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Facts
The assessee, an authorized LIC premium collection agent, deposited demonetized currency of Rs. 5,75,000/- in their bank account. The Assessing Officer treated this amount as unexplained income. The assessee contended that these funds were received from clients for LIC premium payments.
Held
The Tribunal held that the assessee acted as an agent for LIC, a government organization, which was authorized to accept demonetized currency during the demonetization period. The assessee did not use the funds for personal purposes and there was no allegation to that effect.
Key Issues
Whether demonetized currency collected by an LIC premium collection agent from clients for LIC payments can be treated as unexplained income.
Sections Cited
250 of the Income Tax Act, 1961
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Income Tax Appellate Tribunal, “CUTTACK” BENCH, CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
The captioned appeal by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeal), Addl/JCIT(A)-2, Surat [hereinafter referred to as “the Ld. CIT(A)”] vide order no. ITBA/NFAC/S/250/2024- 25/1070613915(1) dated 25.11.2024 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2017-18.
Shri Mohit Sheth represented on behalf of the assessee and Shri S. C. Mohanty, Sr. DR appeared on behalf of the revenue.
It was submitted by the Ld. AR of the assessee that in the course of assessment, the Assessing Officer has treated an amount of rs.5,75,500/- deposited in the bank account of the assessee in the form of demonetized Gopabandhu Dash, AY 2017-18 currency as the unexplained income of the assessee. The Ld. AR drew our attention to the assessment order in page 2 wherein the Assessing Officer categorically admits that the total deposit in the bank account of the assessee comes to Rs.2,24,65,559/- out of which Rs.1,99,57,330/- is cash deposits. It was a submission that part of the cash deposit was in demonetized currency to an extent of Rs,.5,75,000/- deposited in the demonetized currency. It was a submission that these were currencies given to the assessee by the assessee’s client for making payment of LIC premium. It was the submission that the Assessing Officer also recognized that the assessee is an authorized premium point collection agent for LIC. It was the submission that payment to LIC was permitted in respect of the demonetized currency. It was the prayer that the disallowance as made by the Assessing Officer and as confirmed by the Ld. CIT(A) is liable to be deleted.
In reply, the Ld. Sr. DR vehemently relied on the orders of the lower authorities.
We have heard rival submissions. A perusal of the facts of the present case clearly shows that the assessee has been a recognized premium collection point for the LIC. LIC is a government organisation. The government during the demonetization period has authorised to take payment in the form of demonetized currency. The assessee has only acted as an agent of LIC. The assessee has not used any of these funds for his personal purpose. There is also no allegation of this nature from the Assessing Officer in the assessment order. This being so as the demonetized currency has been collected by the assessee as a premium collection point for the LIC, we are of the view that the same cannot be treated as unexplained income of the assessee. Consequently, the addition as made by the Assessing Officer and confirmed by the Ld. CIT(A) stands deleted.