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Facts
The assessee, engaged in e-commerce business distributorship, collected cash from retailers and deposited it in his bank account. The Assessing Officer (AO) made an addition of Rs. 45,21,600/- on account of unexplained money under section 69A of the Act, which was confirmed by the CIT(A). The assessee had provided confirmations for a substantial portion of the deposited amount.
Held
The Tribunal noted that the assessee acted as a collection agent and facilitator for e-commerce services. While the AO made an addition for certain parties, the assessee subsequently provided further confirmations. The CIT(A) ignored these confirmations. Given the substantial confirmations provided and the nature of the business, the Tribunal found it appropriate to restore the matter back to the AO.
Key Issues
Whether the addition made by the AO on account of unexplained money under section 69A, sustained by CIT(A), is justified when substantial documentary evidence was provided by the assessee regarding his role as a collection agent.
Sections Cited
69A, 115BBE, 143(3), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, SURAT
Before: SHRI SANDEEP GOSAIN & SHRI OM PRAKASH KANT
Date of Hearing 06.10.2025 Date of Pronouncement 12.11.2025 ORDER Per: SHRI. SANDEEP GOSAIN, J.M.:
The present appeal has been filed by the assessee challenging the impugned order dt. 30.06.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2017-18.
The only effective ground raised by the assessee is 2. with regard to challenging the order Ld. CIT(A) in sustaining the addition made by the AO on account of unexplained money u/s 69A of the Act. In this regard the assessee relied upon his written submissions which are reproduced herein below:
The appeals is filed against the order of the Learned CIT(Appeals) dated 30.06.2025 confirming the addition of Rs. 45,21,600/- u/s. 69A of the Act and taxing the same u/s. 115BBE of the Act.
The assessee is engaged in the business of distributorship of E-commerce company namely Suvidha Infoserve Private Limited and Money On Mobile for providing E-commerce services visa-vis E-balances like Mobile Recharge, Travel Booking, Bill Payment etc to final customers through retailers. The assessee collects cash from retailers who receives it from final customers by providing above services and then deposit the same in the bank a/c. The assessee filed his return of income for A.Y. 2017-18 on 09.01.2018 declaring total income of Rs 2,51,460/-.The case of the assessee was selected for limited scrutiny for A.Y. 2017-18 for verification of cash deposits in bank a/c. The assessment was finalized u/s 143(3) and total income was assessed at Rs 47,73,060/-.
3. During the year under consideration, the assessee received Rs. 3,23,84,250/- from 106 parties out of which he had deposited Rs. 3,21,72,950/- in the bank account. In the course of assessment proceedings, the assessee filed confirmations from 48 parties in respect of the amount of Rs. 2,78,62,650/-. As the assessee was not able to file confirmations from remaining 58 parties, the learned AO made the addition of Rs. 45,21,600/- for 48 parties.
4. In the course of appellate proceedings, the assessee filed further confirmations of 26 parties in respect of the amount of Rs. 28,87,500/- vide submission dated 07.06.2025. The learned CIT(Appeals) ignored the confirmations and confirmed the addition of Rs. 45,21,600/-. Arguments: 5. It is to be noted that out of Rs. 3,23,84,250/-, the assessee had deposited cash of Rs. 4,41,500/- during demonetisation period and the balance cash of Rs. 3,17,31,450/- during the period other than the demonetisation period.
The assessee had provided the confirmations to the tune of Rs. 2,78,62,650/- from different parties out of Rs. 3,23,84,250/- which comes to around 86% of the amount deposited in the bank account which was substantial amount to establish the fact that the assessee had deposited the cash amount in respect of different retailers only. Moreover, the assessee had provided the addresses and PAN of all the remaining 58 retailers. Therefore, there was no reason for the learned AO to doubt the case of the assessee in as much as, much more than majority of the amount was confirmed and accepted by the assessing officer and when the assessee had provided the names and addresses with PAN of the remaining parties, it was open to the learned AO to make independent inquiry even on random basis. However, the learned AO made the addition without making any independent inquiry and without appreciating the modus operandi of the assessee's business that the amount collected by him was not in the nature of deposit in as much as he was acting as a collection agent and facilitator for providing E-balance services to various retailers on behalf of the E-commerce companies like Suvidha Infoserve Pvt. Ltd. etc. it is further to be noted that the assessee had filed confirmations of 266 parties in respect of the amount of Rs. 28,87,500/- and therefore, the amount of Rs. 3,07,50,150/- i.e. 96% are supported by confiramtions.
The cash deposited are reflected in the financial statements and the cash book. All bank accounts are appearing in the balance sheet filed by the assessee. In subsequent year i.e. A.Y. 2018-19, no addition was made in the scrutiny assessment vide order passed on 26.07.2021. In this year, the case was taken up for scrutiny for cash deposits only.
In view of the above, the Honourable Bench is requested to delete the addition or set aside the matter for fresh adjudication. 3. On the other hand Ld. DR relied upon the orders passed by the revenue authorities.
Bhavinbhai Bharatbhai Kothari, Mumbai.
After having heard the counsels for both the parties and considering the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. we find that assessee had deposited a sum of Rs. 3,23,84,250/- into his bank account and during the course of assessment, it was submitted that the assessee was merely acting as a collection agent of the company wherein he collected payments from the retailers on behalf of the company and return the same to the respective companies. According to the assessee the said collection of receipt should be considered as his turnover as he was acting as a commission agent for the above activities. We noticed that assessee has dealt with 106 parties from whom cash of Rs. 3,23,84,250/- was received and in this regard assessee had submitted documents with regard to 48 parties in the shape of PAN, Addresses, Aadhar card, electricity bill and also submitted confirmation of cash received from said 48 parties. Therefore the addition was not made with regard to these 48 parties. Thereafter the assessee had submitted the same details and confirmation with regard to another 26 parties during the Ld. CIT(A) stage but Ld. CIT(A) still confirmed the additions made by the AO by ignoring the documents filed by the assessee. However, the assessee has again furnished the documentary evidenceswith regard to remaining parties along with corroborative documents. Therefore considering the said facts matter is restored back to the file of AO for Bhavinbhai Bharatbhai Kothari, Mumbai. verifying the documents so filed by the assessee and to pass afresh order with regard to the parties, whose documents have been filed by the assessee. With these directions matter is restore back to the file of AO.
Before parting, we 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 the AO independently in accordance with law.
In the result the appeal filed by the assessee is allowed for statistical purposes.