GOVINDBHAI RAMESHBHAI ASARI,BHILODA SABARKANTHA vs. ITO WARD 1 MODASA, MODASA

आदेश/ORDER PER R. GOVINDARAJAN, ACCOUNTANT MEMBER:

These two appeals filed by the assessee are against the orders passed by Commissioner of Income Tax (Appeals), National Faceless Appeal Centre NFAC (in short, referred to as the CIT(A)) u/s. 250 of the Income Tax Act, 1961 (herein referred to as “the Act”) dated 31-12-2025 & 24-12-2025 relating to Assessment Years 2019-20 & 2020-21 for quantum appeal respectively.

I.T.A Nos. 609 & 612/Ahd/2026 Govindbhai Rameshbhai Asari, A.Y. 2019-20 & 2020-2021 3. The assessee has raised following grounds of appeals:-

ITA No. 609/Ahd/2026 For A.Y. 2019-20

“Ground 1 The Ld CIT Appeals has erred in law and on facts by upholding the decision of Ld AO in reopening the assessment of 1 the Assessee under section 148 based on unsigned approval under section 151 of the Act rendering the whole proceedings as void. Ground 2 The Ld CIT Appeals has erred in law and on facts by upholding the decision of Ld AO in initiating proceedings in the case of the Assessee despite the fact that the total income was below the basic exemption limit as prescribed under section 139 1 of the Income Tax Act 1961 Hence the Assessee was not liable to file a return of income for the relevant assessment year Ground 3 The Ld CIT Appeals has erred in law and on facts by upholding the decision of Ld. AO in passing order under section 147 r.w.s. 144 of the Act by making addition of Rs 34846961 under section 69A without considering the modus operandi of Asssessees business activities in the nature of business correspondent Ground 4 The Ld CIT Appeals has erred in law and on facts by upholding the decision of Ld AO in passing order under section 147 r.w.s. 144 of the Act by making addition of Rs 34846961 under section 69A without analysing the bank transactions appearing on debit as well as credit side of the statement Ground 5 The Ld CIT Appeals has erred in law and on facts by upholding the decision of Ld AO in making an addition of Rs. 34846961 under section 69A in the order passed under section 147 rws 144 without appreciating that in AY 2020 21, the Ld. AO has himself has accepted the fact that assessee is a Business Correspondent and only 1 percent of the transaction value was added, which itself was excessive. The Ld. AOs acknowledgment of the same nature of transactions in AY 2020 21 contrasted with the current addition, reflects an inconsistent and arbitrary approach. The actual commission earned was only Rs 90790 (0.29 percent of withdrawals)as supported by bank records Ground 6 The Appellant reserves the right to add alter amend OR 6 modify any of the grounds of appeal during the course of the appellate proceedings

Total Tax Effect Rs. 5,60,02,066”

ITA No. 612/Ahd/2026 For A.Y. 2020-21

“Ground 1. The Ld CIT Appeals has erred in law and as on facts by upholding the decision of Ld. AO in reopening the assessment of the Assessee us 148 of the Income Tax. 1961. without furnishing a copy of approval obtained under section 151 of Act. The failure to furnish such approval is deemed equivalent to non obtainment of the approval itself, rendering the issuance of notice and the entire reassessment proceedings null and void ab initio. Ground 2. The Ld CIT Appeals has erred in law and as on facts by upholding the decision of Ld. Assessing Officer in initiating proceedings in the case of the Assessee, despite the fact that the total income was below the basic exemption limit as prescribed under section 139 subsection 1 of the Income Tax Act, 1961. Hence, the Assessee was not liable to file a return of income for the relevant assessment year. Ground 3. The Ld CIT Appeals has erred in law and as on facts by upholding the decision of Ld. AO in passing order us 147 r.w.s. 144 of the Act by making addition of Rs. 446981 treating it as commission income applying flat rate of 1 percent which is significantly more than the actual commission applicable in BC transactions which is Rs 73754 from Baroda Gramin Bank and Rs 86812 from Vision India tech service, working out to 0.36 percent.

I.T.A Nos. 609 & 612/Ahd/2026 Govindbhai Rameshbhai Asari, A.Y. 2019-20 & 2020-2021

Ground 4. The Ld CIT Appeals has erred in law and as on facts by upholding the decision of Ld. AO in passing order u/s 147 r.w.s. 144 of the Act by making addition of Rs. 59548 under section 69A without analysing the bank transactions in totality, including both the debit and credit sides of the bank statement, which clearly reflect the business nature of the transactions.

Ground 5. The Appellant reserves the right to add, alter, amend, OR modify any of the grounds of appeal during the course of the appellate proceedings. Total Tax Effect Rs. 1,48,852”

Assessment Year 2020-21 Sl No. Description Addition 1 Cash Deposit (Assessed u/s. 69A 59,548/- r.w.s. 115BBE of the Act) 2 Estimated Commission Receipts i.e. 4,46,981/- variation in respect of commission income 3 Income From Other Sources 3,745/- 4 Variation in Receipt of Income 86,812/- From Business Total Additions 5,97,086/-

I.T.A Nos. 609 & 612/Ahd/2026 Govindbhai Rameshbhai Asari, A.Y. 2019-20 & 2020-2021 assessments was in order. CIT(A) also rejected additional evidence submitted by assessee in support of his claim for A.Y. 2019-20.

7.1 In our considered view, reopening of assessment and passing of best judgment assessment order for both the assessment years is valid as there was information about huge transactions in assessee’s bank account and no return was filed for both assessment years. Further, there was non-compliance on the part of the assessee during assessment proceedings. Hence, this ground of appeal is dismissed for both assessment years.

7.2. On quantum addition, we have heard both the parties and perused the relevant details.

7.3 Assessee, an individual residing in rural area, engaged as a business correspondent (BC) of Baroda Gujarat Gramin Bank (FBC-KO Code 15550052), was rendering banking facilitation services in under-banked areas during the relevant assessment years. The assessee serves as a bridge between the banking system and rural populace, facilitating monetary transactions through his BC Settlement account. For this purpose, assessee carries out transactions exclusively through BC Account No. maintained with Baroda Gujarat Gramin Bank which is designated as “overdraft” to BCS which is not a personal or a proprietary account but one linked directly to BC operations.

7.4 The money belonging to bank’s customers is handled by the assessee as an agent or intermediary. It does not become his income merely because it passes through an account operated in his name. It is handled in a fiduciary capacity. For 4

I.T.A Nos. 609 & 612/Ahd/2026 Govindbhai Rameshbhai Asari, A.Y. 2019-20 & 2020-2021 these transactions, assessee received commission and salary income. The gross amount deposited, withdrawn or transferred from this account cannot be treated as assessee’s income.

7.5 During the course of proceedings, assessee submitted a letter from Gujarat Gramin Bank dated 19-05-2026 which is reproduced below:

These details were made available during first appeal proceedings also. From the above, it could be noted that assessee had income below taxable limit for both assessment years. The additions made to the tune of Rs. 3,12,40,900/- as unexplained money u/s. 69A of the Act for A.Y. 2019-20 is nothing but entire bank transactions in

I.T.A Nos. 609 & 612/Ahd/2026 Govindbhai Rameshbhai Asari, A.Y. 2019-20 & 2020-2021 BC account for relevant assessment year. As these transactions pertained to various individuals and assessee is not the owner of the money, the same is not assessable in the hands of assessee. Hence, addition of Rs. 3,12,40,900/- made u/s. 69A of the Act for A.Y. 2019-20 is deleted as section 69A could not be invoked without any evidence showing that money belonged to assessee. Reliance is placed on decision of Hon’ble ITAT, Kolkatta in the case of Baidyanath Dutta vs. ITO, Ward 3(1), Bankura in ITA No. 304/Kol/2026 order dated 20-05-2026.

7.6. Similarly, cash deposit of Rs. 36,06,061/- made during assessment year 2019- 20 has been assessed u/s. 69A of the Act. This also pertained to various bank customers which cannot be assessed in assessee’s hands. This addition of Rs. 36,06,061/- cannot be sustained for the same reasons stated above.

7.7 Hence, addition of Rs. 3,48,46,961/- (3,12,40,900/- + 36,06,061/- ) is deleted for A.Y. 2019-20. Appeal for A.Y. 2019-20 is partly allowed.

8.1 For assessment year 2020-21, AO after obtaining bank statement details from Baroda Gramin Bank estimated the commission at 1% of total transactions (adhoc estimation) i.e. Rs. 4,46,981/-. When specific details were available from bank statement, AO need not have made adhoc addition. For the same reasons mentioned for assessment year 2019-20, addition of Rs. 4,46,981/- cannot be sustained without showing that the money belonged to assessee. AO did not establish the same. Even though, relevant details were produced before CIT(A), the same were rejected holding that presumptive taxation done (at 1% of turnover) was fair as no audited financials had been produced by assessee to justify the turnover for cash deposits and withdrawals. In our considered view, the view of the CIT(A) is not correct. Hence, addition of Rs. 4,46,981/- is deleted.

8.2 Similarly, addition of Rs. 59,548/- was made u/s. 69A r.w.s. 115BBE of the Act in respect of unexplained cash deposit. The impugned cash deposit represented explained business related transaction which arose out of legitimate business correspondent operation (BC) and not unexplained money within the meaning of 6

I.T.A Nos. 609 & 612/Ahd/2026 Govindbhai Rameshbhai Asari, A.Y. 2019-20 & 2020-2021 section 69A of the Act. Also, AO did not establish that money belonged to assessee. However, these transactions did not pertain to assessee and therefore, the above addition cannot be sustained. The same is directed to be deleted. Further, as per the certificate given by the bank for this year also, assessee was in receipt of income below taxable limit. In view of the above, addition made to the tune of Rs. 59,548/- is deleted.

8.3 AO made addition of Rs. 86,812/- (contract receipt from M/s. Vision India Software Exports) as not explained by the assessee. However, this receipt is duly corroborated by bank statement and form 26AS. Hence, in our considered view, this addition of Rs. 86,812/- requires to be deleted. We order accordingly.

8.4. Appeal for A.Y. 2020-21 is partly allowed.

Order pronounced in the open court on 02-09-2026

Sd/- Sd/- (RAHUL CHAUDHARY) (R. GOVINDARAJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 02/09/2026 a.k. आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद