PRADEEP KUMAR MISHRA,KUSHI NAGAR vs. ITO KUSHI NAGAR, KUSHI NAGAR

IN THE INCOME TAX APPELLATE TRIBUNAL VARANASI BENCH, VARANASI BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA Nos.167 & 168/VNS/2025 A.Y. 2017-18 Pradeep Kumar Mishra, vs. Income Tax Officer, Near Sahu Palace, Padrauna, Kushi Nagar Kushi Nagar, U.P. PAN: BAKPM2996L (Appellant) (Respondent) Assessee by: None Revenue by: Shri. Sudipta Paul, Sr. DR Date of hearing: 06.08.2026 Date of pronouncement: 31.08.2026 O R D E R PER BENCH: These two appeals have been filed by the assessee against the separate orders of the ld. CIT(A), NFAC both dated 27.06.2025, wherein the ld. CIT(A) has dismissed the appeals of the assessee against the order of the ld. Assessing Officer passed for the A.Y. 2017-18 under section 2017-18 under section 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act and also the penalty levied under section 271AAC(1), vide orders dated 30.03.2022 and 19.09.2022 respectively. As the issues involved are common and the penalty arises out of the assessment order in question, these two appeals were heard together and are being disposed together for the sake of convenience. The grounds of appeal in these two appeals are as under: - ITA No.167/VNS/2025 “1. Because on the facts and circumstances of the case, the order of the learned CIT-A is erroneous and not tenable in law and on facts.

ITA Nos. 167 & 168/VNS/2025 Pradeep Kumar Mishra 2. That the learned Commissioner of Income Tax (Appeals) erred both in law and in facts by dismissing the appeal as time-barred without allowing sufficient opportunity to explain the reasons for the delay adequately. 3. That the learned CIT(A) failed to appreciate that the appellant could not submit the explanation for the delay in filing the appeal as It did not occur to the mind of the appellant to explain the condonation of delay. This is because total of three notices were issued, out of which the first two notices did not mention anything to explain about condonation of delay. In the third notice, where the appellant was asked to explain the delay, the appellant did not read it properly and submitted the reply without explaining the reason for the delay, which constituted sufficient cause under section 249(3) of the Act. 4. That the learned CIT(A) has erred in not condoning the delay in filing the appeal, thus denying the appellant the right to be heard on merits and causing grave prejudice against the principles of natural justice. 5. That the appellant prays that the delay in filing the appeal before the CIT(A) may kindly be condoned and the matter be restored to the CIT(A) for adjudication on merits. 6. That the appellant craves leave to add, amend, alter or withdraw any of the above grounds at the time of hearing.” ITA No.168/VNS/2025 “1. Because on the facts and circumstances of the case, the order of the Ld CIT-A is erroneous and not tenable in law and on facts. 2. That the Ld CIT-A erred both in law and in facts by dismissing the appeal as time-barred without allowing sufficient opportunity to explain the reasons for the delay adequately. 3. That the Ld CIT-A has erred in law and on facts in dismissing the appeal without adjudicating the same on merits, merely on the ground that no condonation petition was filed for the delay in filing the appeal. 4. That the Ld CIT-A failed to appreciate that the delay in filing the appeal was due to reasonable and bonafide circumstances, and the appellant ought to have been granted an opportunity to explain the cause of delay before dismissal. 5. That the Ld CIT-A erred in dismissing the appeal without considering that the appellant, being a layman/small assessee/unaware of procedural requirements, had no mala fide Intention and was prevented by reasonable cause from filing the condonation petition. 6. That the Ld CIT-A failed to exercise the discretionary power to condone the delay in a liberal and judicious manner, which has resulted in denial of effective appeal remedy. 7. That the penalty order under section 271AAC(1) passed by the Assessing Officer is bad in law and facts, and has been sustained by Ld CIT-A without examination of merits or application of mind, which is legally untenable.

ITA Nos. 167 & 168/VNS/2025 Pradeep Kumar Mishra 8. That the appellant respectfully seeks condonation of the delay before the Hon'ble ITAT, and prays that the matter be restored to the file of Ld CIT-A for fresh adjudication on merits in the interest of justice. 9. That the Ld CIT-A has erred in not condoning the delay in filing the appeal, thus denying the appellant the right to be heard on merits and causing grave prejudice against the principles of natural justice. 10. That the appellant prays that the delay in filing the appeal before the CIT(A) may kindly be condoned and the matter be restored to the CIT(A) for adjudication on merits. 11. That the appellant craves leave to add, amend, alter or withdraw any of the above grounds at the time of hearing.” 2. The facts of the case are that the Assessing Officer received information that despite not having filed a return of income for the assessment year 2017-18, the assessee had made cash deposits in a current account amounting to Rs. 2,09,30,200/-; made cash withdrawals from current account amounting to Rs. 2,07,83,700/- and received TDS on commission or brokerage under section 194H of Rs. 93,396/-. Therefore, invoking the provisions of clause (a) of explanation 2 to section 147, the ld. Assessing Officer held it to be a case where income chargeable to tax was deemed to have escaped assessment and after obtaining the necessary sanction from the competent authority, issued a notice under section 148 to the assessee on 27.03.2021. The assessee did not file any return in response to the notice under section 148. A further opportunity was given to the assessee by way of issue of notice under section 142(1) dated 19.01.2022, but this was also not complied with. A reminder letter was issued for submission of relevant documents, but this too was not complied with. Accordingly, a notice under section 133(6) of the Income Tax Act, was issued to the Bank of Baroda. It was seen that the assessee had done financial transactions with M/s Fia Technology Services Private Limited and M/s Bank of Baroda and received commission amounting to Rs. 93,396/-. Since the assessee had not made any compliance to the various notices, the

ITA Nos. 167 & 168/VNS/2025 Pradeep Kumar Mishra Assessing Officer was forced to conclude the assessment in a best judgment manner. He observed that the total amount of Rs. 2,09,30,200/- deposited in Bank of Baroda account and the amount paid or credited from M/s Fia Technology Services Private Limited of Rs. Rs. 93,396/- had not been offered to tax and therefore, he brought the same to tax under section 69A and as commission brokerage income respectively. Penalty proceedings under section 271AAC(1) were initiated. 3. Aggrieved with the said assessment order, the assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) observed that the appeals had been filed after a period of 16 months, which was delayed by 15 months. He noted that the assessee had not admitted any delay in the filing of the Form No. 35 and hence not prayed for condonation. He therefore, relied upon the decision of the Hon’ble Delhi High Court in the case of Moddus Media Pvt. Ltd. vs. M/s Scone Exhibition Pvt. Ltd. (RFA 497/201 dated 18.05.2017), the ITAT Cochin Bench in the case of Catholic Syrian Bank Ltd., vs. The DCIT (TDS), CPC, Ghaziabad in ITA Nos. 341-345/Coach/2018 dated 08.10.2018, Lakshya Global Logistics Pvt. Ltd. vs. DCIT, CPC TDS, Ghaziabad in ITA No. 6979-6984/MUM/2017 and the Hon’ble Supreme Court in the case of Basawaraj vs. The Spl Land Acquisition Officer (Civil Appeal No. 6974 of 2013, dated 22.08.2013) to dismiss the appeal of the assessee in limine on account of this delay. 4. Subsequent to the passing of the assessment order, the ld. AO initiated penalty proceedings under section 271AAC(1). Notices sent during the course of penalty proceedings were not complied with and therefore, the penalty proceedings were also concluded in a best judgment manner presuming that the assessee had nothing to say in this regard and after considering that a total amount of Rs. Rs. 2,09,30,200/- had been added back

ITA Nos. 167 & 168/VNS/2025 Pradeep Kumar Mishra under section 69A, penalty of Rs. 16,16,858/- was levied upon the assessee for this default. 5. Aggrieved with the levy of such penalty, the assesse filed an appeal before the ld. CIT(A). However, hereto the ld. CIT(A) observed that the penalty was delayed by nine months without any explanation in this regard and the assessee had also not made compliance to notices issued during the course of appeal asking him to explain the delay. Therefore, the appeal was dismissed at the outset on account of the failure to demonstrate sufficient cause. 6. The assessee is aggrieved with this dismissal of both these appeals and has accordingly come before us. On the appointed date of hearing, nobody was present on behalf of the assessee. However, ongoing through the facts of the case and the grounds of appeal, we observe that the assessee is an individual engaged as a banking correspondent during the year under consideration and renders services to the customers of Bank of Baroda. The assessee was selected for extension of BOB services in the area of Harka Chowk of district Kushi Nagar, U.P. As a business correspondence of the Bank of Baroda, the assessee’s role was to accept deposits from BOB customers as well as to make payments to BOB customers on behalf of the Bank of Baroda and in turn the assessee received commission for the same. For this purpose, the Bank of Baroda had opened a current account in the name of the assessee which was in the nature of a settlement account. In this account all the transactions (cash deposits/withdrawals) of BOB customers were mapped. It was submitted that whatever amount was required to be deposited by the BOB customers in their own bank account, it could be deposited through his BC/Customer Service Point. Their cash was handed over to the assessee and in turn the assessee made a corresponding deposit entry into software provided by the Bank of Baroda. Accordingly, so much of cash was 5

ITA Nos. 167 & 168/VNS/2025 Pradeep Kumar Mishra transferred from the assessee’s current account to the customers own bank account. Similarly, when the customers wanted to withdraw cash from their own bank account, they visited the assessee’s centre and the assessee made a corresponding withdrawal entry into the software provided by the Bank of Baroda. On doing so, that much of cash was transferred from the customer’s own bank account to the assessee’s current account, which in turn was handed over, in cash, to the respective customers. For the purpose of making cash payment to BOB customers, the assessee had to maintain sufficient cash balance with him and for this purpose, he had to make huge cash withdrawals from his current account on regular basis. It was submitted that these Customers Service Points were opened by banks especially in rural areas for the benefit of rural villagers / labourers etc,. It was further submitted, that the ex parte assessment made under section 147 r.w.s. 144 r.w.s. 144B had made an addition of Rs. Rs. 2,09,30,200/- in the current account by treating it as unexplained cash deposits, but not given corresponding debits in the same current account. It was further submitted that the assessee could not respond to any notices issued by the ld. AO because the email ID and mobile number updated on the IT Portal against his PAN was not his own and all notices had been sent to that email. Accordingly, the assessee was unaware of any notices issued by the ld. AO. It was only in the month of July that the assessee came to know about the ex parte assessment order from the office of the JAO and it was thereafter that he filed the appeal against the same. However, the ld. CIT(A) had not considered this fact and dismissed the appeal. It was submitted that the entire proceedings had been conducted in hurry and this was evident by seeing the dates of notices issued by the ld. CIT(A). Accordingly, the assessee had filed the appeal praying for relief against the excessive addition made.

ITA Nos. 167 & 168/VNS/2025 Pradeep Kumar Mishra 7. On the other hand, Sh. Sudipto Paul, Sr. DR (hereinafter referred to as the ld. DR) pointed out that the assessee had not made any compliance before either the ld. AO or the ld. CIT(A) and had also not appeared before the Bench. It was submitted that the statement of facts were not backed up by any evidence and therefore, the same should not be believed and the addition should be confirmed in the hands of the assessee. 8. We have duly considered the arguments of the ld. DR and the arguments placed before us by both parties. We note that owing to the fact that the email ID and mobile number given on the portal were not that of the assessee, the assessee could not keep track of the assessment proceedings and furnish any explanation with regard to the cash deposit made into the Bank of Baroda account. After considering this submission of the assessee, it appears that the cash deposits may be on account of deposits by various customers of Bank of Baroda who were availing the CSP services of the assessee, who was a banking correspondent for the Bank of Baroda. The fact of the assessee being involved in such activities is further borne out by the fact of receipt of commission, on which tax was deducted under section 194H. In the circumstances, after considering the overall facts of the case, we believe it to be in the interest of justice to restore the matter back to the file of the Assessing Officer, so as to enable the assessee to produce the necessary documents before him to demonstrate that the cash deposited into the said bank account at Bank of Baroda is not unexplained but on account of deposits made by various customers availing the CSP facilities. The ld. AO may consider the evidences produced and thereafter pass an apporiprate order in accordance with law. Accordingly, the ITA No. 167/VNS/2025 is held to be allowed for statistical purposes and the matter is restored to the file of the Assessing Officer for de novo assessment.

ITA Nos. 167 & 168/VNS/2025 Pradeep Kumar Mishra 9. Since the matter requires fresh examination to determine whether there is in fact any unexplained money under section 69A that has been deposited into the said bank account, we feel it premature to levy any penalty under section 271AAC(1) until it is determined as to whether the cash deposits in the said bank account are explained or not. Accordingly, we delete the penalty of Rs. 16,16,858/- with the comment that if the ld. AO were to come to a conclusion at the end of assessment proceedings that any portion of the deposits in the said bank account are unexplained and required the initiation of penalty proceedings, he would be at liberty to re- initiate the same as per his findings, in that restored assessment. With the aforesaid comments, the penalty of Rs. 16,16,858/- under section 271AAC(1) is deleted and ITA No. 168/VNS/2025 is held to be allowed. 10. In the result, while ITA No. 167/VNS/2025 is held to be allowed for statistical purpose and ITA No. 168/VNS/2025 is held to be allowed. Orders pronounced on 31.08.2026 in the open Court.

Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/08/2026 sh Copy forwarded to: 1. Appellant – 2. Respondent – 3. CIT DR, ITAT, 4. CIT, 5. The CIT(A) By order Sr. P.S.