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Facts
The assessee, a distributor of SIM cards and recharge coupons, appealed against an order adding Rs. 49,86,900 to their income. The assessee claimed these amounts were sales proceeds duly transferred to principals via RTGS.
Held
The Tribunal restored the matter to the Assessing Officer for verification of the RTGS transfers. If at least 90% of receipts are found to be transferred, the additions shall not be warranted.
Key Issues
Whether the amounts received by the assessee represent business receipts or unexplained income, and if the amounts transferred to principals are to be treated as business expenditure.
Sections Cited
144, 69A, 272(1)(d), 271F
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- Delay Condoned This appeal is filed by the Assessee against the appellate order dated 10.03.2025 passed by the Commissioner of Income Tax (Appeals)National Faceless Appeal Centre, Delhi, relating to the Assessment Year 2017-18.
The assessee has raised the following grounds of appeal:
1. The learned Assistant Commissioner of Income Tax, Circle 4(1), Vadodara ("the AO") and the learned Commissioner of Income Tax (Appeals) ["the CIT(A)"] erred in fact and in law in making the order u/s. 144 of the Act and thereby making an addition of Rs.49,86,900/-u/s. 69A of the Act to the total income of the Appellant.
Asst. Year : 2017-18 - 2– 2. The learned CIT(A) as well as the learned AO erred in fact and in law in making the addition to the total income of the Appellant without considering the facts in proper perspective and without considering the nature of business of the Appellant.
The learned CIT(A) as well as the learned AO erred in fact and in law in considering the entire credit balance to the bank account of the Appellant as unexplained.
4. The learned CIT(A) as well as the learned AO erred in fact and in law in making addition of gross receipts to the bank account without considering the fact that expenditure was incurred by the Appellant in order to make such income.
Without prejudice to the above, the learned CIT(A) as well as the learned AO erred in fact and in law in making the addition to the total income of the Appellant without giving the effect of telescoping to the Appellant.
The learned CIT(A) and the learned AO erred in fact and in law and in initiating the penalty proceedings u/s.272(1)(d) of the Act.
The learned CIT(A) and the learned AO erred in fact and in law in initiating the penalty proceedings u/s.271F of the Act.
The Appellant reserves the right to add, alter modify, substitute, delete all or any of the grounds of appeal.
3. Before us, it was submitted that the assessee is a third-level distributor of SIM cards and recharge coupons. The amounts received by the assessee represent the sale proceeds of such SIM cards and recharge coupons. It was further submitted that the assessee has duly transferred the corresponding amounts to the principals (i.e., main distributors) for the purchase of SIM cards through RTGS. The Ld. Authorised Representative (AR) submitted that the complete details of RTGS transfers and payments made to the principals shall be furnished before the Assessing Officer for verification. In view of the above, the matter is restored to the file of the Assessing Officer for the limited Asst. Year : 2017-18 - 3– purpose of verifying whether the amounts received by the assessee have been duly remitted to the principals/distributors of SIM cards and recharge coupons. If, upon verification, the Assessing Officer finds that at least 90% of the total receipts have been transferred to the principals, the same shall be treated as business receipts, and no addition shall be warranted.
In the result, the appeal of the assessee is allowed for statistical purposes.
The order is pronounced in the open Court on 12.11.2025.
S /- Sd/- Sd/- (T R SENTHIL KUMAR) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Ahmedabad; Dated 12.11.2025 MV आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy