RAVINDRA KUMAR AGARWAL,ERODE vs. ITO, WARD-1(1), ERODE

आयकर अपीलीय अिधकरण, ‘ए’
यायपीठ, चे ई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘A’ BENCH: CHENNAI

ी एबी टी. वक
, ाियक सद एवं
एवं
एवं
एवं

ी जगदीश, लेखा सद के सम

BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER

आयकर अपील सं./ITA No.2216/Chny/2025
&
Stay Petition No.81/Chny/2025
िनधारणवष/Assessment Year: 2018-19

Ravindra Kumar Agarwal,
918, K.A.M. Complex, Park Road,
Karungalpalayam S.O.,
Erode-638 003. v.
The ITO,
Ward-1(1),
Erode.
[PAN: ACLPR 2273 D]

(अपीलाथ/Appellant)

(यथ/Respondent)

अपीलाथ क ओर से/ Appellant by :
Mr.S. Sridhar (Erode),
Advocate
यथ क ओर से /Respondent by :
Mr.Nathala Ravi Babu, CIT
सुनवाईकतारीख/Date of Hearing
:
15.10.2025
घोषणाकतारीख /Date of Pronouncement
:
26.11.2025

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 (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 04.07.2025 for the Assessment Year (hereinafter referred to as "AY”) 2018-19. Stay Petition
No.81/Chny/2025 is filed by the assessee for interim-stay of the outstanding demand raised by the impugned addition confirmed by the Ld

ITA No.2216/Chny/2025 &
SP No.81/Chny/2025 (AY 2018-19)
Ravindra Kumar Agarwal
:: 2 ::

CIT(A); and since both the matters have been posted along with the main appeal (supra), we are disposing them together.
2. The main grievance of the assessee is against the action of the Ld.CIT(A) confirming the high pitched addition made by the AO to the tune of ₹10,91,11,940/- u/s.69A of the Income Tax Act, 1961
(hereinafter referred to as "the Act”).
3. The brief facts are that the assessee filed his return of income
(RoI)/ITR for AY 2018-19 on 27.07.2018 admitting total income at ₹6,75,530/- after claiming deduction of ₹1,48,949/- under Chapter VI-A of the Act. The ITR of the assessee was selected for limited scrutiny assessment on the issue of cash deposits for the relevant AY. The AO issued notice u/s.142(1) of the Act asking the assessee about the details of cash deposits [nature and source of the cash]. The assessee in his reply brought to the notice of the AO that he was engaged in (i) cheque- discounting business especially in one day clearing cheques and for such services rendered, he used to collect discounting charges which is shown as his income and in this year he has offered in the RoI ₹1,37,293/- in his
ITR on this account; and (ii) if any customer who is resident of another
State, who wants to come to Erode (Tamil Nadu) for doing business, and needs cash to be given at Erode, then they could deposit cash in his bank account, and when he reaches Erode, can approach the assessee, then he

ITA No.2216/Chny/2025 &
SP No.81/Chny/2025 (AY 2018-19)
Ravindra Kumar Agarwal
:: 3 ::

would withdraw the cash and give it back to them, for a fees. In this regard, the assessee explained that such transaction/arrangement was carried out for the benefit of Traders, who need not carry cash while travelling from far flung areas, which was mainly for their safety. And for such services (use of bank account to deposit & withdraw cash), the assessee got commission which was shown as his income in his ITR and in this year he has shown ₹5,62,880/- as commission on this account.
When asked by the AO to produce the cash book, the assessee brought to his notice that it was maintained manually and the same is not legible to scan, but he uploaded the same to substantiate the commission and the total income of ₹7,00,173/-. The AO further asked the assessee to file the cash book, register, diary, worksheet, etc., where he has recorded his transactions i.e. copy of bank books details of customers [PAN, e-mail, etc.] who deposited the cash in his bank account, which assessee was unable to produce which resulted in the AO/Ld.CIT(A) drawing adverse view against the assessee and they added the entire deposit in the bank account u/s.69A of the Act. Aggrieved, the assessee is in appeal before us.
4. The assessee having explained the modus-operandi of his business to earn commission income (supra), submitted before us that in earlier years, the department had accepted the aforesaid modus-operandi of the assessee, i.e. the commission income offered on the aforesaid activity

ITA No.2216/Chny/2025 &
SP No.81/Chny/2025 (AY 2018-19)
Ravindra Kumar Agarwal
:: 4 ::

based on both cheque-discounting business as well as the use of assessee’s bank account to deposit & withdraw cash by the assessee, has been accepted, which fact is discernable from perusal of the assessment order passed u/s.k143(3) of the Act for AYs 2012-13, 2014-15 & 2019-
20. Therefore, according to the assessee, when there is no change in facts or law, Rule of consistency demands that this year also commission income offered by assessee to the tune of ₹7,00,173/- ought to have been accepted. In order to support the income offered in the ITR, the assessee brought to our notice that he maintained books for the purpose of preparing financial statements and his turnover for the services rendered is only
₹7,00,173/- which comprises of ₹5,62,880/-
[commission from cash deposits in ICICI bank and Aixs Bank] and ₹1,37,293/- [commission from cheque discounting]. The assessee also is noted to have uploaded the scanned copies of the diary for substantiating the commission income of cash deposits to the tune of ₹5,62,880/-. The assessee again explained the modus operandi of his business. The traders from various parts of India, who has business interest at Erode [for purchase of goods from Erode] deposit cash in assessee’s bank accounts from their towns/cities. And when they reach Erode, the assessee withdraw the money deposited by the trader in his bank account and handover the cash to them (Traders). It was explained by the assessee that they don’t deduct any amount from the amount deposited by the ITA No.2216/Chny/2025 &
SP No.81/Chny/2025 (AY 2018-19)
Ravindra Kumar Agarwal
:: 5 ::

trader in their (assessee’s) bank account i.e. the entire amount deposited by traders in assessee’s bank account was withdrawn and handed over to the trader by the assessee. And for such services rendered, the assessee got a commission from the traders which is accounted and the commission receipt is admitted in his RoI/ITR; and apart from this activity, assessee also does cheque-discounting business and the commission received is also accounted and admitted in his RoI/ITR. And thus, he asserted that the amount deposited in his bank account don’t represent his turnover and the customers/traders who deposited the amount from their respective towns/States took his services at Erode and their money is withdrawn and given to them. Thus, according to the assessee, the AO/Ld.CIT(A) erred in treating the entire cash deposit in his bank account as unexplained income u/s.69A of the Act.
5. Thus, the main thrust of the assessee is that the cash deposits made in his bank accounts are not his income and it belongs to ‘Traders’
who deposit it, which is given back to them; and for such services, the assessee receives ‘commission’ which is the income of the assessee.
Rather than accepting the commission income offered by the assessee to the to the tune of ₹7,00,173/- according to the assessee, the AO/Ld.CIT(A) erred in adding the entire cash deposits u/s.69A of the Act.
Therefore, prayed for deletion of the same.

ITA No.2216/Chny/2025 &
SP No.81/Chny/2025 (AY 2018-19)
Ravindra Kumar Agarwal
:: 6 ::

ITA No.2216/Chny/2025 &
SP No.81/Chny/2025 (AY 2018-19)
Ravindra Kumar Agarwal
:: 7 ::

the cash to be deposited/withdrawn from his bank account to the tune of Rs 5,62,880/- [Total income of Rs 7,00,173/-]. The assessee is noted to have brought to the notice of the AO that his business was carried out at Erode where the traders came from PAN-India for buying goods like textile, turmeric and sugarcane, jaggery, etc.,; and since the Traders are coming from various parts of India and they found it unsafe to carry cash with them [while travelling to Erode], they deposited the cash in the bank account of the assessee at their home town/State i.e. source State; and upon reaching Erode (destination station) bring along with them, the counterfoil of the bank challan as proof of depositing money in assessee’s bank account; and the assessee after verifying the same with his deposits in his bank account, then withdraws it and hands over it to the depositor or his representative. And, for such service of using his bank account, the assessee gets commission which assessee has accounted for and duly shown it in his ITR (supra). The aforesaid modus operandi the assessee is noted to have being carried out from earlier years which fact is discernable from perusal of the assessment order passed in the case of assessee u/s.143(3) for AYs 2012-13, 2014-15 & 2019-20, etc. From a perusal of the assessment order passed for AY 2012-13 u/s.143(3)/147 of the Act dated 09.12.2019, it is discerned that the AO has reopened the assessment taking note that the assessee has deposited ₹3,23,23,600/- in his savings bank account during the relevant assessment year and had ITA No.2216/Chny/2025 &
SP No.81/Chny/2025 (AY 2018-19)
Ravindra Kumar Agarwal
:: 8 ::

declared income of ₹3,96,880/- which was accepted by the AO after accepting the fact that the assessee was into the business of one day clearing cheque business and getting commission ₹100/- to ₹300/- per lakh. The AO noted the modus operandi of assessee’s business viz cash was deposited in his savings bank account and later withdrawn by the person who has deposited the same from different cities. And the AO after enquiry/verification is noted to have accepted the total income returned to the tune of Rs.3,96,880/-. Similarly, for AY 2014-15, the AO is noted to have accepted that the assessee was into ‘cheque discounting business’ and getting commission on such transactions and has admitted total income of ₹6,75,270/-. Other than making an addition of ₹1 lakh, the AO is noted to have accepted the fact that the assessee only derive commission from cheque discounting activity. Similarly for AY 2017-18, the AO is noted to have verified the bank statement of the assessee and has noted that there was cash deposits of ₹10,59,94,164/- and ₹70,52,500/- in the Axis Bank & ICICI bank accounts respectively. And found that assessee was engaged in one day clearing cheque discount and getting commission on it and accepted the total income at Rs.6,62,180/-. From the foregoing discussion and perusal of assessment orders passed u/s.143(3) of the Act it is noted that the case of the assessee was selected for verifying the cash deposits and withdrawals during the year; and the AO is noted to have accepted the explanation of ITA No.2216/Chny/2025 &
SP No.81/Chny/2025 (AY 2018-19)
Ravindra Kumar Agarwal
:: 9 ::

the assessee after verification that the source of the cash deposits were out of the business transaction. And the AO had found that parties from various places, remit their cash into assessee’s bank account and the amount deposited has been withdrawn from the account subsequently which were paid back to the parties and for such service, the assessee received commission. The AO is noted to have verified the bank statements and after examining the same has noted that the assessee is getting commission ₹100/- to ₹300/- per lakh and for AY 2017-18, the AO after disallowing the expenses of ₹1,63,825/- has assessed the income of the assessee at ₹8,26,005/-. Thus, it is noted that the AO has consistently accepted the activity of the assessee of making commission through cheque discounting and the commission income was ₹100/- to ₹300/- per lakh. Therefore, the AO’s action to deport from the earlier years, when there is no change in facts or law, is against the principle of consistency. Therefore, the AO ought not to have made the addition of the entire cash deposit u/s.69A of the Act without even considering the outflow/withdrawal of cash. The assessee’s modus operandi was clearly discernable form the deposits and the withdrawals which was corroborating the assessee’s explanation that customers from various parts of the country used to deposit cash in his bank account, and after arrival in Erode, [after showing the counterfoil of deposit of the cash in his bank account and the assessee after ascertaining that the amount has ITA No.2216/Chny/2025 &
SP No.81/Chny/2025 (AY 2018-19)
Ravindra Kumar Agarwal
:: 10 ::

been credited in his bank account] the assessee used to withdraw the same and give it to the customers for which assessee got commission of ₹100/- to ₹300/- per lakh, which the assessee has shown as income. It is further noted that if ₹100/- to ₹300/- per lakh is applied to the cash deposits of ₹10,84,36,404/- then the resulting income by way of commission works out to ₹3,25,309/- whereas the assessee has offered income of ₹6,75,530/-. Therefore, the AO erred in adding the entire cash deposit u/s.69A of the Act without even considering the outflow/withdrawal of cash. In the light of the aforesaid discussion, we direct the AO to delete the addition of ₹10,84,36,404/-.
8. Since we have disposed of the main appeal of the assessee, the Stay Petition filed by the assessee against the demand raised, has become infructuous and hence, dismissed.
9. In the result, appeal filed by the assessee is allowed and Stay
Petition filed by the assessee is dismissed.

Order pronounced on the 26th day of November, 2025, in Chennai. (जगदीश)
(JAGADISH)
लेखा सद /ACCOUNTANT MEMBER
(एबी टी. वक
)
(ABY T. VARKEY)

याियक सदय/JUDICIAL MEMBER
चे ई/Chennai,
!दनांक/Dated: 26th November, 2025. TLN

ITA No.2216/Chny/2025 &
SP No.81/Chny/2025 (AY 2018-19)
Ravindra Kumar Agarwal
:: 11 ::

आदेश क ितिलिप अ$ेिषत/Copy to:
1. अपीलाथ/Appellant
2. थ/Respondent
3. आयकरआयु/CIT, Chennai / Madurai / Salem / Coimbatore.
4. िवभागीयितिनिध/DR
5. गाड फाईल/GF