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Facts
The assessee, an e-mitra agent, deposited Rs. 26,39,050/- in cash during the demonetization period, claiming it was from e-mitra receipts. The Assessing Officer (AO) treated this as unexplained cash credit under Section 69A, leading to an addition under Section 115BBE, which was confirmed ex-parte by the CIT(A) due to the assessee's non-submission of documents.
Held
The Tribunal observed that the assessee was ex-parte before both lower authorities but had subsequently presented their defence and documents. To ensure natural justice and decide the matter on merits, the Tribunal restored the case to the file of the AO for fresh adjudication, providing the assessee another opportunity of hearing.
Key Issues
Whether a cash deposit of Rs. 26,39,050/- during demonetization constituted unexplained cash credit under Section 69A and whether the ex-parte orders passed by the lower authorities were justified without granting adequate opportunity of hearing to the assessee.
Sections Cited
115BE, 69A, 144, 271AAC(1)
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 1289/JPR/2024
fu/kZkj.k o"kZ@Assessment Year : 2017-18 Shankar Sharma cuke Income Tax Officer 34, Ganpatpur Road, Bordi Walo Vs. Ward 7(2), Ki Dhani, Jat Colony, Bhankrota, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: CMEPS6865B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri U.S. Sharda, C.A. jktLo dh vksj ls@ Revenue by : Shri Gautam Singh Choudhary, JCIT) a lquokbZ dh rkjh[k@ Date of Hearing : 04/02/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 03/04/2025 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 27-08-2024, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2017-18 raising therein following grounds of appeal .
1. Under the facts & circumstances of the case CIT(A) has erred by confirming the additions made by AO as the assessee is running business of e- mitra and cash deposited by him in the bank account was out of the proceeds of e-mitra receipts, therefore, addition made by AO on account of Rs. 26,39,050/- during demonetization was illegal.
3. The appellant prays that the addition of Rs. 26,39,050/- made in respect of disallowance u/s 69A be deleted.
4. The assessee reserves the right to add, reduce, and amend, withdraw of all or any grounds of appeal.”
2.1 At the outset of the hearing, the Bench noticed that the ld. CIT(A) has passed an ex-parte order observing that the despite repeated notices, the assessee has not submitted any documents before him with regard to addition of Rs.26,39,050/- made by the AO and thus he dismissed the appeal of the assessee by confirming the action of the AO. The narration so made in the order of the ld. CIT(A) is as under:-
Findings: “In this case, Notice was issued on 04.02.2021 to the appellant to furnish written submissions and documents on or before 19.02.2021. It was specifically stated in the said notice that if no submissions/ information/ documents were received within the stipulated time period, it would be presumed that the appellant had nothing to say in the matter and the department may proceed ahead based on material available on record. In view of the fact that no written submissions/ information/ documents were received from the appellant, nor any adjournment sought, another notice was issued on 26.04.2024 to the appellant to furnish written submissions, information and documents on or before 13.05.2024. It was specifically stated in the said notice that if no submissions/ information/ documents were received within the stipulated time period, it would be presumed that the appellant had nothing to say in the matter and the department may proceed ahead based on material available on record. In view of the fact that no written submissions/ information/ documents were received from the appellant, nor any adjournment sought, another notice was issued Shankar Sharma vs. ITO on 11.07.2024 to the appellant to furnish written submissions, information and documents on or before 16.07.2024. It was specifically stated in the said notice that if no submissions/information/ documents were received within the stipulated time period, it would be presumed that the appellant had nothing further to say in the matter and the appeal would be decided on merits on the basis of material available on record. In view of the fact that no written submissions/ information/documents were received from the appellant, nor any adjournment sought, one more notice was issued on 19.08.2024 to the appellant to furnish written submissions and documents on or before 26.08.2024. It was specifically stated in the said notice that if no submissions/ information/documents were received within the stipulated time period, it would be presumed that the appellant had nothing to say in the matter and the department may proceed ahead based on material available on record. In view of the fact that no written submissions/ information/ documents have been received from the appellant, nor any adjournment sought, the appeal is being decided on merits on the basis of material available on record. Despite repeated notices as delineated above, the appellant has not seen it fit to file any submissions, information or documents during appeal proceedings. The appellant's deposits of Rs. 26,39,050/- remains unexplained and no documentary has been filed of this cash deposit during the demonetization period In view of the fact that there is no material on record to warrant interference in the order of the AO, the Grounds of Appeal are hereby dismissed.
5. As a result, the appeal is dismissed.” 2.2 During the course of hearing, the ld. AR of the assessee has filed following written submission with the prayer to delete the addition so made by the AO and confirmed by the ld. CIT(A).
“1. The assessee filed his return for Income for the Ass Year 2017-18 on 05.08.2017 vide acknowledgement no 147880440050817 declaring total income of Rs 280414/- under the head Income from Business & Profession and other sources. (PB-1 to 2)
Shankar Sharma vs. ITO 2. The assessee is engaged in the business of photocopy and stationery shop and also taken agency code of E-Mitra centre having valid Service Centre Agency (SCA) registration from the appropriate authority. Copy of SCA is enclosed as (PB-7).
The activity of the business inter alia includes depositing of utility bills i.e. electricity bills, water bill, telephone bills etc and other government related fees. The modus operandi of the same is that customer used to deposit their utility bills or government related fees with the assessee in cash at his E-mitra centre, for which assessee is having valid licence and in turn the assessee deposit the same utility bills or fees with the concerned government authorities through his prepaid account and deposit the case received from customers is being deposited in the assessee's own bank account.
The assessee is carrying on the same business since long and in present the same is being run by the assessee. The State Government has also notified deposit of fees of various department through E-mitra centres i.e. SCAs.
During the demonetisation period i.e. 08.11.2016 to 31.12.2016, E-mitra SCAs were also permitted to deposit the electricity bills, water bills and other Governmental receipts in demonetized currency. Due to this permission, E-Mitra SCA were approached by customers and deposited the demonetized notes with E-Mitra SCAS. News published in this regard in news papers were evident of the same. Copies of such news are enclosed as PB-8 to 9.
6. The assessee, being an SCA, has also collected amount on behalf of University of Rajasthan from students as fees of various coursed, which was to be deposited through E-Mitra SCAs only and prescribed charges are to be recovered from student who deposited the fees. Copy of Notification of University of Rajasthan, Jaipur is enclosed as PB 10 to 13.
During the demonetization period from 08.11.2016 to 31.12.2016, the aseessee has received a sum of Rs 26,36,371/- from its customers from providing E-mitra services, which includes both amount to be deposited On E-mitra portal, the detail of each customer is available and copy of the report generated from portal is enclosed as PB- 14 to 45.
Out of amount collected from students and for other utility services, during the period of demonatization, the assessee has deposited a total sum of Rs 26,31,600/- in his current account no. 61273682599 with State Bank of India. This amount includes currency notes of Rs 1000 and Rs 500 (SBNs) as well other currency notes, which are not demonetised including new currency notes of Rs 2000 and Rs 500 (new). Certificate regarding deposit of cash into Bank has also been obtained from State Bank of India, Mansarovar Branch, Jaipur, where the assessee is having his current account. Copy of Certificate is enclosed as PB-52. As per Bank's certificate, the SBN notes Shankar Sharma vs. ITO were only of Rs.3,17,000/- out of total deposit of Rs. 26,31,600/-. Thus this proves, that the assessee has genuine cash receipts and the same has been deposited with the Bank. Copy of Bank statement of the assessee's current account no 61273682599 is enclosed as PB-53 to 64.
Out of the total amount collected and deposited in Bank account of the assessee, the assessee has transferred Rs 26,37,349/- to E-Mitra Service provider Achariya Technologies Pvt Ltd for refilling or top up his account with Service Provider. Copy of the report generated from portal in this regard is enclosed as PB-46 to 49. Summary of amount used on portal and paid to Service provider is enclosed as PB-50 to 51.
To prevent the mal practice prevailed during the demonetisation period, various government agencies have reported the figures of deposit of cash in bank accounts by common people of the country to the Income Tax Authorities as directed and instructed by Central Government.
Amount deposited by the assessee to the tune of Rs 26,31,600/- was also reported by Bank (such agencies) and the Ld Assessing Officer has arbitrarily considered the total amount deposited in the bank account during the demonetization period of Rs. 26,39,050/-only as unexplained cash credit under section 69A of the Income Tax Act. 1961 without considering the facts and nature of business of the assessee and made addition of the same as income and levied tax thereon.
The Ld. Assessing officer has passed the impugned order under section 144 as the counsel of the assessee was preoccupied in his marriage at the time of notice by the Ld. A O, therefore the same could not be attended. Although the date for time barring the assessment was 31.12.2019 but the L.d. A O remained in hurry to pass the order and final show cause notice was sent through email on 07.12.2016 fixing the date of hearing on 09.12.2016 and passed the order on 09.12.2016 u/s 144 of the Income Tax Act.
During the year under consideration, the assessee has earned commission of Rs. 8064/- from Acharya Technologies Pvt Ltd on account of services rendered to students of University of Rajasthan and other utility services and the same is evident from Form 26AS of the assessee, copy of the same is enclosed as PB-3 to 6. Thus apart from the commission, the assessee.
The assessee aggrieved with the order of Ld A O preferred an appeal before the Hon'ble Commissioner of Income Tax, Appeal-IV, Jaipur in August 2021. The Appeal earlier remained pending and later on the faceless mechanism has been introduced and the appeal of the assessee has been dealt under faceless mechanism.
Although the National Faceless Appeal Centre (NFAC) has issued notices, which has been issued on portal and few of these were also sent through email but due to Shankar Sharma vs. ITO gathering information, the same could not be replied. In the so called last opportunity was given by the NFAC on 19.08.2024 in which reply to be submitted by 26.08.2024. The assessee was in the process of submitting the reply but to the utmost shock of assessee, he got an email of order passed by NFAC on 27.08.2024 at 11.00 a.m which shows the mind making of the NFAC of passing the order and confirmed the demand.
Now, aggrieved with the order NFAC the assessee is preferring this appeal before the Hon'ble Authority with a prayer to delete the addition made by Ld AO and confirmed by the Hon'ble Commissioner of Appeal.
Reliance in this matter is made on the decision of Hon'ble ITAT, Jaipur Benches, "SMC" in the matter of Govind Saini Vs ITO, Jaipur (ITA/629/2023) dtd. 22.04.2024, copy of the same is enclosed as PB-65-79. PRAYER: The humble assessee prays for deletion of unlawful addition made by the Ld A O and confirmed by the Hon'ble Faceless Appellate Authority and grant relief from penalty and other relief as your honour deem fit and appropriate.” It is also noteworthy to mention that the assessee has filed the following paper book containing pages 1 to 82 of the paper book in support of his contentions S. No. Descrition Page No.
ITR V and computation 1-2 2. Form 26AS 3-6 3. Copy of service centre Agency Appointment Certificate 7 4. Copies of News paper cutting showing cash deposits with E-mitra 8-9 Centres 5. Copy of notification issued by University of Rajasthan regarding 10-15 deposit of course fees through E-mitra.
Transaction statement with Acharya Technologies Pvt Ltd (E Mitra 16-48 Service Provider) 7. Statement showing Amount transferred to Acharya Technologies 49-52 Pvt Ltd (E Mitra Service Provider) 8. Summary of Transaction with and amount transferred to Acharya 53-54 Technologies Pvt Ltd (E Mitra Service Provider) 9. Certificate from State Bank of India regarding deposit of cash 55 showing denomination of Notes 10 Copy of Bank statement with State Bank of India for the year 2016- 56-67 17 11. Copy of order of Hon'ble ITAT, Jaipur Bench in the matter of 68-82 Govind Saini Vs ITO, Jaipr (ITA/629/2023)
Shankar Sharma vs. ITO 2.3 On the other hand, the ld. DR supported the order of the ld. CIT(A). 2.4 We have heard both the parties and perused the materials available on record. In this case, it is noticed that the AO made an addition of Rs.26,39,050/- in the hands of the assessee by observing as under:- ‘’2.2 But till date, neither the assessee has attended personally nor furnished any written submission, therefore the case is being completed u/s 144 of the I.T. Act 1961 on the basis of material available on record. 2.3 As per information available on record, the assessee has deposited cash of Rs.26,39,050/-in a/c No. 612736825999 maintained with State Bank of India during the demonetization period but source of such deposited was not explained, therefore on this issue necessary explanation has been called for from the assessee. As, no explanation regarding these cash deposits appearing in his bank accounts during the demonetization period, has been offered and not have furnished any documentary evidences regarding source of the cash deposits in bank account therefore in absence of the same, source of such cash deposited is remains unexplained. Hence, considering the facts, the cash deposits Rs.26,39,050/- during the demonetization period, is treated as unexplained cash credits u/s 69A of the I.T. Act 1961 and is added to the total income of the assessee. As the amount deposited during the demonetization period is unexplained, therefore provisions of section 115BBE is applicable in this case and taxed accordingly. Penalty proceedings u/s 271AAC(1) of the I.T. Act is here by initiated for unexplained income u/s 69A of the Act. ‘’ In first appeal, the ld. CIT(A) has confirmed the action of the AO as no information/ written submission/ documents had been provided by the assessee in his support and thus the ld. CIT(A) dismissed the appeal of the assessee by confirming the action of the AO. The Bench noted from the Shankar Sharma vs. ITO available records that the assessee was ex-parte before the AO and the ld. CIT(A). The assessee has placed before the Bench the written submission as well as paper book in his defence against the orders of the lower authorities. The Bench feels that one more chance should be given the assessee to defend his case. It was the bounded duty of the assessee to appear before the statutory authorities as and when called for. It is noticed that various opportunities were provided to the assessee for settling the issue but the assessee remained lethargic and unserious in pursuing his case However, we are of the view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing opportunity of being heard to the assessee. Hence, the matter is restored to the file of the AO to decide it afresh by providing one more opportunity of hearing, however, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings. Thus the appeal of the assessee is allowed for statistical purposes. 2.6 Before parting, we may make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by AO independently in accordance with law.
3.0 In the result, the appeal of the assesee is allowed for statistical purposes Order pronounced in the open Court on 03/04/2025.