KUSUM TIME AGENCIES PVT. LTD.,KOLKATA vs. I.T.O., WARD - 4(4), KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No.498/KOL/2026 Assessment Year: 2017-18 Kusum Time Agencies Pvt. Ltd................................................................................Appellant Todi Chambers, Room no.114, 1st Floor,2, lal Bazar Street, Kolkata- 700001, [PAN No. AABCK7790D] Vs. I.T.O., Ward – 4(4)..................................…………..…………………....……….Respondent Aayakar Bhawan, P-7, Chowringhee Square, West Bengal- 700069 Appearances by: S.K. Tulsiyan, Advocate, Nisha Rachh, CA & Aryan Rachh, Advocate, appeared on behalf of the Appellant. Sanjit Kumar Das, CIT, DR,,appeared on behalf of the Respondent. Date of concluding the hearing : June 15, 2026 Date of pronouncing the order : September 09 ,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee is directed against the order dated 27.01.2026 of the National Faceless Appeal Centre (NFAC), passed under Section 144 of the Assessment Year 2017-18 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 2. The brief facts of the case of the assessee are that the assessee had filed its return of income on 30.10.2017 declaring total income of Rs. Nil/-for the year under consideration. The case was selected for scrutiny through manualscrutiny as per CBDT's instruction. It appears from the data that the reason for Scrutiny Selection was:

ITA No.498/Kol/2026 Assessment Year- 2017-18 "Abnormal increase of cash deposits during demonetization period as compared to pre-demonetization period"Notice u/s 143(2) and 142(1) of I.T. Act. 1961 along with questionnaires were issued and duly served on the assessee through ITBA. But in response to the above notices the appellant did not turn up to furnish any explanation in respect of Abnormal increase of cash deposits during demonetization period as compared to pre-demonetization period i.e. 08.11.2016 to 31.12.2016 in its bank account as a result of the assessment u/s 144 of the Act for A.Y. 2017-18 was completed vide order dated 09.12.2019 at assessed income of Rs. 32,84,51,321/- after making addition of Rs. 32,84,51,321/- u/s 69A as "Unexplained Money'. Aggrieved by the said order assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been dismissed by the CIT(A) solely on the ground that assessee does not fulfil any of the requirements available in the rule 46A and thus the additional evidence submitted by the assessee is not accepted. Being aggrieved by and dissatisfied the assessee preferred appeal before us. 4. The Ld. AR has challenged the very impugned order by taking so many grounds in the memo of appeal which are as below: -

1a) "That the Ld. CIT(A) erred in law and on facts in confirming the invalid ex parte Assessment Order passed u/s 144 of the Income Tax Act, 1961 on the sole allegation of alleged non-compliances to the notices/show-cause letter/summon sent through profile of the appellant in ITBA Portal in as much as the same was in gross violation of principles of natural justice as the said Notices/show cause/summon etc. were not served on the correct and updated email address of the Appellant thus resulting in denial of effective opportunity of being heard.

ITA No.498/Kol/2026 Assessment Year- 2017-18 1b) That the Ld. CIT(A) failed to appreciate that the Appellant had duly intimated the change in its registered email ID to the Income Tax Department and that subsequent notices continuing to be issued by the Department on a non-functional email ID. rendered the entire assessment proceedings illegal.

1c) That the Ld. CIT(A) erred in law in upholding an assessment framed u/s 144 of the Act when the Appellant had already complied with Notices u/s 143(2) and 142(1) of the Act at the assessment stage by filing audited financial statements, bank statements, and other primary records.

1d) That the Ld. CIT(A) erred in law in upholding the said assessment wherein the Assessing Officer proceeded to complete the assessment without ever confronting the appellant with the proposed huge addition of Rs.32.84 Cr. This is a blatant breach of Section 282 and 2824 read with Rule 127, as well as the cardinal principle of audi alteram partem.

2a) That the Ld. CIT(A) erred in law and on facts in sustaining additions beyond the scope of the reason for which the case was selected for scrutiny, namely "abnormal increase of cash deposits during demonetization period as compared to pre-demonetization period".

2b) That the Ld. CIT(A) failed to appreciate that the Assessing Officer travelled far beyond the limited scrutiny mandate including all cash deposits before and after the demonetization window and even all cheque/RTGS credits in the account and treated the entire bank deposits (cash and non-cash) for the whole financial year (including demonetisation period) as unexplained. The addition of the entire Rs.32.84 Cr (which includes 224.44 Cr of non-cash deposits) grossly transgressed the sole scrutiny reason.

ITA No.498/Kol/2026 Assessment Year- 2017-18 2c) That the Ld. CIT(A) failed to note that the Assessing Officer did not obtain the mandatory approval of the Pr. CIT/CIT to convert the case to full scrutiny in order to expand the investigation beyond the demonetization issue. Issuing notices and making additions on issues outside the CASS-selected parameter, without written approval from the administrative Pr. CIT. violates CBDT's instructions governing limited scrutiny (e.g. Instruction No. 5/2016 and relevant circulars). Thus, the assessment order was passed in excess of jurisdiction and deserves to be annulled on this ground alone.

2d) That the assessment and the appellate order are passed in excess of jurisdiction and thus are bad in law and deserves to be annulled on this ground alone.

3a) That the Ld. CIT(A) erred in law and on facts in confirming the addition of Rs.32,84,51,321/- under section 694 of the Act, treating the entire bank deposits as "unexplained money", despite the same, all arising out of the normal business activities, being fully recorded in the regular books of account.

3b) That the Ld. CIT(A) failed to appreciate that section 69A can be invoked only where money is not recorded in the books of account, whereas in the appellant's case, all cash and bank deposits were duly recorded, reconciled, and explained as business receipts.

3c) That the Ld. CIT(A) erred in law in confirming the addition without rejecting the books of account under section 145 of the Act, which is a sine qua non before disregarding recorded transactions and making additions on an estimated or presumptive basis. In fact, the Assessing Officer never disbelieved the sales or profit figures per se, he simply assumed that bank credits undisclosed income.

ITA No.498/Kol/2026 Assessment Year- 2017-18 3d) That the Ld. CIT(A) erred in law and on facts whereby there is no finding that the sales corresponding to these deposits were bogus in as much as the CIT(A)'s order implicitly accepts that the appellant did report sales of Rs.27.85 Cr and that collections from prior year debtors accounted for most of the deposit-sales gap.

There is no evidence of any sales being fake or fabricated. All sales were supported by tax invoices and stock records.

3e) That the Ld. CIT(A) erred in law and on facts in upholding the addition of even cheque/RTGS credits arising from disclosed sales as unexplained money, which is contrary to settled law that bank deposits arising from business turnover cannot be taxed as income.

3f) That the Ld. CIT(A) failed to appreciate that taxing gross bank deposits instead of real income results in absurdity, double taxation, and is contrary to the scheme of the Income-tax Act. This is a misapplication of law, effectively taxing the entire turnover instead of the income component. It is well-settled that sales are never equal to income, and treating the gross receipts as income (especially when purchases and other expenses are on record) leads to absurd results. The impugned addition overlooks the appellant's cost of goods (mobile phones and lights) and operating expenses entirely, thereby inflating income astronomically and fictitiously.

4a) That the Ld. CIT(A) erred in law and on facts in confirming the addition of cash deposits made during the demonetisation period, despite uncontroverted evidence showing that such deposits were totally out of regular cash sales and out of the available cash balance. The mode of business explains the pattern of deposits. The appellant, being an officially appointed distributer of mobile phones of Samsung India Electronics Ltd. for the Hoogly area, conducted business of purchase and sale, wherein every piece stood fully documented and recorded vide 5

ITA No.498/Kol/2026 Assessment Year- 2017-18 IMEI No. Further, the customers (retailers in Hooghly and nearby) predominantly paid in cash, which was collected daily and periodically deposited. At any given time, the appellant had sufficient cash-in-hand balance (from ongoing sales) which was then deposited into the bank on various dates. Thus, each deposit was covered by prior cash sales - a fact confirmed by the cash book and sales register (produced at the first appeal stage). Neither the AO nor the CIT(A) identified any single credit in the bank that did not have a corresponding entry in the books. Regular business cash deposits cannot be arbitrarily treated as unexplained merely due to the timing clustering around demonetization.

4b) That the Ld. CIT(A) failed to appreciate that there was no abnormal increase in cash deposits during the demonetisation period when compared to pre-demonetisation months and earlier financial years, and hence the very basis of scrutiny was factually incorrect.

5a) That the Ld. CIT(A) erred in law in treating primary business records such as cash book, bank book, sales invoices, and audited accounts as "additional evidence" under Rule 46A, despite the same being statutory records maintained in the normal course of business.

5b) That the Ld. CIT(A) erred in law in confirming the addition on the basis of objections raised by the Assessing Officer under Rule 464, even after calling for a remand report, obtaining detailed verification, and granting full opportunity of verification to the Assessing Officer.

5c) That the Ld. CIT(A) failed to appreciate that once remand proceedings were conducted and the Assessing Officer was given full opportunity to examine the evidence, the procedural bar under Rule 46A stood cured and could not be used to sustain the addition.

5d) That the Ld. CIT(A) misdirected himself by selectively relying on adverse remarks in the remand report while ignoring the reconciliation,

ITA No.498/Kol/2026 Assessment Year- 2017-18 confirmations, tax invoices, detailed GST reconciliation and all relevant explanations furnished in full details and accepted as such during the remand proceedings.

5e) That the Ld. CIT(A) grossly erred in analysing the Remand proceedings wherein the Assessing Officer has offered no Rebuttal of Appellant's Explanation. The law is clear that the onus is on the assessee to explain the nature and source of deposits, and if a plausible explanation is given with evidence, the burden shifts to the Department to rebut it with cogent material. Here, the appellant amply explained the source of every rupee deposited as trading receipts from customers. This explanation was backed by contemporaneous records (audit report, sales ledgers, VAT returns, stock tally, debtor confirmations, etc., all filed before the CIT(A)). The AO made no effort to rebut this explanation, instead, he and the CIT(A) rejected the explanation on general suspicion that the sales could conceivably be inflated. This approach is against settled law. Mere conjecture or disbelief cannot replace evidence in such matters. Once the appellant discharged its initial burden by linking deposits to recorded sales, the failure of the Revenue to prove otherwise renders the addition untenable.

6a) That the Ld. CIT(A) erred in law in upholding the application of section 115BBE which is applicable only where income is rightly assessed under sections 68 to 69D. whereas in the appellant's case no unexplained income existed in law or on facts.

6b) That the Ld. CIT(A) failed to appreciate that business receipts duly recorded in the books cannot be subjected to tax under section 115BBE, which leads to confiscatory and punitive taxation contrary to legislative intent.

7a) That the impugned order passed by the Ld. CIT(A) is bad in law for failure to comply with section 250(6) of the Act, as the said order does 7

ITA No.498/Kol/2026 Assessment Year- 2017-18 not deal with the appellant's detailed Submissions, evidences/documents/books all furnished by the appellant in the remand proceedings and before the CIT(A).

7b) That the CIT(A) has wrongly held that the appellant did not actively cooperate during assessment and therefore the AO's best- judgment was justified in as much as it is clear on facts that any non- compliance was not wilful but due to the lack of proper notice. Once the matter reached appeal, the appellant in fact fully cooperated -filing detailed written submissions, additional evidence, and responding to every remand query. The CIT (A) had all material on record to adjudicate on merits. Thus, the plea of "non-compliance" cannot be used to gloss over the substantive evidences that were available by the appellate stage.

7c) That the Ld. CIT(A) erred in law whereby an ex parte assessment can be cured at the appeal stage if the assessee produces relevant evidence including additional evidence u/s 46A. In fact the Id. CIT(A), in spite of having doors completely opened to decide on merit, with a prejudiced mind chose to completely ignore all the detailed books, supporting evidences and information available before him in appeal and focussed singularly on a baseless initial procedural default of non- compliance. The Ld. CIT(A) has passed the Order with a prejudiced predetermined mind without offering any reasonable grounds.

ITA No.498/Kol/2026 Assessment Year- 2017-18 Ld. CIT(A) has only reproduced the assessment order and did not discuss the merit of the case nor considered the documentary evidences filed by the assessee at the time of remand proceedings. The Ld. AR submits that entire appellate order turns on a single issue whether the additional documents filed by the assessee admissible under rule 46A of the income Tax Rules. The Ld. CIT(A) has notwithstanding the detailed documentary record placed before him spanning two rounds of remand, eight separate files of the assessee and the paperbook which contains about 500 pages, dismissed the appeal solely on the ground that the assessee has failed to satisfy any of the exception under rule 46A and that the additional evidence was therefore, inadmissible. The Ld. AR submits that the assessee has maintained complete books of accounts including cash book, bank book (HDFC ledger) as well as register, purchase register and stock register for the year 2016-17 and the accounts have been duly audited and tax audited reports filed. The further submission of the AR is that every sell is evidenced by VAT invoice being itself conclusive proof of genuine sells.It has been further been submitted by AR that Assessing Officer and CIT(A)have treated the entire bank account credits of Rs. 32,845,132/- as unexplained money u/s 69A while completely ignoring the (a) debt side of the same bank account showing Rs. 28,836,4310/- paid to two identified suppliers,(b) The complete audit accounts showing all sales duly reflected,(c) 304 invoices,(d) 92 identified customers and (e) the vat paid vat page on every transaction. The ld. AR by submitting a bunch of documents before us submitted that non-compliance at the time of assessment proceeding by the assessee was due to the reason that there was no proper service of the notices to the assessee and his prayer that Hon’ble Tribunal be held that the ex-parte assessment order dated 09.12.2019 is invalid in

ITA No.498/Kol/2026 Assessment Year- 2017-18 law having been passed on the basis of notices not lawfully served and without affording the assessee and effective opportunity of hearing and to quash the same or in the alternative to set aside the assessment with appropriate directions for fresh adjudication after valid service and due opportunity in accordance. Contrary to that ld. DR submits that the order passed by the AO is an ex-parte order and CIT(A) has also not considered the documents filed by the assessee at the time of remand proceedings so appeal may be remitted back to the file of AO for fresh order. 5. Upon hearing the submission of the counsel of the respective parties and on perusal of the order of the lower authorities, we find that assessment order was passed in the absence of the assessee as in spite of notices issued to the assessee, Assessee did not file any response nor substantiate any explanation, as a result of which, an ex- parte assessment order has been passed by the Assessing officers by making an addition of Rs. 32,84,51,321/- as unexplained money u/s 69A read with section 115BBE of the Act. Before the appellate proceedings the Ld. CIT(A) asked for remand report from the AO with regard to the documents filed by the assessee, but heinstead of discussing the documents dismiss the appeal by holding that appellant does not fulfil any of the above exceptions available in the aforesaid rule 46A,so additional documents submitted by the assessee is not accepted. There is no denying to this fact that assessment order was passed in absence of the assessee. CIT(A) has also not discussed the issue on merit rather confirmed the order passed by the AO by reproducing the same. On perusal of the documents filed by the assessee, the following facts have been emerged: -

ITA No.498/Kol/2026 Assessment Year- 2017-18 DATE Event Appellant’s Action 30/10/2017 Return of Income filed for AY 2017- Filed 18 declaring loss of Rs. 1,23,484/- 28/09/2018 Notice u/s 143(2)- served on Replied on 28/11/2018 working VSNL email with complete audited accounts 01/05/2019 Notice u/s 142(1)- served on Replied on 09/05/2019 working VSNL email with MOA, ITR, Bank Statement etc. 04/06/2019 Email ID changed; intimate3d to IT New email; Dept; confirmed by Dept contact@kusumtime,com 16/07/2019 All subsequent notices sent to Not received; no to defunct VSNL email compliance 28/11/2019 09/12/2019 Ex-parte Assessment Order u/s Accessed on portal on 144- addition of Rs. 18/12/2019 32,84,51,321/- 30/12/2019 Appeal filed before Cit(A) Filed within 11 days of discovery 12/02/2021 Notice u/s 250- Detailed Filed with Bank Statement, Submission with all documents Cash Book, Audited Accounts etc. 11/09/2023 First Remand Letter Replied 19/09/2023 and 21.09/2023 12/10/2023 314 Sales invoices filed 25 days before Remand Report 18/10/2023 Second Remand letter Replied 06/11/2023(same day as Remand Report) 06/11/2023 First Remand Report Factually erroneous; ignored all submissions 08/01/2024 Notice u/s 250 enclosing First ____ Remand Report 12/01/2024 Complete4ly Reply to First Remand Filed Report before CIT9A) 26/06/2024 Third Remand Letter Replied 02/07/2024

ITA No.498/Kol/2026 Assessment Year- 2017-18 28/06/2024 Fourth Remand Letter Replied 05/07/2024, 18/07/2024, 30/07/2024 31/07/2024 Fifth Remand Letter Replied 01/08/2024 with 9 attachments 13/02/2025 Second (Final) Remand Report Contains fundamental arithmetic error; ignores all submissions 18/02/2025 Notice u/s 250 enclosing Second -________ Remand Report 25/02/2025 Reply to Second Remand Report Filed with 24 supporting before CIT(A) documents

The assessee has filed the following documents before us:-

NO. DESCRIPTION 1 Return of Income filed in ITR-6 on 30/10/2017 2 Audited Accounts of the Assessee Company for the A.Y.2017-18 3 Audited Accounts for the A.Y.2016-17 4 Computation Income for the A.Y.2017-18 5 Memorandum and Articles of Association along with the Certificate of Incorporation 6 The Form 18 being the Notice of Change of Registered Office filed with the ROC along with intimation before the Licencing Officer, Kolkata Municipal Corporation 7 Trade license with KMC of the Appellant Company at the said registered address for the F.y.s 2016-17, 2019-20 and also 2024-26 8 Email dated 03/02/2016 confirming the said appointment of the Appellant as the Samsung Regional Distributor (SRD) 9 Certificate of Enlistment from the Uttarpara Municipality granted to the Appellant Company as Distributor of Mobile phones through the 2017 until 2025. 10 Airtel Bill for the Wi-fi at the Registered address of Todi Chambers for the month of Feb 2025 11 The “Cash Transaction 2016’ Statement downloaded by the Appellant Company from the I.T. Portal

ITA No.498/Kol/2026 Assessment Year- 2017-18 12 Typed version of the “Cash Transaction 2016” Statement Apart from the documentary evidences, the assessee has also filed: - (1) Balance-sheet and profit and loss (2) The MOA of the company (3) Company master data, ITR details of director with pan, the bank account. Company being NDG Bank for the financial year 2016- 17, bank statement of the assessee company, bank ledger, cash book etc. 6. Upon hearing the submission made by the assessee and on perusal of the order it is not in indispute that a lot of documentary evidences have been filed by the assessee at the time of remand proceedings. CIT(A) ought to consider the documentary evidences before passing any final order. It is a case of abnormal increase of cash deposit during demonetization period as compared to pre- demonetization period and the order passed by the AO is an ex-parte order and CIT(A) has not discussed the documents filed by the Assessee at the time of remand proceedings rather he confirmed the order of AO by holding that assessee failed the establish the source of money found in the bank. Lot of documentary evidences which at least runs about 500 pages have been placed by the assessee at the time of remand proceedings.Proper verification of document to come into the right conclusion are essential and that can only be done by the assessing officer. Accordingly, we remitted the appeal of the assessee to the file of the Assessing officers with a direction to pass a fresh order after giving an opportunity to assessee to place his case. Assessing officers is directed to shall consider the documents filed by the assessee and thereafter pass a fresh order in accordance with law. In the result, the appeal of the assessee be remitted back to the file of the Assessing officer. Order of both lower authorities are hereby

ITA No.498/Kol/2026 Assessment Year- 2017-18 set aside. Appeal of the assessee is remanded back to the file of the AO for fresh consideration. In the result, the appeal has been allowed for statistical purpose.

Kolkata, the 09th September , 2026.

Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member

DC Dated: 09.09.2026.

Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order

ITA No.498/Kol/2026 Assessment Year- 2017-18