VIVEK MITTAL,FARIDABAD vs. INCOME TAX OFFICER, WARD 2(5), FARIDABAD, FARIDABAD

Brief facts of the case are that the assessee is an individual and engaged in the business of money transfer agency under the license granted by payments service providers companies like Ezspend Prepaid Payments Solutions Pvt. Ltd., Oxigen Service India Pvt. Ltd.,

Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 11.07.2025, partly allowed the appeal of the assessee.

Aggrieved by the order of Ld.CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:- 1. “On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad, both in the eye of law and on the facts. 2. On the fact and circumstances of the case, Id. CIT(A) has erred both on facts and in law in passing the order without giving any finding on the merits of the case. 3. (i) On the facts and circumstances of the case, Id. CIT(A) has erred both on facts and in law in confirming an addition of Rs. 15,40,000/- under section 69A of the Act, despite the fact that hundreds of small laborers paid this cash in very small amount to appellant assessee during the course of his business of

Ground of appeal No.1 is general in nature hence, not adjudicated.

Ground of appeal No.2 & 3 are with respect to the addition of INR 15,40,000/- made u/s 69A of the Act and confirmed by Ld. CIT(A).

Heard the contentions of both the parties at length and perused the material available on record. The claim of the assessee was that the cash was deposited by various persons with the assessee as he is working as money transfer agent for various payment service providers and was the receipts of principal companies and accordingly, entire sum so deposited was subsequently transferred to the respective principals. During the course of hearing, the assessee has filed details of such cash deposited according to which

On careful perusal of the same, it is observed that the amounts were received by the assessee in SBN as Collection Agent for the principals which was subsequently transferred to the accounts of respective principal i.e. money transfer companies and the assessee got the commission from such activity which has been accepted by the AO. When the assessee was acted as a broker for the principals i.e. money transfer agency, no addition is could be made in the hands of the assessee for the money belonged to those principals and more particularly when these funds were ultimately transferred to their accounts. In view of these facts, AO has wrongly treated the cash deposited during the demonetization period in SBN as unexplained money of the assessee and therefore the addition of INR 15,40,000/- made u/s 69A of the Act is hereby deleted. Accordingly, Ground of appeal Nos.2 & 3 raised by the assessee are allowed.

Ground of appeal No.4 raised by the assessee is with respect to the confirmation of addition of INR 3,88,439/- by estimating the income of the assessee by applying the profit of 2 % on the gross deposits of INR 3.53 crores in his bank account.

Heard the contentions of both the parties at length and perused the material available on record. It is observed that Ld.CIT(A) has reduced the amount of cash deposits from INR 9,22,87,000/- alleged by the AO made in Four bank accounts to INR 3,68,29,500/- pertaining to the deposits made in two bank accounts of the assessee. Thereafter, Ld.CIT(A) reduced the addition of INR 15,40,000/- separately made on account of cash deposits in SBN out of the gross receipts and applied 2% commission rate on the balance deposits and allowed credit of the income declared by the assessee in the return of income filed. It was the claim of the assessee that in terms of arrangements provided by the principals, the assessee was entitled for commission ranging between 0.15% to 0.50 % on the total funds routed through him. As observed above, the AO has never doubted the nature of the business of the assessee, therefore, the source of deposits was not doubted. The only issue remains is what would be reasonable rate of commission on such transactions. The assessee has declared commission income @ 1% however, it is observed that assessee has taken gross receipts at INR 3,19,35,100/- only as against the total deposits of INR 3,69,29,500/- from commission agency business appearing in his bank accounts. Therefore, we direct the AO to apply commission rate of 1% on gross deposits of INR 3,69,29,500/- and recompute the income of the assessee. With these directions, Ground of appeal No.4 raised by the assessee is partly allowed.

In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on 22.05.2026.