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Income Tax Appellate Tribunal, “SMC” BENCH: KOLKATA
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma]
Per Rajesh Kumar, AM:
This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax(Appeals)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)”] dated 06.05.2022 for the AY 2017-18.
The grounds of appeal raised by the assessee is reproduced as under:
1. That the Ld. A.O erred in law as well as in facts in making addition under Section69A of Rs. 35,43,308/- for the alleged unexplained ownership of money by the assessee, where as the assessee has duly explained the nature and source of cash deposit by adducing cogent evidences and further proving that the 2 Assessment Year: 2017-18 Prasenjit Das appellant is not the owner of the amount deposited in bank. The fact is the appellant is a working in the capacity customer service bank and banking correspondence of a nationalized bank which has neither be denied nor disputed.
2. That the learned assessing office / C1T (A) has failed to appreciate that the amount deposited generating from the customers of the bank can under no means to be considered as income of the appellant as he is not the owner there off as the amount deposited was transferred to the customers bank account immediately and consequently invoking of section 69A is unsustainable and bad in law.
3. The CIT (A) erroneously held that cash has been deposited during demonetization period ignoring the facts that the transactions has been carried out throughout the year and the appellant is only a pass through entity and no infirmity can be inferred thereof. That the quantum of transactions, entered during the demonetization period compare with the aggregate annual volume do not display any divergence statistical trend and hence such transactions need not be doubted upon.
4. That the applicant craves leave to add, amend, alter, modify or rescind the grounds herein above at or before the hearing of the appeal.
3. The only issue raised by the assessee is against the confirmation of addition of Rs. 35,43,308/- by Ld. CIT(A) as made by the AO u/s 69A of the Act.
Facts in brief are that the assessee filed return of income on 7.11.2017 declaring total income of Rs. 2,56,670/- under the head income from business and Rs. 86,8824/- under the income from other sources and also claimed deduction under Chapter-VIA. Thereafter the case of the assessee was selected for complete scrutiny under CASS for the reason that there were cash deposits into the assessee’s bank account during the demonetization period. The statutory notices were duly issued and served on the assessee. The notices/questionnaire issued by the AO were duly responded too by the assessee. During the course of assessment proceedings, the assessee submitted that he is a bank CSP ( agent of the bank) providing/rendering services in the remote areas where the banking facilities are not available. In other words, the assessee has been collecting money from the customers and depositing the same into his account and thereafter immediately the money is remitted to the bank and assessee is paid commission in lieu of the said services. Similarly if any local person needs cash the same is provided by the assessee and same is remitted from the bank to the assesse’s account and for that too the assessee is paid commission. During the course of assessment proceedings, the AO upon perusal of the bank statement observed that the assessee has deposited Rs. 23,37,000/- in Allahabad Bank bearing No. 50319747121 during demonetization period and accordingly the assessee was asked to explain the sources of deposits and to justify the same with documentary evidences. Thereafter the AO issued show cause notice and in response to the said notice, the assessee submitted that he is working in the customer service point(CSP) and banking correspondent (BC) of Allahabad Bank at Kolaghat Branch and is also carrying on a family business of dry food processing in the rural area during the year 2016-17. The assessee deposited cash into bank account amounting to Rs. 40,68,308/-. Out of this amount , cash Rs. 5,25,000/- was on account of cash sales and Rs. 32,54,020/- was deposited out of customer’s receipts and balance of Rs. 2,89,288/- received from various persons whose details were also furnished. The AO accepted that the cash deposit out of cash sales of Rs. 5,25,000/- however the balance remaining amount of Rs. 35,43,308/- was added to the income of the assessee on the ground that no satisfactory explanation was given by the assessee as unexplained money.
In the appellate proceedings, the Ld. CIT(A) simply dismissed the appeal of the assessee by observing and holding as under:
“6.1 I have considered the grounds of appeal, statement of facts, evidences filed by the appellant and the content of assessment order. The appellant has not filed any explanation or reasonable cause as to how cash received from 94 customers were wrongly deposited in his saving account which was not supposed to happen. Copy/statement of saving bank account was not filed by the appellant to verify immediate transfer of wrongly deposited cash of customers to the accounts of customers as claimed by the appellant. No confirmation from any of the customers were filed to prove that those customers have given cash to the assessee. The assessee seems to be in business w.e.f. 28/12/2015. Then how all of a sudden in demonetization period, wrong deposit of customers cash will take place in his saving account. The appellant has not filed any written submission in support of various grounds of appeal. Considering the entirety of facts, I am of the view that the AO was justified and correct in adding Rs. 35,43,308/- being unexplained cash deposits and unexplained money of the assessee and hence the same is upheld. Therefore, all the grounds of appeal are dismissed.”
4 I.T.A. No. Assessment Year: Assessment Year: 2017-18 Prasenjit Das 6. After hearing the rival contentions and perusing the After hearing the rival contentions and perusing the material on record, the material on record, the undisputed facts as culling out of records before us and as gathered from the undisputed facts as culling out of records before us and as gathered from the undisputed facts as culling out of records before us and as gathered from the arguments of the rival parties, we observe that the assessee is customer service point arguments of the rival parties, we observe that the assessee is customer service point arguments of the rival parties, we observe that the assessee is customer service point and bank correspondent of Allahabad Bank at Kolaghat Branch and was of Allahabad Bank at Kolaghat Branch and was of Allahabad Bank at Kolaghat Branch and was also carrying on a family business of dry food processing a family business of dry food processing. Since the banking facilities we . Since the banking facilities were not available in the rural areas and therefore he acted as agent of the bank accept available in the rural areas and therefore he acted as agent of the bank accept available in the rural areas and therefore he acted as agent of the bank accepting money from the public and also disbursing money to the public on be money from the public and also disbursing money to the public on be money from the public and also disbursing money to the public on behalf of the bank. We note that the modus operandi was modus operandi was that whenever the money was collected it was whenever the money was collected it was immediately deposited into his bank account immediately deposited into his bank account by the assesse and thereafter remitted by and thereafter remitted by RTGS in the Allahabad bank. S Allahabad bank. Similarly whenever cash is required by the customer th imilarly whenever cash is required by the customer the same is remitted from the bank and transferred to from the bank and transferred to assessee’s account and disburse account and disbursed accordingly. The assessee was paid commission in lieu of this service. We have gone accordingly. The assessee was paid commission in lieu of this service. We have gone accordingly. The assessee was paid commission in lieu of this service. We have gone through the Appointment Letter through the Appointment Letter issued by Allahabad Bank to the assessee which is by Allahabad Bank to the assessee which is extracted below for the sake of ready reference for the sake of ready reference:
5 Assessment Year: 2017-18 Prasenjit Das 7.We have also gone through the Business Correspondence Agent/ Village Level Entrepreneur Agreement entered between dated 20.06.2016 wherein the assessee was authorized as BCA/VLE )business correspondent agent/village level entrepreneur) and commission received by the assessee from the Allahabad Bank for rendering the said services . After examining the above agreement and annexure attached therewith, we note that A-1 provides for the eligibility of the BCA/VLE, A-2 deals with the scope of services to be rendered which included enrollment of customers including collection of biometric and other details and providing cards such as debit card/credit card and deposit of money in a bank account with any bank ,withdrawal of money from account with any bank , remittances from the account with a bank to an account with the same bank or any other bank , balance enquiry and issue receipts /statement of accounts , canvassing of loan applications from eligible beneficiaries . Besides we note that the assessee is also required to create awareness about savings and other products offered by the bank and other services to be offered at the CSP namely basic saving bank deposit accounts, recurring deposit accounts remittances, fixed deposits ,overdraft and retail loans, KCC and third party financial products etc. We note that in similar manner annexure III provides for technology services and annexure –IV lays down standard operating procedures for business. We have also examined the bank account of the assessee to know the behavior and pattern of cash deposits into his bank account and find that there were deposits right from the beginning ranging normally from Rs. 3,000 to Rs. 20,000/- and on some occasions even more amount of cash was deposited out the money received from the customers and used to be remitted to Allahabad Bank account from his account immediately. Therefore , we are of the considered view that the authorities below have failed to appreciate the facts correctly which were available on records. Considering this fact, we are not in agreement on the conclusion drawn by the lower authorities and accordingly set aside the order of Ld. CIT(A) by allowing the appeal of the assessee and the AO is directed to delete the addition.
Order is pronounced in the open court on 28th November, 2022