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Facts
The assessee, an individual working as a helper at Annamalai University, collected tuition fees from students and deposited them in his bank account. The Assessing Officer (AO) treated the cash deposit of Rs. 15,48,988/- as unexplained money and brought it to tax. The CIT(A) dismissed the assessee's appeals.
Held
The Tribunal condoned the delay in filing the appeals, acknowledging a reasonable cause. The Tribunal held that the assessee had provided evidence of collecting fees and remitting them to the university, and estimated 8% of the cash deposit as the assessee's net income from business.
Key Issues
Whether the cash deposit in the assessee's bank account, collected as fees for the university, can be treated as unexplained income. If so, what is the quantum of income to be taxed.
Sections Cited
139(1), 69A, 143(3), 147, 271(1)(c)
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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI S. R. RAGHUNATHA
अपीलाथ� की ओर से/Appellant by : Mr. N. Arjun Raj, Advocate ��थ� की ओर से/Respondent by : Ms. Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 24.04.2025 घोषणा की तारीख/Date of Pronouncement : 05.05.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
This appeals by the assessee are filed against the separate orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the same assessment year 2012-13, vide orders dated 25.07.2024 and 29.08.2024 respectively.
At the outset, we find that there is a delay of 148 days and 117 days respectively in appeals filed by the assessee, for which petition for condonation of delay along with reasons for delay has been filed. After considering the petition filed by the assessee and also hearing both the parties, we find that the assessee was aware of the impugned orders only & 552/Chny/2025 after receiving recovery notices of demand by approaching physically. Further, the orders were sent to the Email ID of tax practioner’s office, which was not brought to the notice of the assessee and hence there is a reasonable cause for the assessee in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeal and admit appeal filed by the assessee for adjudication.
The assessee is an individual filed had not his return of income u/s.139 (1) of the Act. As per the information available with the AO the assessee had deposited substantial cash in his bank account at Indian bank to the tune of Rs.15,48,988/-. Case of the assessee was reopened and the statutory notices were issued. In response the assessee filed his return of income declaring a Total income of Rs.3,08,830/- on 01.10.2019. Further, the assessee submitted that he was working as a Helper in Annamalai University and also had collected exam and other fees from students of different cities as it was not convenient for them to come and deposit the fees. The assessee also submitted a letter from Professor & PCP co-ordinator Chemistry Wing, DDE, wherein it is stated that the assessee had collected fees from students and remitted to the University account. The assessee stated that the cash deposit is the amount received from students and remitted the to the University account. However, the AO was not convinced and made an entire cash deposit of Rs.15,48,988/- as unexplained money u/s.69A of the Act and brought to tax by passing an order u/s.143(3) r.w.s. 147 of the Act dated 21.12.2019. Aggrieved by the order of the AO the assessee preferred an appeal before the ld.CIT(A). & 552/Chny/2025
The ld.CIT(A) has dismissed both the appeals of the assessee by confirming the order of the AO for the reason that the assessee has failed to respond for any of the notices issued by the ld.CIT(A) as noted in the order dated 25.07.2024 and 29.08.2024 respectively.
The ld.AR for the assessee submitted that the assessee is an individual who was working as a Helper in Annamalai University. The ld.AR stated that the assessee was co ordinating with the students of taken up for distance education with the University and collected the applicable tuition & other course fees along with little margin and remitted the same within due dates on behalf of students. Further, the ld.AR stated that the assessee had also filed a letter obtained from ‘Professor & PCP co-ordinator Chemistry Wing’, DDE, wherein it is stated that the assessee had collected fees from students and remitted to the University account. The ld.AR explained that the assessee had made cash deposit from the amount received from students and remitted the to the University account. The margin earned has already been included in the return of income filed along with his salary income. The ld.AR also furnished the salary slips of the assessee to prove that he was employed in the Annamalai University. In light of the above, the ld.AR prayed for deleting the addition made by the AO and the same has been confirmed by the Ld.CIT(A).
Per contra, learned DR opposed to the submissions of learned AR and stated that there is no evidence to prove that the fees has been collected by the assessee from the students and hence pleaded for dismissal of the appeal. & 552/Chny/2025
We have heard rival submissions and perused the record. It is admitted fact that the assessee was working as a Helper in Annamalai University and has drawn salary. In support of the same the assessee has submitted the salary slips issued by the university has been submitted. Further, the assessee also has received a certificate dated 22/11/2019 from ‘Professor & PCP co-ordinator Chemistry Wing’, DDE, and submitted the same before the AO, wherein the it has been certified that the assessee had collected the fees from the students of Distance Education and remitted to the university on behalf of students, since the online payment facility was not available in the university in that period. Since, the assessee has proved the source of the cash deposit as fees collected from the students and remitted the amount to the university, the issue of quantum of net gain retained by the assessee needs to be decided. In the present facts and peculiar circumstances of the case and in the interest of justice and to reduce further litigation, we are making a reasonable estimate of 8% of the cash deposit i.e. Rs.15,48,988/- made as his net income from business and direct the AO to recompute the total income. Accordingly, the we are setting the order of the ld.CIT(A) by allowing the grounds of appeal raised by the assessee.
Further, the quantum appeal filed by the assessee against the order of the ld.CIT(A) has been adjudicated by estimating the income of the assessee @ 8% of the cash deposit made, hence the consequential penalty levied u/s.271(1)(c) of the Act has been deleted. Our view has been supported by the decision of the Hon'ble Rajasthan High Court in the case of CIT vs. Krishi Tyre & 552/Chny/2025 Retreading and Rubber Industries reported as 360 ITR 580 has held that where addition is made purely on estimate basis, no penalty u/s. 271(l)(c) of the Act is leviable and the similar view has been expressed by the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Sangrur Vanaspati Mills Ltd. reported as 303 ITR 53. Therefore, we are inclined to set aside the order of ld.CIT(A) by allowing the grounds of appeal raised by the assessee.
Order pronounced in the open court on 05th May, 2025 at Chennai.