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Facts
The assessee's case for AY 2017-18 was selected for limited scrutiny due to cash deposits. The Assessing Officer (AO) added ₹78,61,000/- under Section 69A for unexplained bank deposits after the assessee failed to comply with notices. The assessee, an advertising contractor, claimed the deposits were cash receipts from customers, but the CIT(A) upheld the addition due to lack of evidence, leading to this appeal.
Held
The Tribunal partly allowed the appeal. It held that ₹25,11,000/- of the total addition, which originated from bank transfers, could not be treated as undisclosed and was effectively deleted. For the remaining cash deposit of ₹53,50,000/-, the matter was remanded back to the AO to allow the assessee a fresh opportunity to explain the source of these cash deposits.
Key Issues
Whether cash deposits and bank transfers in the assessee's bank account constitute unexplained money under Section 69A, and if the Assessing Officer was justified in making the addition without differentiating between sources and providing adequate opportunity to the assessee.
Sections Cited
Section 69A, Section 115BBE, Section 142(1), Section 274, Section 272A(1)(d), Section 271AAC, Section 44AD
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Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAY
Assessee represented by Shri Devesh Poddar, A.R. Department represented by Shri Khubchand T. Pandya, Sr.DR Date of hearing 17/11/2025 Date of pronouncement 16/12/2025 O R D E R PER: RATNESH NANDAN SAHAY, A.M.
This appeal by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi/learned Commissioner of Income Tax (Appeals), Patna-3, Patna [in short, the ld. CIT(A)] dated 09/08/2023 for the Assessment Year (AY) 2017-18. The assessee has raised following grounds of appeal:
1. For that Ld CIT(A) was not justified in dismissing the appeal of the assessee in a summary manner without rightly appreciating the facts and grounds of appeal.
2. For that the case of the assessee was selected for limited scrutiny on the reason "cash deposited during the year." The AO was not justified in travelling beyond this limited issue and making addition of entire credits/ deposits (cash as well as cheque bank transfer) made in the bank account of the assessee. As such, the addition made by the AO and confirmed by the Ld CIT(A) to that extent (Rs. 25,11,000/-) is bad in law.
3. For that the lower authorities have failed to consider and appreciate that the fact that the assessee works as an advertising contractor and gets paid/reimbursed from customers in cash which is deposited in her account Baby Chatterjee Vs ITO and transferred to the media house and or their agents. From the bank statement of the assessee it can be clearly seen that against each cash deposit, there is subsequent transfer made. As such, the entire deposit, by no means can be considered as income of the assessee.
4. For that the total addition made for Rs. 78,61,000/- U/s 69A is uncalled for and fit to be deleted. At the outset, this amount includes bank transfer of Rs. 25,11,000/- which the AO could not have look into and against the remaining cash deposit of Rs. 53,50,000/- the same in totality cannot be considered as income. Addition if any could be restricted to the profit element after giving credit of the income disclosed. As such, the addition made for Rs. 78,61,000/- in totality is uncalled for and fit to be deleted.
5. For that other grounds in detail will be argued at the time of hearing.
2. At the outset, we find from perusal of record that there is delay of about one month in filing of this appeal by the appellant before the Tribunal. Impugned order was passed by the ld. CIT(A) on 09/08/2023, however, this appeal was filed on 10/11/2023. The appellant has filed application for condonation of delay mentioning the fact that the in the month of September and October, the office of the Authorised Representative of the assessee was preoccupied with audit, ITR filing and other time bound statutory compliances. The assessee was trying to e-file the appeal, however, due to technical error, the same could not be uploaded. As such, being left with no alternate option, the assessee had filed this appeal manually. The appellant stated that the delay in filing appeal was neither intentional nor deliberate and the appellant has good case on merit would suffer prejudice if delay is not condoned in his case and the appeal is not adjudicated on merit. On the other hand, the learned Senior Departmental Representative (ld. Sr.DR) for the revenue submits that on the issue of condonation of delay, the Bench may take appropriate view in accordance with law. Therefore, considering the fact that the delay is not inordinate and seems Baby Chatterjee Vs ITO to be not intentional, therefore, the delay of about one month in filing this appeal is condoned.
Facts of the case, in brief, are that the assessee had declared income under the head 'income from salary and income from other sources (interest)' for the assessment year under consideration and declared total income at ₹ 4,16,400/- . The case was selected for limited scrutiny through CASS selection on the ground of "cash deposit during the year". Accordingly, statutory notices were issued from time to time. However, no compliance was made by the assessee. Further, a notice under Section 142(1) of the Income Tax Act, 1961 (in short, the Act) was issued on 29/01/2019 requiring the assessee to furnish certain details/documents on or before 06/02/2019 but again no compliance was made by the assessee either on one pretext or another. Accordingly, penalty proceedings under Section 274 read with section 272A(1)(d) of the Act were initiated. Since no compliance was made by the assessee despite having been given several opportunities of being heard, the Assessing Officer added a sum of ₹ 78,61,000/- under Section 69A of the Act and charged income tax rate as prescribed under Section 115BBE of the Act on the ground that all credit entries made in the bank account No. 50100043805813 maintained by the assessee in HDFC bank, Anantpur Branch, Ranchi remained unexplained. Penalty under Section 271AAC of the Act was also initiated by the Assessing Officer for failure to comply with the notices issued by the Assessing Officer.
Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the ld. CIT(A), who vide the impugned order, held that the assessee had failed to explain the source of cash deposits made in the said bank account Baby Chatterjee Vs ITO despite having been given several opportunities of being heard and the assessment was made ex parte. The assessee, on the other hand, has submitted in its written submission filed before the ld. CIT(A) that ₹ 25,11,000/- is out of bank transfer and ₹ 53,50,000/- is out of cash deposits. It was explained by the appellant before the ld. CIT(A) that the appellant is in the business of advertising contracts and the cash was received from the parties from whom the advertising contracts were given. The appellant, therefore, pleaded before the ld. CIT(A) that the income of the assessee should be estimated at the same rate of 8.04% of ₹ 53,50,000/- which has already been declared by the assessee being "no account case". The ld. CIT(A), further held in the impugned order that no books of account or ledgers of the parties from whom the cash were received for advertising contracts were filed and no correlation has also been made with the receipt and the cash deposits. Hence, due to lack of evidence before, in the appellate proceedings, the addition made by the Assessing Officer is confirmed and the appeal of the assessee is dismissed.
Further aggrieved by the order of ld. CIT(A), the present appeal has been filed by the assessee before this Tribunal.
During the course of hearing before us, the ld. AR of the assessee submitted that the assessee is in the business of executing advertising contracts and received cash and had deposited in the HDFC bank and has declared a sum of ₹ 2,25,600/- under the head income from other sources on the total deposits of ₹ 78,61,000/- i.e. around 8% of the total deposits. The appellant is not