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Facts
The assessee, a business correspondent, deposited over Rs. 1 crore cash in her bank account, which the AO treated as unexplained money under Section 69A after she failed to respond to notices. Both the assessment and first appeal were completed ex-parte, leading to an addition of Rs. 1,02,77,631/- to her income.
Held
The Tribunal admitted additional evidence furnished by the assessee, which prima facie suggested the deposits were collections for the bank. Since these evidences were not examined by lower authorities, the Tribunal remanded the matter to the AO for de novo adjudication, providing the assessee another opportunity to present her case.
Key Issues
Whether cash deposits by a business correspondent represent unexplained money under Section 69A, and if ex-parte assessment/appellate orders are valid without considering the assessee's business model and new evidence.
Sections Cited
147, 144B, 148, 69A, 143(2), 142(1), 133(6), 250(6), 234A, 234B, 234C
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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Shri Ravish SoodShri Madhusudan Sawdia
(िनधा�रण वष�/Assessment Year: 2017-18) Smt. Aliveni Gurram Vs. Income Tax Officer KARIMNAGAR Ward – 2 PAN:BURPG4403M Karimnagar (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Shri T. Chaitanya Kumar, Advocate राज� व �ारा/Revenue by:: Shri Waseem UR Rehman, Sr. DR सुनवाई की तारीख/Date of hearing: 04/12/2025 घोषणा की तारीख/Pronouncement: 10/12/2025 आदेश/ORDER Per Madhusudan Sawdia, A.M.:
This appeal is filed by Smt. Aliveni Gurram (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 16.06.2025 for the A.Y.2017-18. 2. The assessee has raised the following grounds of appeal:
Page 1 of 7 “1. The learned Commissioner of Income-tax (Appeals) order is erroneous in facts and law.
The order of the learned Commissioner of Income-tax (Appeals)erred in confirming the action of the assessing officer ex-party u/s 147 read with section 144B of the IT Act, without giving further opportunity.
3. The order of the learned Commissioner of Income-tax (Appeals)erred in confirming the action of the assessing officer issuing notice u/s 147 read with section 148 of the IT Act. Which is illegal and arbitrary.
The learned Commissioner of Income Tax (Appeals) and assessing officer erred in failed to appreciate that the appellant is a commission agent authorized by SBI and payment service institutions, and that all the cash deposits in the bank account belonged to the customers. The appellant merely acted as a disbursement and collection Centre and earned a commission of only 1% on such gross transactions. The deposits thus do not constitute the appellant's income and cannot be treated as unexplained money under Section 69A.
5. The learned Assessing Officer and CIT(A) erred in law and on facts in treating the entire cash deposits of. Rs.1,02,77,631/- as unexplained money under Section 69A of the Income-tax Act, 1961, without considering the business model and without any evidence to suggest the amount was unaccounted income of the appellant.
6. The authorities failed to consider that the appellant could not furnish the bank statements due to merger of State Bank of Hyderabad into SBI and requested more time. This genuine and bonafide reason was unjustly ignored, and the assessment was completed ex-parte.
7. The CIT(A) failed to issue any final hearing notice or enable the appellant to present submissions during the faceless appellate process, especially when the appeal was pending for over three years. This procedural failure renders the appellate order void ab initio.
8. The CIT(A) did not discuss or evaluate the specific grounds raised in Form 35 and passed a non-speaking order without recording reasoned findings, thereby violating provisions of Section 250(6) of the Income-tax Act.
The learned AO erred in determining the total income at Rs.1,03,61,433/- against the returned income of Rs.83,802/- , solely on the basis of customer-related deposits, without any basis or inquiry into the actual income earned by the appellant.
The CIT (Appeals) erred in upholding the levy of interest under sections 234A, 234B, and 234C of the Act.
Any other ground/grounds may be urged at the time of hearing.”
The brief facts of the case are that the assessee is an authorised business correspondent for State Bank of Hyderabad and other financial institutions, engaged in the activity of collection of cash on behalf of the bank. The assessee had not filed any return of income for the Assessment Year 2017–18. Based on information available on record, the Learned Assessing Officer (“Ld. AO”) noticed that the assessee had deposited cash amounting to Rs.1,02,77,631/- in her savings bank account with State Bank of Hyderabad. Accordingly, the Ld. AO initiated proceedings under section 147 of the Income Tax Act, 1961 (“the Act”) and issued notice under section 148 of the Act dated 30.03.2021. In response, the assessee filed her return of income on 30.05.2021 declaring a total income of Rs.83,802/-. Thereafter, notice under section 143(2) of the Act dated 24.06.2021 and several notices under section 142(1) of the Act were issued calling for details and documentary evidence explaining the source of cash deposits. However, the assessee did not comply with the statutory notices. The Ld. AO also issued notice under section 133(6) of the Act to State Bank of Hyderabad calling for the assessee’s bank account statement. The bank also did not respond. In the absence of any compliance by the assessee and Page 3 of 7 with no reply from the bank, the Ld. AO treated the entire cash deposit of Rs.1,02,77,631/- as unexplained money under section 69A of the Act and added the same to the income of the assessee. The assessment was completed by Ld. AO under section 147 read with section 144B of the Act on 12.03.2022 determining the total income of the assessee at Rs.1,03,61,433/-.
4. Aggrieved with the order of the Ld. AO, the assessee filed appeal before the Ld. CIT(A). However, the assessee again failed to appear or furnish the required details before the Ld. CIT (A). Consequently, the Ld. CIT(A) dismissed the appeal of the assessee ex parte.
Aggrieved with the order of the Ld. CIT(A), the assessee is in further appeal before this Tribunal. During the course of appellate proceedings, the Learned Authorised Representative (“Ld. AR”) submitted that the only issue involved in the present appeal relates to the addition of Rs.1,02,77,631/- made by the Ld. AO under section 69A of the Act. The Ld. AR explained that the assessee is an authorised Business Correspondent of State Bank of Hyderabad, collecting small cash deposits from farmers and villagers residing in rural areas and depositing the same into the bank on their behalf. In this capacity, the assessee acts merely as an agent of the bank and the cash collected does not belong to her. To substantiate this claim, the Ld. AR placed on record the certificate and identity card issued by the bank evidencing the assessee’s appointment as Business Correspondent, placed at page nos. 4 to 17 of the paper book. The Ld. AR further invited our
Page 4 of 7 attention to the trading and profit and loss account of the assessee for the year ended 31.03.2017 placed at page no. 3 of the paper book and submitted that during the year the assessee received commission income of Rs.1,06,540/- and after deduction of expenditure, the net profit of Rs.83,802/- was offered as income in the return of income filed. He submitted that these facts clearly establish that the cash deposits in the assessee’s bank account do not represent the assessee’s own money but are cash collected from villagers on behalf of the bank and deposited with the bank as part of her business correspondent work. The Ld. AR also placed before us the copy of return of income, computation, profit and loss account, balance sheet, certificate and identity card issued by the bank, and copy of bank statement, all filed as part of the paper book running from page nos. 1 to 194. He submitted that these documents constitute crucial evidence going to the root of the matter and should be admitted as additional evidence. He submitted that the assessee could not furnish these documents before the Ld. AO or Ld. CIT(A) because assessee did not have the documents at the relevant time and could obtain them from the bank only after persistent efforts. He therefore prayed for admission of additional evidence and requested that the matter be remanded to the Ld. AO for fresh adjudication on merits.
Per contra, the Learned Departmental Representative (“Ld. DR”) strongly objected to the request for remand and submitted that adequate opportunity had already been provided before both the lower authorities, which the assessee failed to Page 5 of 7 avail. He submitted that no further opportunity should be given to the assessee.
We have carefully considered the submissions of the rival parties and perused the material available on record. We find that both before the Ld. AO and before the Ld. CIT(A), the assessment and appellate proceedings were completed ex parte due to non-compliance on the part of the assessee. We also find that the assessee has now placed various documents such as bank identity card, business correspondent certificate, profit and loss account, bank statements and other supporting materials which prima facie appear relevant for adjudicating the core issue regarding the source and nature of cash deposits. These evidences go to the root of the matter in determining whether the cash deposits belong to the assessee or represent cash collected on behalf of the bank. Considering the nature of evidence filed, the fact that the assessee did not have these documents earlier, and in the interest of substantial justice, we deem it appropriate to admit the additional evidence furnished by the assessee. Since these evidences were not examined by the lower authorities, the issue requires fresh verification. Accordingly, in the interest of justice, we restore the matter to the file of the Ld. AO for de novo adjudication after examining all the additional evidences placed on record and after affording reasonable opportunity of being heard to the assessee. The assessee shall be at liberty to file all necessary documents and explanations in support of her claim. The assessee is also directed not to seek unnecessary adjournments and to fully cooperate in the remand proceedings.
In the result, the appeal of the assessee is allowed for statistical purposes.