MANIPARAMBATHIRUMBAN MOHAMED KUTTY,KOZHIKODE vs. ITO WARD 1, KOZHIKODE

Brief facts of the case are that the appellant is an individual engaged in the business of collection agent for wholesale onion distributors in the area of Kottakkal area of Malappuram district. The appellant collects money due to the onion suppliers and deposit in his bank account and transfers the money to the onion suppliers Maniparambathirumban Mohammed Kutty and get commission income. The return of income for AY 2018-19 was filed on 15.09.2018 declaring income of Rs. 3,75,800/-. Against the said return of income, the assessment was completed by the National e-Assessment Centre, Delhi (hereinafter called "the AO") vide order dated 30.03.2021 passed u/s. 143(3) r.w.s. 143(3A) and 143(3B) of the Income Tax Act, 1961 (the Act) at a total income of Rs. 8,36,98,100/-. While doing so, the AO made addition of Rs. 8,33,22,300/- being cash deposits made in the bank account treating as unexplained money of the appellant for the failure of the assessee to substantiate the explanation that the said money represents the money collected on behalf of the onion suppliers.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal for the failure of the appellant to establish the existence of the parties with confirmation or genuineness of the impugned purchases.

Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.

The learned counsel for the assessee submits that the appellant is a collection agent for certain onion dealers. The money collected on behalf of the onion suppliers were deposited in his account and transferred to the onion suppliers after charging commission. The deposits in the bank account represent the money collected from the customers. Therefore, no addition can be made in Maniparambathirumban Mohammed Kutty the hands of the appellant. He further submits that from the bank statements it would be evident that the money collected and deposited in the bank account were immediately transferred to the onion suppliers after retaining his commission. In support of this he filed copies of the agreement with the onion suppliers.

On the other hand, the learned CIT-DR opposed the above submissions and submitted that the appellant had failed to discharge the onus of proving the source of cash deposits and, therefore, the AO had rightly made the addition and the CIT(A) rightly confirmed the addition an no interference is called for.

We have heard the rival contentions and perused the material available on record. The issue that arises for our consideration is whether the addition made by the AO as unexplained money can be sustained in the eyes of law. During the course of assessment proceedings, when the appellant was called upon to explain the source of cash deposits, it was explained that the said deposits were made out of money collected from buyers of onion on behalf of onion suppliers located in the state of Maharashtra. It appears that during the course of assessment proceedings the appellant could not file any evidence in support of the above explanation. During the course of hearing before us the appellant had filed copy of the bank statements, wherein it is clearly stated that after deposing the money, the money is transferred to onion suppliers. Moreover, the appellant also filed one sample copy of the agreement entered into Maniparambathirumban Mohammed Kutty by the appellant with onion suppliers to show that the appellant was acting on behalf of the onion suppliers for collection of money from the buyers in consideration of commission. This material would clearly show that the money deposited in the bank account does not belong to the appellant. He was only acting as a collection agent on behalf of certain parties. Since this was not verified by the AO, we are of the considered opinion that the matter requires remand to the file of AO and ordered accordingly with a direction to complete the de novo assessment in accordance with law after affording reasonable opportunity of hearing to the appellant.

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.