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Facts
The assessee, engaged in money transfer services with her husband, deposited a large sum of cash into a joint savings account. The Assessing Officer treated this as unexplained income, and the CIT(A) upheld the addition. The assessee appealed to the Tribunal.
Held
The Tribunal noted that the joint account was used for money transfer facilitation services, and the cash deposits represented customer remittances, not the assessee's unexplained income. However, the assessee failed to provide a reconciliation of the commission earned from these services.
Key Issues
Whether cash deposits in a joint bank account used for money transfer services represent unexplained income of the assessee, and if not, whether the commission earned therefrom has been properly accounted for.
Sections Cited
143(3), 147, 148, 68, 133(6), 234A, 234B, 234C, 234D, 271(1)(c), 271F, 194H
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Before: SHRI PAWAN SINGH & SMT. RENU JAUHRI
Date of Hearing 29.10.2025 Date of Pronouncement 10.11.2025 आदेश /O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 03.07.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2014-15. 2. The assessee has raised the following grounds of appeal:
1. Reassessment proceedings bad-in-law i. On the facts and circumstances of case and in law the Ld AO erred In passing the assessment order under section 143(3) r.w.s 147 of income tax Act which is passed against the principal of natural justice and is bad in law. ii. On the facts and circumstances of case and in law The LD. Assessing Officer should have a reason to believe that any income chargeable to tax has escaped assessment for any assessment year addition shall not be made merely based on suspicion. iii. On the facts and circumstances of case and in law LD. AO erred in not providing the assessee with the reasons for reopening hence the whole proceedings are void ab initio and order passed by LD AO should be quashed. iv. On the facts and in the circumstances of the case and in law, the learned Assessing Officer erred in reopening the assessment under Section 147 of the Income-tax Act, 1961, after the expiry of four years from the end of the relevant assessment year, without demonstrating that there was any fallure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The reopening is therefore bad in law and liable to be quashed."
2. On the facts and in the circumstances of the case and in law, The Ld. CIT(A) erred in confirming the addition made by the Ld. AO of Rs.1,61,51,700/- as cash deposited in the bank u/s 68 treating the same as unexplained income and added the same to the income of the assessee.
3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition made by the learned Assessing Officer without properly appreciating that the transactions in question were undertaken by the assessee's husband through a bank account held jointly with the assessee. The learned CIT(A) further erred in failing to consider that tax was deducted at source (TDS) under the PAN of the assessee's husband, clearly indicating that the income did not pertain to the assessee.
4. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not considering the specific contention of the assessee that in response to notices issued under Section 133(6) of the Income-tax Act, 1961, the concerned parties duly confirmed that the transactions in question were carried out by Mr. Santosh Gupta, the husband of the assessee, and not by the assessee herself. The learned CIT(A) failed to appreciate this material evidence while adjudicating the matter 5. On the facts and in the circumstances of the case and in law, The Ld. CIT(A) erred in confirming the addition made by the Ld. AO on the fact that replies had not been received with respect to the notices issued u/s 133(6) to various parties.
6. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition made by the learned Assessing Officer by considering only the credit entries in the bank account in isolation, without appreciating the corresponding debit entries and the overall nature and flow of transactions in the account, which clearly demonstrate that the credits did not represent unexplained income of the assessee. Further we would like to state that the credit entry pertains to amount received from the public who want to send their money to their native places whereas debit entries pertains to the amount debited by the assessee to the company which further sends the said amount to the relatives in native place.
7. On the facts and in the circumstances of the case and in law, the Ld. CIT erred in confirming the of charging interest under section 234A 2348 234C and 234D of the Income Tax Act 1961 8. On the facts and in the circumstances of the case and in law, the Ld. CIT erred in confirming the of charging of penalty proceeding under section u/s 271(1)(c) of the Income Tax Act 1961 9. On the facts and in the circumstances of the case and in law, the Ld. CIT erred in confirming the of charging of penalty proceeding under section u/s 271F of the Income Tax Act 1961 10. The Appellant craves leave to add amend and or delete any of the above grounds of Appeal
s.”
3. Brief facts of the case are that filed return for A.Y. 2014-15 on 25.05.2015 declaring income of rs. 3,18,109/- from business and profession and other sources. Case was processed u/s. 143(1). Subsequently, based on the information regarding cash deposits in savings bank account of the assessee, a notice u/s. 148 was issued on 15.10.2019. with regard to the cash of Rs. 1,61,51,700/- deposited in assessee’s account, ld. AO rejected the assessee’s explanation that it represented money received from clients who had no account in Mumbai and wanted to send money to their native places and therefore used assessee’s service on payment of commission.
Accordingly, the entire amount was treated as unexplained and added u/s. 68 to the income of the assessee. Aggrieved, the assessee preferred an appeal before ld. CIT(A). However, ld. CIT(A) dismissed the appeal with following observation:
In my considered opinion, the appellant was not legally authorized to carry the alleged transaction on behalf of any other party. Moreover, the verification u/s 133(6) of the Act from the mentioned parties through which the transaction is claimed to be carried out, reveals that there has been no authentication of such transaction. In view of this, the AO's conclusion that the cash deposit of Rs. 1,61,51,700/- to be assessed under section 68 of the Income Tax Act, 1961, is upheld.
Further aggrieved, the assessee filed the present appeal before the Tribunal. The assessee has raised several grounds on legality of reopening as well as on the merits.
Before us, ld. AR has made written submissions on legal grounds as well as on the merits. With regard to the merits, ld. AR has submitted as under: � “Business Background: The appellant, along with her husband, was engaged in providing money transfer services and also operated a stationery and Xerox shop under the name "Maa Sharda Stationary and Xerox." � Registration as Authorized Agent: During the relevant year, the appellant and her husband were duly registered as business correspondents and money transfer agents (Certificate enclosed in Paper Book). � Nature of Cash Deposits: The appellant received cash from persons without bank accounts in Mumbai to remit funds to their native places. These amounts were deposited in a joint savings bank account (held with husband Santosh Gupta) and transferred through recognized channels such as State Bank of India using gateways of Suvidha Infoserve Pvt. Ltd., MOS Utility Finance Pvt. Ltd., Fintech Finance Ltd., and Oxigen Services Pvt. Ltd., against which commission was earned. � Joint Certificate: The certificate of business correspondence was issued jointly in the names of the appellant and her husband (Paper Book reference page 408-412). � Flow of Transactions: The bank statements (Paper Book pp. 06- 52) and State Bank records show that deposits were transferred immediately or the next day, confirming that funds were routed for remittance and not retained Error in AO and CIT(A)'s Approach: Both authorities erred in treating gross cash deposits of Rs. 1,61,51,700/- as unexplained income without considering corresponding debit entries. A bank account only reflects fund movements and cannot alone determine income. � Inflow-Outflow Pattern: Each deposit in the bank account was followed by a corresponding withdrawal or transfer, evidencing that funds belonged to third parties and the assessee acted merely as a facilitator, not the owner of funds. � Legal Principle: For income determination, both sides of the bank statement must be considered. Since deposits were offset by withdrawals, the addition under section 68/69A is unjustified. � Role of Husband: The money transfer operations were managed by Mr. Santosh Gupta, the assessee's husband, who handled remittance services. The joint bank account was used mainly for his business activities. � Supporting Certificates: The Paper Book contains certificates and authorizations showing both the appellant and her husband were registered agents with major payment facilitators - -Oxigen Services India Pvt. Ltd. (Agent Code 9009000238) - in assessee's name. -Fino Fintech Foundation Ltd., MOS Utility Pvt. Ltd., Suvidha Infoserve Pvt. Ltd. in Mr. Santosh Gupta's name (Certificates at pp. 60-62). -Maa Sharda Communication Centre registration under MOS Utility Pvt. Ltd., confirming business operations under his name. • Nature of Business Proven: These documents establish that the money transfer business was primarily operated by Mr. Santosh Gupta, and the assessee's account was used only as a joint operational channel, not as her independent business account. • Ownership of Funds: The transactions in the joint account pertain mainly to the husband's business. The account was used for convenience, and the deposits represent customer remittances, not assessee's income. • Evidence from Form 26AS (Santosh Gupta): Form 26AS of Mr. Santosh Gupta (Paper Book pp. 58-59) shows TDS deductions on commission income from several entities -Transcorp International Ltd. Rs. 22.42 (TDS) -Fino Payments Bank Ltd. - Rs. 121 (TDS) -Vodafone India Ltd. Rs. 200 (TDS) -Suvidha Infoserve Pvt. Ltd. Rs. 21,764 (TDS on Rs. 2,17,648 commission)
• Commission Statement Confirmation: The commission statement from Suvidha Infoserve Pvt. Ltd. (Paper Book pp. 67-407) corroborates the Rs. 2,17,648 commission credited to Mr. Santosh Gupta, matching Form 26AS details. • Supporting Tax Records: Income Tax Acknowledgment, Computation, Balance Sheet, and P&L of Mr. Santosh Gupta (Paper Book pp. 53-55) confirm that the said commission income was duly declared and taxed. Form 16A (pp. 56-57) and appointment certificates (pp. 60-62) further substantiate his authorization and operations. • Conclusion on Ownership of Deposits: The evidence conclusively proves that the deposits belong to Mr. Santosh Gupta's business, not the assessee. The same income has already been offered to tax in his return, and hence no addition can be sustained in the assessee's hands. • Income Already Declared by Assessee: The assessee has already disclosed brokerage income of Rs. 68,477.85 from Oxigen Services India Pvt. Ltd. in her return (Form 26AS at pp. 4-5), with TDS of Rs. 6,850 under section 194H. This income has been duly taxed and cannot be taxed again. • Bank Statement Evidence: The SBI bank statement (Account No. 30265735587, pp. 06-52) reflects total cash deposits of Rs. 1,61,51,700/-, which are merely customer remittance funds with matching withdrawals. The entries confirm the assessee's role as a service intermediary, not the owner of the funds. • Further we would like to bring to your kind attention that assessee's case is identical to those considered by the Hon'ble ITAT, Mumbai in the case of Shri Jeevan Javerchand Rathod. In that case, the assessee was engaged in a similar money transfer facilitation activity through companies such as Suvidha Infoserve Pvt. Ltd., MOS Utility Pvt. Ltd., and Fino Fintech Foundation. The Tribunal, after examining the pattern of deposits and withdrawals and the nature of business, held that the cash deposits represented business transactions and not unexplained income, and that only the commission earned therefrom could be brought to tax. The factual matrix and nature of operations in the present case being substantially the same, the ratio of the said decision squarely applies.” 4.2 Ld. AR has also placed on record, the following documents in the form of a paperbook:
“1. Copy of details with respect to certificates Name of Certificate Issuing Associated Bank Holder Company/Institution Mrs. Poonam Santosh Oxigen Services India - Gupta(Assessee) Pvt. Ltd. Mr. Santosh Gupta Fino Fintech Foundation Union Bank of (Husband of Assessee) Ltd. India Mr. Santosh Gupta MOS Utility Pvt. Ltd. State Bank of India (Husband of Assessee) Mr. Santosh Gupta Suvidha Infoserve Pvt. Axis Bank (Husband of Assessee) Ltd. Maa Sharda MOS Utility Pvt. Ltd. State Bank of India Communication Centre (Proprietorship Concern Operated by Mr. Santosh Gupta) 2. Copy of Working explaining Monthly cash deposits and withdrawals.
Copy of statement showing details of the parties giving cash to the assessee including there phone number and amount.”
4.3 Further, ld. AR has cited several judicial pronouncements by the co- ordinate benches in similar cases. Specifically, ld. AR has placed reliance on the decision of the Mumbai Bench in case of Jeevan Javerchand wherein under similar facts and circumstances, the co-ordinate bench has held as under:
7. We have heard rival submissions of the parties and perused the relevant materials on record. The Assessing Officer though has accepted the modus operendi of the assessee of collecting cash and withdrawing the same for further deposit to the accounts of respective companies, but the assessee was required to reconcile whether the amount of Rs.1,33,29,500/- deposited in his saving bank account was already considered while working out the commission in respect of deposits collected from customers pertaining to the three companies. The assessee has not demonstrated that the total deposits of ₹1,33,29,500/- were fully accounted for while computing commission income. No such reconciliation was provided by the assessee before the lower authorities. In the absence of reconciliation, the estimation of unexplained income cannot be said to be wholly without basis. Therefore, in the facts and circumstances of the case and in the interest of substantial justice, we feel it appropriate to restore this matter also back to the file of the Assessing Officer with the direction to the assessee for filing reconciliation as how the amount of Rs.1,33,29,500/- deposited in the bank account has already been considered while working out the commission received from relevant companies. The assessee shall furnish a detailed reconciliation showing how the cash deposits relate to specific customer transactions on behalf of the named companies and whether such amounts were already included while computing commission income. The Assessing Officer shall verify the reconciliation and pass a reasoned order thereafter. The No. 2 of the appeal of the assessee is also accordingly allowed for statistical purposes.
Ld. DR, on the other hand, has strongly relied on the orders of the lower authorities. He has pointed out the reasons for which the impugned addition has been made and these are recorded in para 6 of the assessment order as under:
“6. Notice u/s 133(6) of the act was issued to the various parties for genuineness and creditworthiness the above said transaction and bank statement was also called for from the State Bank of India as well as the assessee. From the bank statement, it is evident that the assesse has deposited cash amounting to Rs. 1,61,51,700/- in her saving bank account during the assessment year and further transferred the amount to various parties either same day or very next day. With reference to notice u/s 133(6) of the act, M/s Mos Utility Pvt Ltd has responded and submitted the copy of ledger account for the period from 01/04/2013 to 07/12/2013 and stated that there is no transaction beyond this date, From the ledger, it is clearly seen that the entire transaction is done on the name of Mr. Santosh Gupta and not in the name of the assesse.” Thus it was contended by ld. DR that the assessee had not discharged its onus u/s. 68 with regard to the cash deposited in her savings account and, therefore, the addition u/s. 68 in respect of cash deposited to the tune of Rs. 1,61,51,700/- deserves to be upheld.
We have heard the rival submissions, and the documents placed on record have been carefully considered. Admittedly, the assessee and her husband Shri. Santosh Gupta were engaged in the business of money transfer agents as isevident from the certificates placed on record which are listed in para 4.2 hereinbefore. The joint savings bank account with SBI was being used for this purpose as can be seen from the pattern of cash deposits and subsequent withdrawals/transfers. Thus the entire cash deposit could not be added to assessee’s income as she and her husband have used the account for rendering money transfer facilities to sundry customers, for a commission. However, the assessee has not demonstrated before the lower authorities as to how much commission has been earned, its computation and reconciliation of the total commission with the income declared from this activity in the returns of the assessee and her husband.
We also note that under similar facts, in the case of Jeevan Javerchand Rathod (supra), the co-ordinate bench had remanded the matter to the ld. AO and directed the assessee to furnish a detailed reconciliation. Since the facts and circumstances in the present case are similar, respectfully following the decision of the co-ordinate bench, we hereby restore the matter to the ld. AO for the purpose of reconciliation of commission earned and disclosed by the assessee from the business of money transfer agent. Ld. AO is directed to consider the assessee’s submissions and pass a fresh order on the issue after giving proper opportunity to the assessee.
In the result, assessee’s appeal is allowed for statistical purposes. Order pronounced in the open court on 10.11.2025.