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Facts
The assessee, a 'Buffalo Mandi Commission Agent', filed his return for AY 2018-19, which was selected for scrutiny due to significant cash deposits of Rs. 6,37,16,100/- in his Union Bank of India current account. The Assessing Officer treated these deposits as unexplained investment under Section 69 of the Act, an addition that was subsequently upheld by the Ld. CIT(A), as the assessee failed to provide adequate substantiation for the sources of the deposits.
Held
The Tribunal noted that the assessee has submitted additional evidence, including confirmation letters from buyers and ledger account copies, which were not examined by the lower authorities. Considering the new evidence and the request for de novo adjudication, the Tribunal set aside the impugned order and remanded the issue back to the file of the Assessing Officer for fresh examination and adjudication, granting reasonable opportunity to the assessee.
Key Issues
Whether unexplained cash deposits in the assessee's bank account should be treated as unexplained investment under Section 69 of the Income Tax Act, and if additional evidence should be considered for a fresh adjudication.
Sections Cited
250, 143(3), 144B, 69, 143(2), 142(1), 133(6), Rule 29 of ITAT Rules, 1963
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM
Before: SHRI S BALAKRISHNAN, HON’BLE & SHRI SANDEEP SINGH KARHAIL, HON’BLE
आदेश /O R D E R
PER SANDEEP SINGH KARHAIL, JUDICIAL MEMBER:
The assessee has filed the present appeal against the impugned order dated 17.03.2025, passed under section 250 of the Income Tax Act, 1961 (in short ‘Act’) by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi [hereinafter in short “Ld.CIT(A)”], for the A.Y. 2018-19.
“1. That on the facts and circumstances of the case and in law, the order u/s 143(3) r.w.s. 144B of the IT Act, dt. 21.04.2021, as upheld by the Ld.CIT(A), NFAC vide orders passed u/s 250 dt. 17.03.2025, are contrary to the facts of the case and the provisions of law.
The learned CIT (A) ought to have appreciated the fact that when assessee has explained, with cogent reasons, the sources before the AO for the deposits made in bank account, the learned CIT(A) should have deleted the addition made under section 69 of the IT Act of Rs.6,37,16,100/-.
3. The Learned CIT(A) upheld the assessment order in which the Assessing Officer made an addition based on conjecture and suspicion. In doing so, the CIT(A) disregarded the assessee's explanation, which provided clear reasons that the bank deposits were made from the funds available to the assessee.
4. The Learned CIT(A) overlooked and failed to consider the explanation regarding the source of deposits that is from out of business transactions.
5. For these and other reasons that may be urged at the time of hearing, the appellant prays that the orders passed u/s 250 of the Income Tax Act be set aside and the additions made by the Assessing Officer be deleted.””
The only grievance of the assessee is against the addition made under section 69 of the Act by treating the cash deposits made in his bank account as an unexplained investment.
Brief facts of the case pertaining to this issue are that the assessee is an individual who derives his income from business and profession, and is doing the business “Buffalo Mandi Commission Agent” business. For the year under consideration, the assessee filed his return of income on 28.09.2018, declaring the total income of Rs.5,04,980/-. The return filed by the assessee was selected for limited scrutiny through CASS on the issue of cash deposits. Accordingly,
Page No. 2 Subbarao Jaladi statutory notices under section 143(2) and 142(1) of the Act were issued and served on the assessee. Upon examination of the material placed on record, it was observed that the assessee made substantial cash deposits into his bank accounts during the year under consideration, as compared to the opening cash balance and turnover disclosed. It was further observed that there were cash deposits of Rs.6,37,16,100/- in the assessee’s current account maintained with Union Bank of India, while as per Form 61A filed by the assessee, the cash deposits in the bank were only to the tune of Rs.3,11,33,500/- and cash in hand as on 31.03.2017 was Rs.1,29,110/-. Accordingly, the assessee was asked to explain the sources of such cash deposits in its bank account and substantiate its claim with all the relevant documentary evidence. Notice under section 133(6) of the Act was also issued to the Union Bank of India and State Bank of India, asking for the details of the assessee’s bank account along with all the details in connection with the assessment of the case. In response to the notice issued, the assessee submitted that he is involved in the Buffalo Mandi Commission Agent business, in which he acts as a mediator between farmers and traders. The assessee submitted that he primarily caters to the demands of Kerala and Tamil Nadu, and the purchasers make deposits into his account. The assessee then pays the farmers via cheques and receives a commission for this activity. The assessee further submitted that he is showing the same transactions as sales and purchases in his returns and has three bank accounts: one current account with the State Bank of India and two bank accounts, namely a savings account
Page No. 3 Subbarao Jaladi and a current account with the Union Bank of India. In response to the statutory notices, the assessee also submitted that upon verification, it was found that the credits of the current account maintained with Union Bank of India were not taken into account by his Accountant while filing the return of income, and this was left undisclosed by him. The assessee submitted that all the deposits in this bank account pertain to the business. Since the total cash credits in the current account maintained with Union Bank of India amounting to Rs. 6,37,16,100/- were not disclosed by the assessee in his return of income, and the assessee could not substantiate his claim of such deposits with valid documentary support, the Ld.AO vide order dated 21.04.2021 passed under section 143(3) r.w.s. 144B of the Act treated the entire sum of cash credits as an unexplained investment under section 69 of the Act and added the same to the total income of the assessee.
The Ld. CIT(A), vide impugned order, upheld the addition made by the Ld.AO under section 69 of the Act as the assessee could not provide the details of sellers and purchasers of buffalo on which he had earned commission income.
Being aggrieved, the assessee is in appeal before us.
During the hearing, the Ld. Authorised Representative [hereinafter “Ld.AR”], reiterating the submissions made by the assessee before the lower authorities, submitted that the cash deposits in the current account of the assessee maintained with Union Bank of India could not be disclosed while filing the Page No. 4 Subbarao Jaladi return of income due to the failure on the part of the income tax practitioner of the assessee. The Ld. AR submitted that the assessee has now received confirmation letters from the buyers, along with ledger account copies, which evidence the nature of the bank credits. Accordingly, Ld.AR prayed that the matter be restored to the file of the Ld. AO for de novo adjudication, after considering all the details now available to the assessee. In this regard, the Ld.AR also brought our attention to the petition filed by the assessee under Rule 29 of the ITAT Rule, 1963, seeking admission of the additional evidence. Further, the Ld.AR submitted that the assessee has also filed his affidavit along with the affidavit of the Chartered Accountant to substantiate the claim that the details of the current account maintained with Union Bank of India were inadvertently not recorded and taken into account while filing the return of income for the year under consideration. Further, the Ld.AR also brought our attention to the death certificate of the assessee’s wife to substantiate the submissions of the assessee that the assessee’s wife was diagnosed with severe medical conditions and she passed away on 24.07.2019.
On the other hand, Ld. Departmental Representative [hereinafter in short “Ld. DR”] submitted that the confirmation letters, as now placed on record by the assessee, were not examined by any of the lower authorities and therefore the opportunity should be granted to the revenue to analyse the same.
Page No. 5 Subbarao Jaladi 9. Having considered the submissions of both sides and perused the material available on record, since the entire addition of Rs.6,37,16,100/- under section 69 of the Act is based on the cash deposited in current account of the assessee maintained with Union Bank of India, which the assessee could not substantiate during the proceedings before the lower authorities and has now brought on record by way of additional evidences confirmation letters of the buyers and other supporting documents, we deem it appropriate to restore this issue to the file of the Ld. AO for de novo adjudication after examination of the details furnished by the assessee. With the above directions, the impugned order on this issue is set aside, and the grounds raised by the assessee are allowed for statistical purposes. Before concluding, it is needless to mention that no order shall be passed without affording reasonable and adequate opportunity of hearing to the assessee. We may also note that Ld. AO shall be at liberty to seek any other information from the assessee, which it may be considered necessary for the complete adjudication of this issue. We order accordingly. As a result, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open court on 19th September, 2025.