INCOME TAX OFFICER, NAGERCOIL vs. MAHALAKSHMI RAMASAMY, NAGERCOIL

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ITA 2893/CHNY/2024Status: DisposedITAT Chennai06 February 2025AY 2018-19Bench: HON’BLE SHRI MANOJ KUMAR AGGARWAL (Accountant Member), SHRI MANU KUMAR GIRI (Judicial Member)1 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT(A)'s findings were supported by bank statements and the principal's statements, confirming the assessee's business model of earning commission. The grounds regarding Rule 46A violation were not accepted.

What were the facts?

The Revenue appealed against the order of the CIT(A) deleting additions made towards cash deposits treated as unexplained money. The assessee acted as a milk distributing agent, collecting cash, depositing it, and transferring it to the principal, earning commission income.

What were the issues?

Whether cash deposits, in the context of commission earned as a milk distribution agent, can be treated as unexplained income, and whether the CIT(A) erred in admitting evidence without granting an opportunity to the AO.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 69A,Section 46A,Section 44AB,Section 148,Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, CHENNAI

Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI MANU KUMAR GIRI, JM

आयकर अपीलीय अिधकरण “ए” "ायपीठ चे"ई म"। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHENNAI माननीय "ी मनोज कुमार अ"वाल ,लेखा सद# एवं माननीय "ी मनु कुमार िग&र, "ाियक सद# के सम'। BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM AND HON’BLE SHRI MANU KUMAR GIRI, JM आयकरअपील सं./ (िनधा(रणवष( / Assessment Year: 2018-19) ITO Smt. Mahalakshmi Ramasamy बनाम/ Ward-1, 3/3B3, Vathiyarvillai, Vs. Nagercoil Nagercoil, Agasteeswaram-629 001. "थायीलेखासं./जीआइआरसं./PAN/GIR No. DJTPM-5698-P (अपीलाथ"/Appellant) : (" थ" / Respondent) & Cross Objection No.18/Chny/2025 (In (िनधा(रण वष( / Assessment Year: 2018-19) Smt. Mahalakshmi Ramasamy ITO, बनाम/ 3/3B3, Vathiyarvillai, Ward-1, Vs. Nagercoil, Agasteeswaram-629 001. Nagercoil. "थायीलेखासं./जीआइआरसं./PAN/GIR No. DJTPM-5698-P (Cross-Objector) : (" थ" / Respondent) अपीलाथ"कीओरसे/ Assessee by : Shri M. Sundar (Advocate) - Ld. AR " थ"कीओरसे/Revenue by : Shri R. Bhoopathi (Addl.CIT) - Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 06-02-2025 घोषणाकीतारीख /Date of Pronouncement : 06-02-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by Revenue for Assessment Year (AY) 2018-19 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 29-08-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 147 r.w.s 144 of the Act on 13-03-2024. The grounds taken by the Revenue read as under:-

The Order of the Ld. CIT(A) NFAC, Delhi is opposed to law on the facts and in the (1) circumstances of the case. (2) The Ld. CIT(A) erred in deleting the addition made towards cash deposits of Rs.1,38,57,250/- by treating the same as unexplained money u/s.69A. (3) The Ld. CIT(A) erred in admitting additional evidence, without granting opportunity to the Assessing Officer, in violation of the provisions of Rule 46A of the I.T. Rules, 1962. (4) The Ld. CIT(A) erred in deleting the entire addition of Rs.1,38,57,250/- made u/s.69A without appreciating the fact that the assessee had not filed return of income and explained the source for the cash deposits before the Assessing Officer. (5) The Ld. CIT(A) erred in not appreciating the fact that the assessee had failed to file return of income, tax audit report as required u/s. 44AB of the I.T. Act and failed to respond to the notices issued u/s.148 and 142(1) to prove that cash deposits made was from known source of income and the assessee has no taxable income. The assessee has filed cross-objection which is supportive of impugned order. Having heard rival submissions and upon perusal of case records, our adjudication would be as under.

2.

The assessee’s case was reopened pursuant to receipt of information that the assessee deposited cash of Rs.138.57 Lacs in her bank account and also earned commission from M/s Hutson Agro Product Ltd. for Rs.0.31 Lacs. Since the assessee failed to substantiate the source of cash deposits, Ld. AO added both these items u/s 69A.

3.

During appellate proceedings, it transpired that the assessee acted as milk distributing agent for Hutson Agro Products Ltd. The modus operandi was that the assessee distributed milk to the customers of Hutson Agro Products Ltd. and collected money from the buyers which was deposited in the current account and transferred to the principal through banking channels. In the process, the assessee earned commission income. In support, the assessee furnished bank statement as well as statement of Hutson Agro Products Ltd. Concurring with assessee’s submissions, Ld. CIT(A) directed Ld. AO to delete the addition of cash deposit of Rs.138.57 Lacs. Aggrieved, the revenue is in further appeal before us.

4.

The findings rendered by Ld. CIT(A) are duly evidenced by the copy of bank statement as well as statement of Hutson Agro Products Ltd. as placed on record by Ld. AO. It would appear that the business model of the assessee is to distribute milk for principal against which the assessee would collect cash. The cash so collected would be deposited in the bank account which would be transferred to the principal through banking channels. In the process, the assessee has earned commission income which is reflected by the principal in the TDS statement. All these facts duly support the conclusion of Ld. CIT(A) in the impugned order and therefore, the same could not be faulted with. The power of Ld. CIT(A), as per settled legal position, is co-terminus with that of the power of Ld. AO. Therefore, the ground on violation of Rule 46A could not be accepted considering the facts of the case. The revenue’s appeal stand dismissed. The assessee’s cross-objection are merely supportive in nature.

5.

The appeal as well as cross-objection stand dismissed. Order pronounced on 06th February, 2025. (MANU KUMAR GIRI) (MANOJ KUMAR AGGARWAL) "ाियक सद# / JUDICIAL MEMBER लेखा सद# / ACCOUNTANT MEMBER चे2ई Chennai; िदनांक Dated : 06-02-2025 DS आदेशकीHितिलिपअ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ"/Assessee 2. " थ"/Revenue 3. आयकरआयु;/CIT Madurai. 4. िवभागीय"ितिनिध/DR 5. गाड@फाईल/GF

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