BALAGANESAN ANJALI,VELLORE vs. INCOME TAX OFFICER WARD-2, VELLORE, VELLORE

आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeal)/Delhi, (hereinafter referred to as ‘Ld.CIT(A)’), Delhi, dated 16.10.2025 for the Assessment Year (hereinafter referred to as ‘AY’) 2019-20. 2. At the outset, the Ld.AR of the assessee submitted that the Ld.CIT(A) has passed an order without adjudicating the grounds of appeal on merits on the plea that assessee didn’t respond to his notices. In this

ITA No.4112/Chny/2025 (AY 2019-20) Balaganesan Anjali :: 2 :: regard, the assessee brought to our notice that the assessment order was also passed ex parte qua assessee and the AO has made an addition of Rs.5,24,56,606/- and raised a demand of Rs.8,31,20,835/-. According to the Ld.AR, the assessee was functioning as a Business Correspondence Agent (BC Agent) (Bank Mitra) for the Central Bank of India through AGS Management Services and the money deposited in the OD account of the assessee was only used as a intermediary between bank and public, which money ultimately got deposited/ transferred to the Central Bank of India and for the services rendered, the assessee only received miniscule commission of 1%. Hence, the huge addition made in the hands of the assessee is arbitrary and since the assessment order itself was ex parte without hearing assessee, the assessee prayed for one more opportunity before the AO citing the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC).

ITA No.4112/Chny/2025 (AY 2019-20) Balaganesan Anjali :: 3 :: The present appeal arises out of the assessment order dated 13.03.2024 completed u/s. 147 read with sections 144 and 144B of the Income-tax Act, 1961 for Assessment Year 2019-20. The proceedings were initiated on the basis of information available with the Department that cash deposits of Rs.4,93,63,404/- and cash withdrawals of Rs.5,24,56,606/- had been made in a bank account standing in the name of the assessee. An order u/s.148A(d) was passed on 29.03.2023 and thereafter notice u/s.148 was issued on 30.03.2023. The assessment was ultimately completed ex parte on 13.03.2024 by treating Rs.4,93,63,404/- as unexplained money u/s.69A and Rs.30,93,202/- being the difference between the alleged cash withdrawals of Rs.5,24,56,606/- and cash deposits of Rs.4,93,63,404/- as income from other sources, resulting in a total demand of Rs.8,31,20,835/-. Aggrieved by the assessment order, the assessee filed an appeal before the learned Commissioner of Income-tax (Appeals). Along with Form No. 35, the assessee furnished, inter alia, the BC Appointment Letter, BC Agreement, Bank Confirmation issued by the Central Bank of India and other documents in support of the condone delay application. The learned CIT(A) condoned the delay in filing the appeal after accepting the explanation offered by the assessee. However, since no further submissions were filed during the appellate proceedings, the learned CIT(A) confirmed the additions solely on the basis that no supporting material had been placed before him for consideration. The order of the CIT(A) was passed on 16.10.2025. Aggrieved by the said appellate order, the assessee is now before this Hon'ble Tribunal seeking appropriate relief. Issue in brief The additions have arisen solely on account of large cash deposits and withdrawals reflected in an overdraft account maintained for Business Correspondent (BC) operations. The authorities below proceeded on the assumption that the entire deposits represented the assessee's own money. The documentary evidence now placed before this Hon'ble Tribunal establishes that the assessee was merely a BC of Central Bank of India earning commission income and that the impugned transactions represented banking transactions undertaken on behalf of customers. The issue involved in the present appeal is, therefore, whether customer funds routed through a BC account can be assessed as unexplained income in the hands of the BC. Before adverting to the merits of the additions, it is humbly submitted that the assessment itself proceeds on fundamentally incorrect transaction figures adopted from Form 26AS/SFT information, which are contrary to the bank's own records and confirmation. The additions therefore fail even at the threshold on facts. The Assessing Officer has adopted cash deposits of Rs.4,93,63,404/- and cash withdrawals of Rs.5,24,56,606/- solely on the basis of

ITA No.4112/Chny/2025 (AY 2019-20) Balaganesan Anjali :: 4 :: information appearing in Form 26AS/SFT. A perusal of the Form 26AS placed in the paper book (page 29 -at Part E below ) shows that the SFT entries for cash deposits and cash withdrawals have been reported twice. The figure of cash deposits of Rs.2,46,81,702/- appears twice under SFT-003_03A and the figure of cash withdrawals of Rs.2,62,28,303/- appears twice under SFT-003_03B. The figures adopted in the assessment order are therefore merely the result of duplication in SFT reporting and do not represent the actual transactions in the account. The bank confirmation (page 19 of the paper book) certifies cash withdrawals of Rs.2,62,38,457/- and cash receipts of Rs.2,62,38,457/-, which is exactly the figures as appearing in the bank statement during the relevant period (page 33 of the paper book – summary of bank statement on month-on-month basis) Consequently, the very foundation of the assessment is erroneous. The addition of Rs.4,93,63,404/- u/s.69A is based on an incorrect figure derived from duplicated SFT reporting and not from the actual bank records. Equally, the addition of Rs.30,93,202/- is merely a mathematical consequence of the same incorrect data. Once the actual figures certified by the bank are considered, the alleged difference between deposits and withdrawals disappears altogether. The addition of Rs.30,93,202/- would never have arisen had the Assessing Officer undertaken even a basic verification of the bank records. The primary evidence in relation to banking transactions is the bank's own statement of account and confirmation. Once the bank has certified the actual transactions no addition can be sustained merely on the basis of erroneous figures appearing in Form 26AS. Without prejudice to the above, even assuming that the transactions reflected in the account are considered for examination, the additions are unsustainable on merits and the same is substantiated hereinbelow. On merits Assessee was only a Business Correspondent (BC) of Central Bank of India and the impugned transactions do not represent her income The assessee was appointed as a BC Agent (Bank Mitra) for the Central Bank of India through AGS Management Services. The appointment letter and BC agreement are placed in the paper book in page number 14 and 15 to 18 respectively. Under the BC arrangement, the assessee was merely facilitating banking transactions such as deposits, withdrawals, account opening, NREGA payments, pension payments etc., for villagers of Mosur, Palaiyam and Vanakkambadi Panchayath through Aadhar Linked Machine, as seen in the confirmation letter given by the bank in page number 19 of the paperbook. The remuneration structure appearing in BC agreement page 16 of paper book itself establishes that the assessee was entitled only to

ITA No.4112/Chny/2025 (AY 2019-20) Balaganesan Anjali :: 5 :: commission/service charges for transactions and not to the underlying funds handled through the account. Therefore, the gross cash deposits and withdrawals routed through the BC account cannot be treated as the assessee's income. Nature of BC Activity – Cash transactions do not represent assessee's Income The assessee was functioning as a BC Agent (Bank Mitra) of the Central Bank of India through AGS Management Services, a corporate BC engaged by the bank. The appointment letter and BC agreement evidencing the same are placed in the paper book (supra). Under the BC model introduced by banks to promote financial inclusion in rural and semi-urban areas, the assessee acted as an extended service point of the bank for residents of villages within the assigned area. The assessee was authorised to facilitate various banking services including:  cash deposits into customers' bank accounts and cash withdrawals through BC point Machine ;  disbursement of government benefits like Old Age Pensions, Milk Payments, Salaries;  MGNREGA , welfare payments and other direct benefit transfer payments;  Account opening and customer enrolment activities;  Other banking transactions permitted by the bank through the BC channel. All of these activities were done through the Aadhaar Enabled Payment System (AePS) For carrying out these activities, the assessee was required to maintain an operational account through which cash received from customers and cash disbursed to customers were routed. Consequently, the account reflected substantial cash deposits and withdrawals on a day- to-day basis. However, such amounts never belonged to the assessee and represented monies of numerous banking customers whose transactions were facilitated through the BC outlet. The assessee functioned merely as an intermediary between the bank and the public. The funds deposited and withdrawn were part of the banking operations conducted on behalf of customers and constituted circulating transaction amounts rather than the assessee's own receipts or income. The remuneration structure under the BC agreement (supra) further demonstrates the true nature of the arrangement. The assessee was compensated only by way of fixed fees and commission linked to the number and volume of transactions undertaken and did not derive any beneficial ownership over the cash handled. The Central Bank of India has independently confirmed (supra) that the assessee was functioning as a BC since 06.01.2017 and that the transactions routed through the OD account (Page 34 of the paper

ITA No.4112/Chny/2025 (AY 2019-20) Balaganesan Anjali :: 6 :: book clearly specifies that it is the OD account of the BC) represented public banking transactions such as deposits, withdrawals, pension payments, MGNREGA payments, salary payments and account-opening activities carried out through the BC Point Machine. The bank has specifically certified that all transactions routed through the account were for the public only, thus proving that it is not the personal transaction of the assessee. The independent confirmation from the Bank completely explains the transactions. The bank confirmation certifies cash withdrawals of Rs.2,62,38,457 and cash receipts of Rs.2,62,38,457 during the relevant period. Thus, deposits and withdrawals substantially mirror each other, demonstrating a pass-through mechanism typical of a BC account. A detailed summary prepared from the bank statements (supra) establishes that cash deposited and cash withdrawn are corresponding transactions and nothing could be added in the hands of the the assessee. Accordingly, the cash deposits and cash withdrawals reflected in the account cannot be equated with the assessee's income and, at the highest, only the commission earned for rendering BC services could constitute the income in her hands. Therefore, the deposits and withdrawals reflected in the BC account are merely routing entries arising from banking operations conducted on behalf of customers and cannot be regarded as income of the assessee. This position is also evidenced by the BC Agreement, Appointment Letter and the confirmation issued by the Central Bank of India. Reliance is placed on the following judgments attached as a part of the case law book, where, in similar facts, the addition was deleted.  Addition u/s 69A cannot be invoked on Bank correspondence who acts on behalf of bank  Sushil Kumar Sharma Vs ACIT (ITA.No.1944/2023)[Delhi ITAT] – page 1 to 11 of case law book – para 10 -page 6 and 7.  Shri Prasenjit Das Vs.ITO,Ward-27(3),Haldia (ITA No.369/2022[Kolkata ITAT] page 12 to 17 of case law book – para 6 and 7 - page 15 and 16.  Aliveni Gurram Karimnagar vs Income Tax Officer Ward-2, Karimnagar [ITA No.1297/2025](ITAT Hyderabad) page 18 to 24 of case law book – para 3 and 7 – page 20, 23,24. Consistency – similarly placed BC of the very same bank was accepted by the Department In the case of Shri Babu Yuvaraj Rahavan, another BC of the same bank - Central Bank of India, operating under the same banking model, during the course of his assessment proceedings, the Assessing Officer accepted that the assessee was working as a Bank Facilitator for the Central Bank of India, that the cash deposits and cash withdrawals in the account represented transactions carried out on behalf of bank

ITA No.4112/Chny/2025 (AY 2019-20) Balaganesan Anjali :: 7 :: customers and that the assessee earned only commission income for such services. After verification of the bank certificate, BC agreement and supporting documents, the assessment was completed at the returned income without making any addition towards the cash deposits and withdrawals. (assessment order of Shri Babu Yuvaraj Rahavan attached from page 35 to 39 of the paper book – relevant para-para 3.2 and 3.4.2 (page 37 and 38 of paperbook)) Once the Department has accepted the nature of BC transactions in an identical factual situation, there is no justification for treating the present assessee differently without bringing any distinguishing material on record. The principle of consistency also supports deletion of the addition. Non-compliance before the Assessing Officer and CIT(A) was due to circumstances beyond the assessee's control It is submitted that the email id to which the notices were sent were handled by the Bank and it was informed to the assessee that the replies will be taken care by the Bank. Accordingly, the the assessee was of the firm belief that the issue / demand will be resolved. It is only after the order of the CIT(A), the assessee approached a Chartered Accountant and sought his guidance on the further steps and that is how the present appeal came to be filed. The addition u/s. 69A was made solely because the assessee did not respond and no explanation was available on record. Similarly, the CIT(A) dismissed the appeal only because no supporting documents were filed before him and specifically observed that there was no material on record to verify the claim. However, the fact remains that the assessee had uploaded the appointment letter, BC agreement, bank confirmation along with form 35 at the time of filing the appeal to explain the nature and source of the transactions. The CIT(A) ought to have verified the same and ought to have allowed the appeal on merits. Prayer The entire addition has arisen only because large cash deposits and withdrawals appearing in the BC account were mechanically treated as income. The documentary evidence now on record conclusively establishes that the assessee was merely a BC of Central Bank of India earning commission income and that the impugned cash transactions belonged to banking customers. Consequently, it is most humbly prayed that the addition of Rs.4,93,63,404/- u/s.69A and the further addition of Rs.30,93,202/- be deleted and thus render justice. Having perused the written submission, we don’t want to comment on the merit of the same. Since, we find that the assessee didn’t get proper opportunity before the AO, relying on the decision of the Hon’ble Supreme

ITA No.4112/Chny/2025 (AY 2019-20) Balaganesan Anjali :: 8 :: Court in the case of Tin Box Co. (supra), we set aside the impugned order the Ld.CIT(A) and restore the assessment back to the file of AO for de nova assessment, and the assessee is directed to participate in the assessment proceedings and file the relevant documents to substantiate her assertion about the deposit in her bank-account in accordance to law after hearing assessee. 5. In the result, the appeal filed by the assessee is allowed for statistical purpose. Order pronounced on the 09th day of July, 2026, in Chennai. Sd/- Sd/- (एबी टी. वक�) (एस. आर. रघुनाथा) (ABY T. VARKEY) (S.R.RAGHUNATHA) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�/ACCOUNTANT MEMBER चे�नई/Chennai, �दनांक/Dated: 09th July, 2026. YS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

Digitally signed YASHVI by YASHVIR SINGH R SINGH Date: 2026.07.20 10:18:17 +05'30'