YASHWANT KUMAR,MAU vs. INCOME TAX OFFICER, WARD 3(3), MAU

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ITA 8/VNS/2025Status: DisposedITAT Varanasi31 August 2026AY 2017-20187 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal and restored the matter to the Assessing Officer. The assessee was directed to produce evidence to explain the cash deposits in their bank account related to their banking correspondent activities.

What were the facts?

The assessee, a business correspondent for Bank of Baroda, failed to respond to notices from the Assessing Officer and CIT(A) due to unfamiliarity with electronic communication. This led to an ex-parte assessment order and dismissal of the appeal.

What were the issues?

Whether the cash deposits in the assessee's bank account were adequately explained by their business as a banking correspondent and whether the assessment proceedings were vitiated due to non-compliance with procedural requirements.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 144B,Section 142(1),Section 194H

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VARANASI “DB”BENCH, VARANASI

Before: SH. SUDHANSHU SRIVASTAVA & SH. NIKHIL CHOUDHARY

For Appellant: Shri Ashish Bansal, Advocate
For Respondent: Shri Deepak Yadav, Sr. DR
Hearing: 04.08.2026Pronounced: 31.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL VARANASI “DB”BENCH, VARANASI BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.8/VNS/2025 A.Y. 2017-18 Yashwant Kumar, vs. Additional/Joint/Deputy/ Majhauwa, Pindohari, Asstt. CIT/ Income Tax Officer, Mau, Uttar Pradesh-221706. National Faceless Assessment Centre, Delhi. / Income Tax Officer, Ward-3(3), Mau, Uttar Pradesh. PAN: CZMPK1553M (Appellant) (Respondent)

Assessee by: Shri Ashish Bansal, Advocate Revenue by: Shri Deepak Yadav, Sr. DR Date of hearing: 04.08.2026 Date of pronouncement: 31.08.2026 O R D E R PER NIKHIL CHOUDHARY, A.M.:

This is an appeal filed by the assessee against the order of the ld. CIT (Appeals) / NFAC dated 04.06.2024, wherein the learned CIT(A) has dismissed the appeal of the assessee against the order passed by the Assessing Officer under section 147 r.w.s 144 read with section 144B of the Income Tax Act, 1961 (the Act), for the AY 2017-18 dated 29.03.2022. The grounds of appeal are as under:-

ITA No. 8/VNS/2025 A.Y. 2017-18 Yashwant Kumar “1. BECAUSE the proceedings against the appellant under section 147 of the Act vide notice dated 20.04.2021 issued under section 148 of the Act are wholly erroneous as the same has been invoked without following the due procedure provided under section 148A of the Act, as stood inserted in the statute book vide Finance Act 2021 w.e.f. 01.04.2021, the addition of Rs.1,43,74,127/- made by the ld. Assessing Officer in the assessment order dated 29.03.2022 as also affirmed by the CIT(A) is void-ab-initio. 2. BECAUSE the approval under section 151(i) of the Act for invoking proceedings under section under 147 of the Act against the appellant could have been given by an officer of the rank of Principal Commissioner or Principal Director or Commissioner or Director, in the present case the approval said to have been granted by the Addl./JCIT, Range 1, Gorakhpur is wholly vitiated being void-ab-initio. WITHOUT PREJUDICE TO THE AFORESAID 3. BECAUSE the appellant being a business correspondent working on behalf of Bank of Baroda, Mirzahadipur Branch, and runs a Grahak Sewa Kendra/ Customer Service Point on behalf of the Bank Of Baroda, all the deposits are out of collections made from his customers and payments too are to his customers, for doing this work during the year under consideration appellant derived commission income of Rs.1,08,927/- from Bank of Baroda and on this income TDS of Rs.6,014/- under section 194H has been deducted by the bank, said commission income has duly been assessed to tax by the ld. Assessing Officer in the assessment order dated 29.03.2022 passed by him. 4. simultaneous BECAUSE the authorities below being fully aware of the fact that there are cash deposits of sums aggregating to Rs.1,42,65,200/- and a withdrawal of cash of Rs.1,38,24,000/- during the year, then there was no basis for the ld. Assessing Officer to tax the entire deposits could at all would have been treated as the income from undisclosed sources. 5. BECAUSE the appellant is having a license from the Bank Of Baroda for running Grahak Sewa Kendra/ Customer Service Point, however, due to unawareness of the notices having been issued upon him through electronic and none of the notice having been served upon him physically through Centralized Communication by NFAC as required under section 144B of the Act, no compliance could be made at the time of assessment proceedings and the appellant was prevented from reasonable cause in putting up his appearance and place entire facts before the ld. Assessing Officer. 6. BECAUSE the appellant was not provided with the sufficient and reasonable opportunity of being heard before passing the impugned appellate order dated 04.06.2024, accordingly, there is complete violation of principles of natural justice to the appellant. 7. BECAUSE the order appealed against, is contrary to facts, law and principles of natural justice.”

ITA No. 8/VNS/2025 A.Y. 2017-18 Yashwant Kumar 2. At the very outset, it is noticed that the appeal of the assessee is delayed by 157 days. The assessee has filed a condonation petition in which it has been submitted that the assessee is a business correspondent working on behalf of Bank of Baroda, Mirzahadipur Branch and derives commission income from the Bank. The assessee does not use email frequently and all the notices that had been issued during the assessment proceedings were sent on email. Due to this notices had escaped his attention resulting in an ex-parte order. When the assessee came to know about the assessment order, he filed an appeal before the First Appellate Authority (FAA) on 30.08.2022, duly accompanied by a condonation petition. However, hereto the assessee was issued notices vide electronic medium and the assessee was not able to comply to them as the assessee was not accustomed to handle electronic communications. It was only when he enquired from his counsel in November 2024, that he was informed that the appeal has been dismissed in limine for want of compliance. On the advice of his counsel, he deposited the appeal fees and thereafter approached the Advocate at Allahabad who was handling matters before the Income Tax Appellate Tribunal to draft the appeal and file the same. Accordingly, it was prayed that it was on account of lack of knowledge of the said appeal order that appeal was delayed by 154 days and it was prayed that this delay may kindly be condoned.

3.

We have duly considered the petition filed by the assessee. We note that in the absence of physical service of notice, notices sent through email medium cannot automatically be assumed to have been accessed by the assessee, if the assessee is not accustomed to handling of electronic communications on a day to day basis. Accordingly, we find the explanation

ITA No. 8/VNS/2025 A.Y. 2017-18 Yashwant Kumar of the assessee for failure to file the appeal on time as plausible and therefore we admit the appeal for adjudication on its merits.

4.

The facts of the case are that the Assessing Officer observed that the assessee had made cash deposits in current account to the extent of Rs. 1,42,65,200/-, made cash withdrawals from the said current account to the extent of Rs. 1,38,24,000/- and received commission or brokerage under section 194H of Rs. 1,08,927/-. Since the assessee had not filed his return for the said AY, he came to a conclusion that a sum of Rs. 2,81,98,127/- had escaped assessment on this count. Accordingly he issued notice under section 148 asking the assessee to file a return. However he records that the assessee did not make compliance to the said notice. Subsequently the Assessing Officer issued notices under section 142(1) and also a show- cause notice to the assessee, but none of these notices were responded to. Accordingly, the Assessing Officer records that he had no alternative except to complete the assessment in a best judgment manner and he therefore made an addition on account of cash deposits of Rs. 1,42,65,200/- and Rs. 1,08,927/- received as commission or brokerage, holding them to be income from unaccounted sources.

5.

Aggrieved with the said assessment order, the assessee filed an appeal before the learned CIT(A) In its Form No. 35, the assessee submitted that he was an individual running a customer service point and providing banking services for withdrawal and deposit of cash for customers of the Bank and the Assessing Officer had erred in adding back the cash deposit in the Bank A/c towards the income by treating the same as unexplained. The learned CIT(A) records the fact that he provided multiple opportunities to the assessee to submit documents and make submissions in response to the appeal filed, but no compliance was made to the same. Accordingly he 4

ITA No. 8/VNS/2025 A.Y. 2017-18 Yashwant Kumar came to the conclusion that the assessee was not interested in pursuing his appeal and since he had not provided any documents to enable the learned CIT(A) to take a decision on merits, he dismissed the appeal of the assessee and upheld the additions made by the Assessing Officer.

6.

The assessee is aggrieved with the said dismissal of his appeal and has accordingly come before us. Shri Ashish Bansal, Advocate appearing on behalf of assessee submitted that the assessee was a business correspondent working on behalf of Bank of Baroda, Mirzahadipur Branch and ran a Grahak Sewa Kendra on behalf of the Bank. All the deposits in the said Bank A/c were out of collection made from customers and all the withdrawals were for payments to the customers of the Bank. For doing this work during the year under consideration, the assessee derived commission income of Rs. 1,08,927/- from Bank of Baroda and on this income, TDS of Rs. 6014/- had been deducted under section 194H. This commission income was fully in the knowledge of Assessing Officer and therefore there was no basis for the Assessing Officer to tax the entire deposits into the said Bank A/c by treating the same as unexplained. Had the assessee being aware about the notices, he would have furnished the necessary documentary evidences to establish the fact that the deposits into and the withdrawals from the said Bank A/c with Bank of Baroda were entirely on account of his role as a Banking Correspondent and no part of it was unexplained. It was submitted that the assessee was unfamiliar with electronic communications and no physical service had taken place as per the provisions of section 144B of the Act. Therefore, the assessee was handicapped in making submissions before the Assessing Officer or learned CIT(A). The learned AR prayed that if the matter would be restored back to the file of the Assessing Officer, he would ensure that subsequent notices

ITA No. 8/VNS/2025 A.Y. 2017-18 Yashwant Kumar would be complied with and he prayed that the assessee should be given an opportunity to demonstrate that the deposits in the said Bank A/c fully explained out of the activity of banking correspondent for Bank of Baroda. He agreed not to press the legal grounds as raised in Ground Nos. 1 & 2. The learned Sr. DR, Shri Deepak Yadav submitted that in view of the agreeing not to press Ground Nos. 1 & 2, he had no objection to the matter being restored back to the file of the Assessing Officer for a proper finding of fact on the issue. He however prayed for direction to be given to the assessee to ensure compliance before the Assessing Officer so that the restoration of the matter to his file should not become a fruitless exercise.

7.

We have duly considered the facts and circumstances of the case and the arguments advanced by both the parties. As ground nos. 1 & 2 have not been pressed, the same are dismissed as such. With regard to the remaining grounds, we note that the issue of whether the deposits in the bank account are explained by the business of Grahak Sewa Kendra of Bank of Baroda, Mirzahadipur Branch that was being done by the assessee as a banking correspondent, has not been examined by the Assessing Officer or the learned CIT(A) on account of the lack of compliance by the assessee to the various notices issued by them. We believe that before deposits in the said current account can be held to be unexplained, it is necessary to consider the evidences in the possession of the assessee which would establish his contention that the said deposits were on account of customers of the Grahak Sewa Kendra. Accordingly, in the interest of justice, we restore the matter back to the file of the learned Assessing Officer with a direction to the assessee to produce all the necessary documents before the Assessing Officer in support of his contentions. The

ITA No. 8/VNS/2025 A.Y. 2017-18 Yashwant Kumar learned Assessing Officer may thereafter consider such material and decide the issue afresh.

8.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced on 31.08.2026 in the open Court.

Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/08/2026 SK, Sr. PS

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