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Facts
The assessee, engaged in the business of a stamp vendor, deposited a large sum of cash (Rs.1,25,52,000) into their bank account. The Assessing Officer (AO) reopened the case, treating this deposit as unexplained cash credit and also added interest income. The assessee argued that the cash was from stamp purchasers and used for purchasing stamp papers for the government.
Held
The Tribunal held that the assessee had provided evidence like break-ups of stamp paper purchases, cash deposits, and reconciliation statements, which indicated the cash was utilized for purchasing stamp papers. The AO and CIT(A) failed to refute the assessee's explanation with cogent material, and it was not a case of parallel business. The interest income was already offered for tax.
Key Issues
Whether the cash deposits in the bank account were unexplained cash credits, and if the interest income was taxable again.
Sections Cited
68, 147, 148
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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: S/SHRI INTURI RAMA RAO & SHRI PRAKASH CHAND YADAV
PER PRAKASH CHAND YADAV, JUDICIAL MEMBER:
The present appeal of the assessee is arising from the order of the ld Commissioner of Income Tax (Appeal) NFAC, Delhi dated 12.11.2024 having DIN No. ITBA/APL/S/250/2024-25/1070288064(1) and relates to assessment year 2016-17.
Brief facts of the case as coming out from the orders of authorities below are that the assessee is engaged in the business of stamp vendor approved by the Government of Kerala. The assessee was maintaining an account with State Bank of India. This bank account
Page 2 of 6 was specially maintained for online payments for purchase of government stamp papers from registrar office. For the impugned assessment year, the assessee has not filed any return of income.
Thereafter, on the basis of an information from the department, the Assessing Officer reopened the case u/s.147 r.w.s 148 of the Act. The main reason for reopening of the case of the assessee is that an amount of Rs.1,25,52,000/- has been deposited in cash in her saving bank account. Thereafter, the Assessing Officer issued various notices to the assessee. However, no compliance was made by the assessee expect one notice of 148. Accordingly, the Assessing Officer taxed the entire amount of Rs.1,25,52,000/- as unexplained cash credits u/s.68 of the Act. The Assessing Officer also made an addition of Rs.34,513/- on account of interest received by the assessee from the bank.
Aggrieved with the order of the Assessing Officer, the assessee filed appeal before the ld CIT(A) and contended that the cash deposits were received from the respective stamp purchasers/customers of the assessee and same were deposited with the State Bank of India and ultimately transferred to Government of Kerala. The assessee has also filed certain evidences with the ld CIT(A) in order to show the bona-fides of the transaction. These evidences were filed before the ld CIT(A) as additional evidences and the ld CIT(A) has sought remand report from .
Page 3 of 6 the Assessing Officer. After considering the remand report received from the Assessing Officer, the ld CIT(A) affirmed the view of the AO on the ground that the assessee failed to provide details of customers who had purchased the stamp papers during the financial year 2015-16.
None appeared on behalf of the assessee when the matter called on for hearing.
Ld Sr DR relied on the orders of authorities below.
After considering the submissions of ld Sr DR, we observe that before the ld CIT(A) the assessee has filed following evidences:
a) Break up of purchase of stamp paper b) Break up of cash deposit c) Reconciliation statement d) Stamp vendor license e) Income computation statement f) Documents writer license etc.
However, both the authorities i.e. the Assessing Officer and ld CIT(A) were forcing the assessee to file the list of customers who have purchased the government stamp papers. Having regards to these facts, we observe that so far as the interest income of Rs.34,513/- is concerned, same has already been offered to tax in her income and, therefore, cannot be taxed again by the Assessing Officer. Now coming .
Page 4 of 6 to the issue of cash deposit of Rs.1,25,52,000/-, we observe that the assessee has purchased stamp papers of worth Rs.1,26,20,789/- during the year under consideration from the Government as is evident from the breakup of purchase of stamp papers filed by the assessee before the ld CIT(A) and also examined by the Assessing Officer in the remand proceedings. Further, the assessee has explained that the entire cash which has been deposited with State Bank of India has been utilized for purchase of stamp papers only. However, both the authorities have failed to refute this contention of the assessee as well as evidences filed by the assessee with any cogent materials. It is not the case of the Assessing Officer that the assessee is running parallel business from where the assessee has earned an amount of Rs.1,25,52,000/-.
Therefore, the only probability is that the cash has been received by the assessee from the customers. This basic contention of the assessee has not been refuted by the lower authorities. Therefore, we are of the view that no addition is called for in this case. We further observe that so far as the debit of these amounts to the Government of Kerala is concerned, nobody has doubted the genuineness. In these circumstances, we delete the addition made by the Assessing Officer and confirmed by the ld CIT(A)
In the result, appeal of the assessee stands allowed.
Order pronounced in court on 20th day of August, 2025