vodafone/Mobile. They will pay some amount as a commission to the assessee and the retailer. The commission amount will be credited to the wallet account of the assessee. It is also pertinent to note that the wallet account is a running account and hence one-to-one matching is not possible. 6. The ld. AR further submits that the money transfer scheme primarily caters to migrant employees who seek to transfer their hard-earned money to their families and friends. Most of the migrant employees are working in the Hosur location as casual labourers. They usually receive their labour charges in cash. Further, it would be difficult for them to deposit the amount in the bank account of family members during the business hours of the bank because the business hours of the bank and I.T.A. No.1791/Chny/24 5 the working hours of the labourers are the same. Hence, it is convenient for the migrant employees to hand over the cash to the retailer/the assessee and provide the details of the person to whom the amount is to be transferred. 7. The ld. AR argued that the total income of the assessee, inclusive of commission income, did not exceed the basic exemption limit of Rs. 2,50,000/-. Consequently, there was no obligatory requirement for the assessee to file a return of income under section 139 of the Act for the AY 2017-18. Additionally, due to her minimal turnover (commission income), there was no compulsion to maintain formal books of account as per section 44AA of the Act. Consequently, the assessee did not maintain books of accounts as prescribed under section 44AA of the Act. 8. It was also submitted that in 2019, the assessee faced a significant challenge when her husband fell ill and had to be admitted to the hospital. Additionally, due to the limited income generated and the inability to sustain the business, the assessee discontinued these activities. He further submits that in subsequent assessment year 2018-19, the Assessing Officer passed the order acknowledging the activities carried on by the assessee and estimated the commission amount as 0.8% of total transactions (credit) amount. I.T.A. No.1791/Chny/24 6 9. The ld. DR Ms. Gouthami Manivasagam, JCIT submits that there is no proof to determine the income of the assessee at 0.4% or 0.8%. She referred to page 25 of the paper book and submits that the margins to RMU for RO’s signed up by Oxigen and subsequently assigned to RMU’s will be calculated from the date of their assignment to RMU as per the record of Oxigen. The calculation of such margins will be based on Oxigen’s records in the software used for controlling/monitoring the transactions and these will be treated as final and binding upon the parties. Further, she referred to page 53 and submits that the payments envisaged herein are based on gross money value of the transactions done by the merchants and shall be on real time basis, though the invoicing shall be on monthly basis. 10. Having heard the submissions of the ld. AR and the ld. DR and on perusal of the paper book containing 413 pages filed by the assessee, we note that admittedly before the Assessing Officer and the ld. CIT(A), no representation were made which is clear from page 9 & 10 of the impugned order, which clearly shows that there was no assistance from the assessee in furnishing any documents to prove the sources of cash deposits in her bank accounts. The ld. CIT(A) confirmed the order of the Assessing Officer only on the impression why the third party has to gfive I.T.A. No.1791/Chny/24 7 cash to the assessee for transfer of money when all the citizens can open a bank account in their name and many rural branches are opened with a view to give banking access to all the citizens of this country. It is clear from the observations that the ld. CIT(A) did not believe the submissions of the assessee and doubted the business activities, which are narrated before us by the ld. AR herein above. Further, we refer to application filed under Rule 29 of the ITAT Rules, 1963 for admission of additional evidence, wherein, it is sought for re-examination of the matter by the authorities in view of the assessment order for subsequent year AY 2018- 19, wherein, it was stated that the Assessing Officer determined the income of the assessee at 0.8%. The ld. AR submits that the evidence as provided in item Sl. No. 1 to 4 of page 1 to 58 of the paper book were not available before the Assessing Officer and the ld. CIT(A) and sought another opportunity for the assessee. It is also noted that the Assessing Officer discussed similar issue in subsequent AY 2018-19 by bringing on the business activities in detail. We note that the copies of agreement with Oxigen Services (India) Private Limited, Spice Digital Limited and Form 26AS are at page 1 to 28, 45 to 54 and 55 to 58 were not available before the authorities below. Further copy of Email conversations with Oxigen Services (India) Private Limited at page 29 to 44 of the paper book were also not there before the Assessing Officer. Since the ld. AR I.T.A. No.1791/Chny/24 8 able to show the required documents before us in support of the claim of the assessee, we deem it proper to remand the matter to the file of the Assessing Officer for fresh consideration. The assessee is at liberty to file evidences, if any, before the Assessing Officer. Thus, ground Nos. 2 & 3 raised by the assessee are allowed for statistical purposes. 11. Ground Nos. 4 & 5 raised by the assessee in challenging the action of the ld. CIT(A) in confirming the addition towards business income of the assessee at ₹.95,82,427/- with a contention that in the year under consideration, the Assessing Officer estimated the income at 10% of the total credits in the bank account, whereas, in the subsequent assessment year 2018-19 vide order under section 147 r.w.s. 144B of the Act dated 25.03.2024, the Assessing Officer applied the rate of 0.8% of the total cash credited in her bank account. Under such circumstances, we are of the considered opinion that for the assessment year under consideration, since the Assessing Officer is required to determine the income of the assessee on verification of Form 26AS, we deem it proper to remand the matter to the file of the Assessing Officer for fresh consideration. The assessee is at liberty to file evidences, if any, before the Assessing Officer. Thus, ground Nos. 4 & 5 raised by the assessee are allowed for statistical purposes. I.T.A. No.1791/Chny/24 9 12. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 29th October, 2024 at Chennai. Sd/- Sd/- (S.R. RAGHUNATHA) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 29.10.2024 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. "