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Facts
The assessee, an individual operating a Customer Service Point (CSP) for State Bank of India, deposited ₹10,69,000 during the demonetization period. This deposit was claimed to be from customer transactions and not personal income. The Assessing Officer (AO) treated it as unexplained money and made an addition under section 69A. The assessee could not respond to notices due to remote location and lack of access to tax professionals, leading to an ex parte assessment under section 144. The CIT(A) upheld the AO's order.
Held
The Tribunal noted that the CIT(A) had not passed a speaking order and failed to appreciate the documentary evidence submitted by the assessee, such as the CSP agreement, bank statements, and commission certificate. The Tribunal also observed that the assessee's delay in filing the appeal was due to a reasonable cause.
Key Issues
Whether the cash deposits made during the demonetization period were unexplained money and whether the CIT(A) erred in not considering the evidence and passing a non-speaking order.
Sections Cited
69A, 144, 250, 271F, 272A(1)(d)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PATNA BENCH AT KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Addl/JCIT(A)-1, Chandigarh [hereinafter referred to as Ld. ‘Addl/JCIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2017-18 dated 15.01.2025, which has been passed against the assessment order u/s 144 of the Act, dated 31.10.2019. On the whole of May 2
The Registry has informed that the appeal is barred by limitation by 24 days. At the time of hearing, none appeared on behalf of the assessee and the appeal was heard with the assistance of the Ld. DR. Although the assessee has not filed any application seeking condonation of delay, however a submission stated to be an affidavit I.T.A. No.: 206/PAT/2025 Assessment Year: 2017-18 Prakash Gupta. has been filed in which it is stated that during the demonetisation period, total sum of ₹ 10,69,000/- was deposited into the SBI account and the cash deposited was not the personal income but represented transactions conducted by customers availing banking services through his CSP outlet. The actual income is stated to be only ₹ 78,739/- which was earned as commission from SBI for operating the CSP. The assessee submitted CSP agreement, bank statements and certificate of commission income as evidence to substantiate that the deposited cash was part of regular business transaction and not unaccounted money. It is also mentioned at Sl. No. 8 of the affidavit that due to remote location and lack of access to professional tax guidance, he was unable to respond to the notices issued under section 142(1), which led to an ex parte assessment under section 144 of the Act. Thus, after perusing the same, we find that as the assessment was made ex parte under section 144 of the Act and the appeal was also not represented properly as only written submission along with the relevant documents was filed and as the assessee had not filed the return of income nor any explanation regarding nature and source of the cash deposit during assessment proceeding was filed, the only ground of appeal relating to cash deposit was dismissed. As the assessee was living in a remote area and did not have access to professional tax guidance because of which ex parte assessment was made, and as the assessee does not gain anything by filing a belated appeal, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication.
The assessee is in appeal before the Tribunal raising the following grounds of appeal: I.T.A. No.: 206/PAT/2025 Assessment Year: 2017-18 Prakash Gupta. “1. That on the facts and circumstances of the case and in law, the learned CIT(Appeals) gravely erred in confirming the addition of Rs. 10,69,000/- made by the Assessing Officer under section 69A of the Income Tax Act, 1961, without appreciating the true nature of appellant's business as a Customer Service Point (CSP) operator of State Bank of India.
That the learned CIT(Appeals) failed to appreciate that the appellant operates as an authorized business correspondent of State Bank of India through CSC E-Governance Services India Pvt. Ltd., where cash deposits and withdrawals are an integral part of the business operations.
That the learned CIT(Appeals) erred in not considering that the cash deposits of Rs. 10,69,000/- during the demonetization period (09.11.2016 to 30.12.2016) represented customer transactions and not the personal income of the appellant.
That the learned CIT (Appeals) failed to appreciate that the appellant's actual income for the year was only Rs. 78,739/- (commission earnings), which was below the taxable limit, and therefore, there was no requirement to file the return of income.
That the learned CIT(Appeals) erred in upholding the best judgment assessment under section 144 without considering the appellant's genuine difficulties in responding to notices due to his remote location and lack of access to tax professionals.
That the learned CIT (Appeals) failed to consider the documentary evidence submitted during appellate proceedings, including: a) CSP Agreement with SBI/CSC E-Governance Services India Pvt. Ltd. b) Bank statements showing the transactional nature of deposits c) Certificate of commission income (Rs. 78,739/-) from SBI
That the learned CIT(Appeals) erred in not appreciating that the appellant's bank statement shows all other credits throughout the year were through transfer entries, and cash deposits were made only during the demonetization period as part of normal banking operations.
That the initiation of penalty proceedings under sections 271F and 272A(1)(d) is unjustified considering the appellant's reasonable cause for non-compliance.”
Brief facts of the case as mentioned earlier are that the assessee is an individual and engaged in the business of operating in Customer Service Payment (CSP) for the State Bank of India in the remote village providing basic banking services to rural customers and operates through CSC E-Governance India Pvt. Ltd. which is an authorized business facilitator of the State Bank of India providing services like deposits, withdrawal and AADHAAR enabled payments. During the I.T.A. No.: 206/PAT/2025 Assessment Year: 2017-18 Prakash Gupta. demonetization period (09.11.2016 to 30.12.2016) cash of ₹10,69,000/- was deposited in the assessee’s SBI Account in Panchdewri Branch. The Ld. AO issued notices u/s 142(1) of the Act to which the assessee could not respond due to remote location and lack of access to tax professional and the assessment was completed u/s 144 of the Act treating the entire cash deposits as unexplained money u/s 69A of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) which was dismissed despite submission of documentary evidence proving the nature of deposits as is stated in the grounds of appeal.
Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
None appeared on behalf of the assessee and the appeal was heard with the assistance of the Ld. DR. It is stated in Ground No. 6 that the Ld. CIT(A) failed to consider the documentary evidence submitted during the appellate proceedings including CSP Agreement with the State Bank of India/CSC E-Governance Services India Pvt. Ltd., bank statement showing the transactional nature of deposits and certificate of commission income of ₹78,739/- from the State Bank of India. The credits throughout the year were through transfer entries and cash deposit was made only during the demonetization period as part of normal banking operation. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld but had no objection if another opportunity were provided to the assessee.
We have considered the facts of the case and the grounds of appeal. Both before the Ld. AO as well as the Ld. CIT(A), proper representation was not made and the Ld. CIT(A) in the appeal order has reproduced the assessment order and was of the view that the cash I.T.A. No.: 206/PAT/2025 Assessment Year: 2017-18 Prakash Gupta. receipt and cash payment is involved in the activities carried on by the assessee as claimed by him, the same should have been regular phenomenon throughout the year but in this case, the cash has been deposited only during the demonetization period which is in large amount. Since the assessee had not placed any document to show that the actual owners of the alleged cash deposits were other persons which he should have maintained as per guidelines issued during the relevant period for cash deposits and cash withdrawals, the amount of cash of ₹10,69,000/- deposited was held as not related to his business and since the nature and source of the same remained unexplained therefore, the addition was confirmed and the grounds of appeal were dismissed.
In this respect, we note that Section 250(6) casts a duty on the Ld. (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose assessee's appeal merely by holding that Assessing Officer's order is a self-speaking order which requires no interference. It has also been held in the case of Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay) after discussing the provisions of sections 250(1) and 251(1) that the law does I.T.A. No.: 206/PAT/2025 Assessment Year: 2017-18 Prakash Gupta. not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.
Since there was no proper compliance before both the Ld. AO as well as the Ld. CIT(A) and the assessee has sufficient evidence in the form of agreement with the bank and other documents for the relief claimed, therefore, the Bench was of the view that in the interest of justice and fair play, another opportunity needs to be provided so that the facts may be properly appreciated. After examining the facts of the case and the law, we deem it appropriate to set aside the order of the Ld. CIT(A) and restore the appeal back to the Ld. CIT(A) for disposal of the grounds of appeal taken by the assessee on merit by passing a speaking order. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, 1962 shall also be followed and an opportunity of being heard may be provided to the Ld. AO, if required. Accordingly, the grounds taken by the assessee in his appeal are partly allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 10th October, 2025. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 10.10.2025 Bidhan (Sr. P.S.) I.T.A. No.: 206/PAT/2025 Assessment Year: 2017-18 Prakash Gupta. Copy of the order forwarded to:
Prakash Gupta, Bankatiya Rajapur, Gopalganj, Bihar, 841441. 2. ITO, Ward-2(4), Siwan.
Addl/JCIT(A)-1, Chandigarh.
CIT-
CIT(DR), Patna Bench, Patna.
Guard File. //// By order