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Facts
The assessee, a Business Correspondent for State Bank of India, did not file an income tax return. The AO, suspecting income from cash withdrawals and commissions, reopened the case and made additions to the assessee's income. The first appellate authority dismissed the appeal without admitting additional evidence.
Held
The Tribunal set aside the order of the NFAC and restored the file to the Assessing Officer, granting the assessee one more opportunity to present their case and submit evidence.
Key Issues
Whether the NFAC was justified in dismissing the appeal without admitting additional evidence, and whether the assessment proceedings were correctly initiated and conducted.
Sections Cited
147, 148, 144, 133(6), 194H, 194D, 144B, 270A, 272A(1)(d), 46A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
O R D E R This appeal has been preferred by the Assessee against the order dated 27.05.2025, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2018-19.
2.0 The brief facts of the case are that the assessee was a Business Correspondent of State Bank of India and ran a Customer Service Point (CSP). The assessee had not filed his return of income for the year under consideration. The Income Tax Department was in possession of information that the assessee had made cash withdrawals of Rs.1,36,10,616/- from the Current Account maintained with the State Bank of India, received an amount of Rs.11,550/- as ‘Commission/Brokerage’ and ‘Insurance Commission’ during the year under consideration. The case of the assessee was reopened under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) after issuing notice to the assessee under section 148 of the Act. However, the assessee neither responded to the notice under section 148 of the Act nor filed any return of income for the year under consideration. The Assessing Officer (AO), thereafter, issued statutory notices to the assessee, requiring the assessee to explain the cash transactions entered into by the assessee. Since the assessee failed to file the details and supporting documents to explain the reason for huge cash withdrawals from the bank and utilization thereof, the AO proceeded to complete the assessment on the basis of Best Judgment Assessment, after issuing show cause notice to the assessee. In response to the show cause notice dated 27.02.2023 under section 144 of the Act, the assessee had filed a written submission on 06.03.2023, which reads as under:
“The assessee engaged in the business of common service centre (csc) of state Bank of India where he has get a commission amount to Rs.100 on transfer of 10000.00 rupees. Therefore he has get a commission amount approx. Rs.150000 which is lower than 250000.00 amount which is maximum amount not chargeable to Tax. Therefore assessee did not file his return of Income for this financial year. There is only cash deposit or withdrawal due to his nature of business. The deposit is due to bank mitra (csc) business model. Therefore, as per income tax act, 1961, the assessee is under the limit of return fling and no obligation on him to fle his return of income even though tds is deducted on his income. Please consider our reply to the best of our knowledge and belief.” 2.1 The AO, not being satisfied with the reply furnished by the assessee, estimated the receipts/income of the assessee @ 6% of the cash withdrawals of Rs.1,36,10,616/-, which came to Rs.8,16,637/- and added the same to the total income of the assessee.
2.2 The AO also added Rs.11,550/- received by the assessee under the head ‘commission or brokerage’ and ‘insurance commission’ to the total income of the assessee, treating the same as unexplained receipt under section 194H and 194D of the Act.
2.3 The AO completed the assessment under section 144/147 of the Act read with section 144B of the Act, assessing the total income of the assessee at Rs.8,28,187/-.
2.4 The AO also initiated penalty proceedings under sections 270A and 272A(1)(d) of the Act, separately.
2.5 Aggrieved, the Assessee preferred an appeal before the NFAC and filed additional evidence. However, the NFAC, without admitting the additional evidence filed by the assessee, dismissed the appeal of the assessee and confirmed the order of the AO.
2.6 Now, the assessee has approached this Tribunal challenging the orders of the AO as well as the NFAC, by raising the following grounds of appeal:
1. Because on facts and in law, the Ld. CIT (Appeals) has erred in confirming the addition of Rs.8,16,637/- made as variation in respect of receipts by estimating @6% of total cash of Rs.1,36,10,616/- as withdrawn during the financial year from the current bank account maintained by the appellant-assessee.
2. Because on facts and in law, the Ld. CIT (Appeals) has erred in confirming the addition of Rs.8,16,637/- without considering the facts that the appellant has worked as business correspondent of the Bank and the cash withdrawal & deposit were for SBI bank customers and no way connected with any business of appellant and the appellant has received only commission from the bank for providing these services to the customers.
Because on facts and in law, the Ld. CIT (Appeals) has erred in confirming the action of assessing officer without appreciating the fact that the impugned assessment was passed without ensuring the compliance of notice issued under section 133(6) of the Income Tax Act, 1961 himself by the assessing officer.
Because on the facts and in law, the Ld. CIT (Appeals) has erred in confirming the addition of Rs.11,550/-made as variation in respect of unexplained receipts under section 194H & 194D of the Act although these income fall below the taxable limit prescribed under the provisions of Income Tax Act, 1961.
5. Because on facts and in law, the Ld. CIT (Appeals) has wrongly decided the appeal by concluding that the submissions made before him by the appellant constitute additional evidence, and thus the Ld. CIT (A) failed to decide the appeal on its merits & has wrongly rejected the appeal under the garb of the provisions of Rule 46A of the Income Tax Rule, 1962.
6. Because on facts and in law, the Ld. CIT (Appeals) has erred in confirming the impugned assessment order without considering the facts that the assessment proceedings were wrongly initiated by issuance of notice under section 148 of the Income Tax Act, 1961 as there was no such income escaped in the assessment year 2018-19.
7. Because on facts and in law, the Ld. CIT(Appeals) has erred in confirming the penalty proceedings initiated under section 270A and 272 A (1) (d) of the Income Tax Act, 1961.
8. Because on facts and in law, the appellate order dated 27/05/2025 passed by the Ld. CIT (Appeals) confirming the impugned additions deserves to be cancelled being arbitrary, unjustified & bad in law,.
Because on facts and in circumstances of the case, the appellant reserves the right to amend, to introduce / add to other grounds of appeal and new facts with the kind permission of your Honorable Bench. 3.0 None was present on behalf of the assessee when the appeal was called out for hearing nor was any adjournment application moved in this regard. However, looking into the facts of the case, I proceed to adjudicate the appeal ex-parte qua the assessee.
4.0 Since the order passed by the AO was under section 144 of the Act and the NFAC had dismissed assessee’s appeal without admitting the additional evidence filed by the assessee, the Ld. Sr. D.R. has no objection to the restoration of appeal to the file of the Assessing Officer.
5.0 I have heard the Ld. Sr. D.R. and have also perused the material on record. It is evident that the order passed by the AO is ex-parte qua the assessee and the Ld. First Appellate Authority has dismissed the appeal of the assessee without admitting the additional evidence filed by the assessee. Looking into the facts of this case, I am of the considered view that the assessee deserves one more opportunity to present his case and, therefore, I set aside the order of the NFAC and restore this file to the Office of the Assessing Officer with the direction to provide one more opportunity to the assessee to present his case. The AO is also directed to admit whatever evidences assessee wants to submit before him. I also caution the assessee to fully comply with the directions of the Assessing Officer in the set-aside proceedings when called upon to do so, failing which, the Assessing Officer would be at complete liberty to pass the order in accordance with law, based on material available on record even if it is ex-parte qua the assessee.
6.0 In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 31/12/2025.