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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
O R D E R This is an appeal filed by the assessee a This is an appeal filed by the assessee against the order of the gainst the order of the CIT(A)-2, Bhubaneswar , Bhubaneswar dated 20.12.2016 for the assessment year for the assessment year 2012- 13.
None appeared on behalf of the assessee when the matter was None appeared on behalf of the assessee when the matter was None appeared on behalf of the assessee when the matter was called for hearing. Perusal of order sheet, it is revealed that it is an old called for hearing. Perusal of order sheet, it is revealed that it is an old called for hearing. Perusal of order sheet, it is revealed that it is an old appeal and case was adjourned several times at the request of the ld A.R. appeal and case was adjourned several times at the request of the ld A.R. appeal and case was adjourned several times at the request of the ld A.R. of the assessee ee. However, it is a general practice of ld A.R. to take the . However, it is a general practice of ld A.R. to take the adjournment just to delay the hearing of the case just to delay the hearing of the case. In view of above, I . In view of above, I proceed to decide the appeal of the assessee exparte after hearing ld D.R. proceed to decide the appeal of the assessee exparte after hearing ld D.R. proceed to decide the appeal of the assessee exparte after hearing ld D.R. and on the basis of materials available on record and on the basis of materials available on record.
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Ground No.1 relates to quashing of assessment order passed by the AO by issue of notice u/s.148 of the Act without having reasons recorded.
When this fact brought to the knowledge of ld D.R., he produced a certified copy of notice sheet dated 8.12.2013, of assessment record containing reasons recorded u/s.148 of the Income tax, as under:
“ The assessee has filed his return of income for assessment year 2012-13 on 7.8.2013 disclosing total income of Rs.3,67,010/-. It is seen from information available on record that the assessee has made following transactions which are reflected in AIR and CIB.
Deposited (cash of Rs.10,00,000 or more in a saving bank a/c. (ICICI Bank Ltd.) 2. Time deposit exceeding Rs.2 lakhs with banking company (HDFC Bank ltd.,) For that, I have reasons to believe that income chargeable to tax for assessment year 2012-13 has escaped assessment within the meaning of section 147 of the Income tax At, 1961. Issued notice u/s.148 to the assessee.”
On perusal of order sheet, I find that the AO has recorded the reasons before issuing notice u/s.148 of the Act for completing assessment u/s.147 r.w. 143(3) of the Act. It is well settled law that the validity of the reassessment proceedings is to be judged with reference to the reasons recorded for reopening the assessment, which is done in this case. Hence, I do not find force in this ground of appeal, which is hereby dismissed.
Besides the above legal ground, the assessee has also raised various grounds on merits, which are discussed as under:
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Ground No.2 relates confirmation of addition of Rs.27,049/- under the head “ conveyance allowance”.
The ld CIT(A) has confirmed the addition, inter alia, observing as under:
“….. During the course of assessment proceedings, the AO found that the appellant has claimed exempt conveyance allowance of Rs.36,649/-. The AO is of the view that the appellant is eligible for exempt conveyance allowance of Rs.9,600/-. Therefore, it is sustained and the ground of appeal is dismissed.”
8. I have heard the submission of ld D.R. As per circular No.6/2004 dated 6.12.2004, the assessee-individual is entitled to deduction of Rs.9600/- per year with regard to conveyance allowance. In this case, the assessee has claimed Rs.36,649/-, which is not in accordance with the CBDT circular. Therefore, I concur with the findings of ld CIT(A) in confirming the disallowance. This ground of appeal is dismissed.
9. Ground No.3 relates to confirmation nof addition of Rs.18,000/- on account of interest income of Rs.18,000/-.
10. On perusal of the impugned order, I observe that the assessee had deposited of Rs.3,00,000/- as fixed deposit and has shown Rs.1,00,000/- in the return of income. Therefore, the AO calculated the interest income of Rs.18,000/- on the fixed deposit of Rs.2,00,000/- and added to the total income of the assessee. I also observe that during the appellate proceedings, the ld A.R. of the assessee accepted the addition and same
P a g e 3 | 10 was confirmed. If this is the position, there was no necessity to agitate ths issue before the Tribunal. Hence, I confirm the addition and this ground of appeal is dismissed.
11. In Ground No.4 of appeal, the assessee is aggrieved by the confirmation of addition of Rs.22,77,420/- regarding deposits made in the bank account and Ground No.5 relates to addition of Rs.2,20,950/- with regard to cheque deposits in banks.
Facts of the case are that during the course of assessment proceedings, the Assessing Officer noticed that the assessee had nine bank accounts in different banks. The Assessing Officer also noticed that there are various mode of deposits i.e. cheque, cash, fund transfer and other deposits totaling to Rs.46,07,608/-. Out of above amount, cash deposits of Rs.22,77,420/- and Rs.2,22,950/- in cheque deposits were made during the relevant financial year. On being asked to explain the mode and source of deposits in cash and cheques, it was the submission of the assessee that the cash/cheque deposits were made in his bank accounts after receiving from the customers of E-Nxt Financial Ltd., as the assessee was responsible for collection of loan instalments from several persons from places like Jagatsinghpur, Paradeep and Kendrapara and the money was received in cash and the same was given back to the employer company. Since the assessee could not furnish necessary evidence of giving the money to the P a g e 4 | 10 employer company, the Assessing Officer made the addition of Rs.22,77,420/- as cash deposits and Rs.2,22,950/- as cheque deposits.
On appeal, the ld CIT(A) confirmed the addition, mainly on the ground that the assessee has not been able to submit any confirmation letter from E-Nxt Financial Ltd., regarding receiving of money from the assessee and any authorization that the assessee is authorized to receive money from the customers on behalf of the employer company.
Ld D.R. supported the orders of lower authorities. He submitted that since the assessee has not been able to explain the source of cash deposits/cheque deposits with documentary evidence, the authorities below were right in making the addition and confirming the same.
I have heard the submission of ld D.R. and perused the record of the case. It is not disputed that the assessee was working in E-Nxt Financials Ltd., for collection of loan installments from various customers on behalf of his employer. On perusal of assessment order, it is seen that the assessee had produced a letter to the AO dated 7. 11.2016 claimed to have been written to E-Nxt Financial Ltd., wherein, information regarding collection and deposit by the appellant was asked for. From the above letter, it is clearly inferred that the service rendered by the appellant to his employer as collection agent of loan instalments. It is claimed by the assessee that after receiving the cash, same was deposited in his bank account and P a g e 5 | 10 thereafter the same was paid to Employer Company. On perusal of orders of authorities below, I observe that there are cash deposits and cheque deposits in several bank accounts and assessee has failed to furnish necessary evidences regarding the source of collection of cash and cheques and depositing the same in his bank account, except submitting that the cash/cheques were collected from the customers on behalf of his employer company i.e. E-Nxt Financial Ltd. The Assessing Officer has accepted some amount being received in cheque payments, therefore, it is safely presumed that the assessee was responsible for collection of money from the customers.
In the case at hand, the assessee had not disclosed the cash deposits/cheque deposits made in various bank accounts maintained by him in his name. When the cash/cheque deposits was unearthed by the AO and same being questioned, the assessee explained that the cash deposits/cheque were made after receiving the same from the various customers on behalf of his employer company i.e. E-Nxt Financials ltd but could not produce any evidence i.e. confirmations from the customers or the authorization letter of his employer company to receive the cash on their behalf. It is not the case of the revenue that the assessee was not employed as collection agent by the employer. It is also accepted by the department that some amounts of instalments received in cheque were genuine and there is no dispute to that effect. It is claimed by the assessee
P a g e 6 | 10 that during his visit to different places, he used to collect cash and cheques from customers on behalf of the employer and immediately deposited the cash in his bank account because he did not want to take any risk for carrying the cash. Later on, same were withdrawn and deposited in the office of the employer. The assessee is an employee and filling the income tax return of only salary income. There are no such assets or any other business activity from which it can be said that the assessee has earned a sum of Rs. 30,97,940/- from undisclosed sources. It is also very clear that what so ever amount was collected or deposited in bank account of the assessee has been transferred to the employer company. The assessee has collected the money in Cash/Cheque from various customers and thereafter had deposited in company account. The mere fact that the assessee has not furnished letter from his employer that he is engaged as collection agent is no ground to disbelieve his contention. The Assessing Officer has accepted in the assessment order that the assessee is employed as collection agent. From the above facts, it is inferred that the Assessing Officer has negated the contention of the assessee on surmises and conjectures. There is no doubt that every assessee submits explanations. There is further no doubt that every explanation should not be accepted as a truth. But wherever the explanation contains truth, it requires to find out such truth and to give benefit of the same to the assessee. It would not be correct to reject the explanation outright without weighing the evidence and P a g e 7 | 10 without seeing the reasonableness of the evidence. In the present case, the explanation of the assessee that he has deposited the cash collected from the customers in his bank account and thereafter deposited the same in his employer account cannot be denied outright because it is his contention that he collected cash and cheques on behalf of the employer. The AO has accepted the amount deposited by cheques which was also collected from the customers of his employer.
After considering the entire facts and circumstances of the case, I am compelled to observe that the entire amount cannot be treated as unexplained cash credit/deposits in his bank account especially keeping in view the fact that he is working and drawing salary as loan collection employee and the AO has not brought any fact in regard to establish that the assessee is having other undisclosed sources of income , out of which this amount was earned and deposited to his bank account. Regular deposits and withdrawals fortify the fact that it was his employer money which was collected by him from customers and on various places to save risk of carrying cash and he withdrew the amount from the said bank account and deposited to the account of employer being the money belonging to his employer.
Therefore, in my considered view, the Assessing Officer has not considered the facts of the assessee on right perspective and added the cash collected by him to his income and part of the cheque collection has P a g e 8 | 10 been allowed. When one part of collection of loan instalment has been allowed being receipt through cheque then other part cannot be disbelieved and disallowed merely because it was cash deposit. It is also not necessary that any other additional positive material should be produced by the assessee in order to discharge this burden which rests upon him. The assessee may claim to have discharged the burden by relying on the material which is on record by filing a letter dated 7.11.2016 asking the employer to intimate the collection and deposit, irrespective of whether it is complied by the employer or not. If it can be said on a preponderance of probabilities that the failure to give the collection and deposit by the employer has not arisen on account of any fraud or any gross or wilful neglect on the part of the assessee. Hence, I set aside the orders of the lower authorities on this issue and direct the AO to delete the addition of Rs.22,77,420/- as cash deposits and Rs.2,20,950/- being cheque deposits and allow Ground Nos.4 & 5 of the assessee.
In the result, appeal of the assessee is partly allowed.
Order pronounced on 22 /10/2021.