SH. RISHIKESH RAJA,JAIPUR vs. ITO, WARD-3(1), JAIPUR, JAIPUR

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ITA 735/JPR/2023Status: DisposedITAT Jaipur28 March 2024AY 2016-179 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal acknowledged that the assessee, an E-mitra help desk agent, received cash from various persons for E-mitra portal services, such as IRCTC ticket purchases and other expenditures. The Tribunal observed that the paper book contained details demonstrating the utilization of cash deposits for such purposes, and bank statements confirmed that small cash amounts were deposited and immediately used for payments. While the Revenue authorities pointed to the lack of details regarding the persons providing cash, the Tribunal considered the age of the matter (almost 8 years old) and the fact that the source of income from similar activities in the subsequent Assessment Year 2017-18 was accepted by the AO. To resolve the dispute, the Tribunal sustained an addition of Rs. 50,000/- to account for the deficiency alleged by the Revenue authorities and deleted the remaining addition of Rs. 15,51,220/-. The Tribunal found that the discretion under Section 69 was not exercised judiciously by the lower authorities in confirming the entire addition. The ratio decidendi is that while maintaining records of cash providers is expected, in cases of long-standing transactions and accepted income from similar activities in subsequent years, a substantial part of the addition can be deleted, with a nominal amount retained to address the revenue's concerns about unverified sources.

What were the facts?

The assessee, Sh. Rishikesh Raja, an individual earning commission as an E-mitra help desk agent, filed an appeal against the order of the CIT(A)-7, Kolkata, dated 13.10.2023. This order confirmed an addition of Rs. 16,01,220/- made by the Assessing Officer (AO) under section 143(3) of the Income Tax Act, 1961, for Assessment Year 2016-17. The AO had questioned cash deposits of Rs. 18,24,600/- in the assessee's bank account, deeming Rs. 16,01,220/- as unexplained income after considering the declared income of Rs. 2,24,200/-. The assessee contended that the cash deposits were from customers for E-mitra transactions and that providing names and addresses after a lapse of time was impossible. The CIT(A) dismissed the appeal, holding that the assessee failed to furnish the required details.

What were the issues?

1. Whether the addition of Rs. 16,01,220/- by treating cash deposits in the bank account as unexplained income is justified, considering the assessee's explanation that these deposits relate to E-mitra transactions and that furnishing customer names and addresses after a lapse of time is impossible (turning on Section 69 of the Income Tax Act)? 2. Whether the addition of the entire cash deposit is erroneous, given that the peak balance in the bank account was less than the declared income, and similar cash deposits in Assessment Year 2017-18 were accepted by the AO (turning on Section 69 of the Income Tax Act)? Assessee's contentions: - The cash deposits are from customers for E-mitra transactions (utility bills, ticket purchases, etc.) and are not the assessee's own money. - It is impossible to furnish names and addresses of customers after a significant time lapse. - The CIT(A) erred by not considering the submitted documents and by dismissing the appeal solely on the lack of customer details. - Reliance was placed on CIT vs. Smt. P.K. Noorjahan (1999) 237 ITR 570 (SC) to argue that the AO is not obliged to treat unexplained investment sources as income in every case, and discretion must be exercised based on facts. - For AY 2017-18, similar cash deposits related to E-mitra transactions were accepted by the AO. - The peak balance in the bank account was less than the declared income. Revenue's contentions: - The assessee did not file necessary details before the AO. - The assessee could not provide details of the names and addresses of persons who gave cash to the assessee before the CIT(A). - Therefore, the additions should be sustained.

Which sections of the Income-tax Act were involved?

Section 69,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR

Before: SHRI MANISH BORAD, AM & DR. S. SEETHALAKSHMI, JM

For Appellant: Shri P.C. Parwal (C.A.)
For Respondent: Smt. Monisha Choudhary (Addl.CIT)
Hearing: 26/03/2024Pronounced: 28/03/2024

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh euh"k cksjkM] ys[kk lnL; ,oa Mk0 ,l- lhrky{eh] U;kf;d lnL; ds le{k BEFORE: SHRI MANISH BORAD, AM & DR. S. SEETHALAKSHMI, JM vk;dj vihy la-@ fu/kZkj.k o"kZ@Assessment Years : 2016-17 Sh. Rishikesh Raja cuke ITO Vs. A-18, Narsingh Nagar, Ward-3(1), Jaipur. Jhotwara, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BNHPR1782B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (C.A.) jktLo dh vksj ls@ Revenue by : Smt. Monisha Choudhary (Addl.CIT) a lquokbZ dh rkjh[k@ Date of Hearing : 26/03/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 28/03/2024 vkns'k@ ORDER PER: MANISH BORAD, AM This appeal is filed by the assessee aggrieved from the order of the Learned Commissioner of Income Tax(Appeals)-7, Kolkata dated 13.10.2023 [Here in after referred as “CIT(A)”] for the assessment year 2016-17, which in turn arise from the order dated 10.11.2018 passed under section 143(3) of the Income Tax Act, [Here in after referred as “Act” ] by the AO.

2. The assessee has marched the present appeal on the Sh. Rishikesh Raja vs. ITO following grounds:- “1. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 16,01,220/- by treating the cash deposit in the bank account over and above the income declared in the return as unexplained by holding that assessee has not furnished the name & address of the person from whom cash was received by ignoring that cash deposit in the bank account are in respect of e-mitra transaction where furnishing name & address of such person after a lapse of time is an impossibility.

2. That Ld. CIT(A) has erred on facts and in law in confirming the addition for the entire cash deposit in the bank account ignoring that peak balance of the bank account is much less than the income declared and in AY 2017-18 income declared by the assessee on similar cash deposit in respect of e-mitra transaction was accepted by the AO in the order framed u/s 143(3) of the Act.

3. The appellant craves to alter, amend & modify any ground of appeal.

4.

Necessary cost be awarded to the assessee.”

3.

Brief facts of the case are that the assessee is an individual earning income from commission as an E-mitra help desk agent. Income tax Return for A.Y. 2016-17 through e-filed on 30.03.2018 declaring total income of Rs. 2,24,200/-. Case selected for limited scrutiny under CASS. After duly serving the notices u/s 143(2) and 142(1) of the Act, the ld. AO carried out the assessment proceedings and asked the assessee to explain the source of cash of Rs. 18,24,600/- deposited in his bank account. But there was no proper compliance and the ld. AO taking into consideration the Sh. Rishikesh Raja vs. ITO income of Rs. 2,24,200/- declared by the assessee in the ITR, made an addition of unexplained cash receipt of Rs. 16,01,220/- thereby assessing income at Rs. 18,25,420/-.

4. Aggrieved, from the said order of assessment the assessee has filed an appeal before the ld. CIT(A). The ld. CIT(A) after hearing the contention of the assessee dismissed the appeal of the assessee giving following findings on the issue:-

DECISION:- I have gone through the detail assessment order passed by Assessing Officer (AO) and details of submission given by assessee. Appellant had submitted copy of summary of cash deposits made, copy of bank statement, and copy of the certificates issued by various agencies. These documents do not constitute additional evidence. The summary of cash deposits was already available with AO at the time of assessment. The copy of bank statement evidencing cash deposit was already considered by AO before making addition. The copies of certificates from various agencies cannot be considered as evidence which are mere assertions and is not supported by vouchers, cash receipts and detail address of persons from whom cash were received. AO had given sufficient opportunities at the time of assessment to appellant to explain the source of cash deposits, however, appellant choose not to furnish details. This prevent AO from third party enquiry to verify the genuineness of cash deposits. Further, at this stage also appellant choose not to furnish details of name and address of persons from whom cash were received. Therefore, additions made by AO is confirmed.

Sh. Rishikesh Raja vs. ITO As a result the appeal is dismissed.”

5.

Aggrieved from the order of the ld. CIT(A) the assessee has preferred this appeal before this tribunal on the grounds as reiterated in para 2 above. To support the grounds so raised the ld. AR appearing on behalf of the assessee has placed reliance on the written submission which is extracted herein below:-

“Submission:- 1. At the outset it is submitted that in response to the notice dt. 10.08.2018 issued by AO, the counsel of assessee took adjournment. The subsequent notice issued on 19.09.2018 & 08.10.2018 did not came to the notice of assessee nor the counsel of assessee informed about any such notice and therefore the explanation could not be furnished. However, detailed submission along with documentary evidences were filed before the Ld. JCIT(A) with a request to admit the same as additional evidence but the Ld. JCIT(A) held that these documents do not constitute additional evidence. Even if it is accepted that these are not additional evidence, it is the duty of the Ld. JCIT(A) to consider the same in right earnest but he has dismissed the appeal only by holding that assessee has not furnished the name & address of person from whom the cash was received.

2.

From the bank statement placed at PB 9-71 and the statement of cash deposit in the bank account along with the utilization of such cash placed at PB 5-8, it is evident that the individual cash deposit has been utilized for payment to Hermes 1-Ticket, IRCTC, Oxygen Services India Pvt. Ltd., Avenues India Pvt. Ltd., etc. and on making such payment they provide the limit for purchase of ticket or for payment of mobile recharge, DTH, utility bill payment, credit card payment, etc. Thus it is proved beyond doubt that the cash deposit in the bank account is not the money of assessee but is the money of customer which is utilized for the purpose for which money was given by the customer. Therefore, even if the name & address of these persons are not available with the assessee, it cannot be treated as unexplained money of assessee. For this proposition reliance is placed on the decision of Hon'ble Supreme Court in case of CIT vs. Smt. P.K. Noorjahan (1999) 237 ITR 570. In Sh. Rishikesh Raja vs. ITO this case, assessee was a Muslim lady aged 20 years. She made certain investments in land. The explanation of assessee regarding the source of the purchase money for these investments was that the same were financed from out of the savings from the income of the properties which were left by her mother's first husband. The said explanation offered by the assessee was rejected and addition was made u/s 69. The Tribunal, however, held that even though the explanation about the nature and sources of the purchase money was not satisfactory but in the facts and circumstances of the case it was not possible for the assessee to earn the amount invested in the properties and that by no stretch of imagination could the assessee be credited with having earned this income in the course of the assessment year or was even in a position to earn it for a decade or more. The Tribunal took the view that although the explanation of the assessee was liable to be rejected, s. 69 of the Act conferred only a discretion on the ITO to deal with the investment as income of the assessee and that it did not make it mandatory on his part to deal with the investment as income of the assessee as soon as the latter's explanation happened to be rejected. According to the High Court, the Tribunal had not committed any error in taking into account the complete absence of resources of the assessee and also the fact that having regard to her age and the circumstances in which she was placed she could not be credited with having made any income of her own and in these circumstances the Tribunal was right in refusing to make an addition of the value of the investments to the income of the assessee. Ld. counsel appearing for the Revenue, has urged that the Tribunal as well as the High Court were in error in their interpretation of s. 69 of the Act. It was held by Hon'ble Supreme Court as under:- "We are unable to agree. As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in Parliament, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under s. 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the ITO under s. 69 of the Act to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case. In the instant case, the Tribunal has held that the discretion had not been properly exercised by the ITO

Sh. Rishikesh Raja vs. ITO and the AAC in taking into account the circumstances in which the assessee was placed and the Tribunal has found that the sources of investments could not be treated as income of the assessee. The High Court has agreed with the said view of the Tribunal. We also do not find any error in the said finding recorded by the Tribunal. There is thus no merit in these appeals and the same are accordingly dismissed."

3. It is further submitted that in AY 2017-18 also, there was similar cash deposit in the bank account but after considering the explanation that the cash deposit is received from the customer for payment of utility bills, tickets, etc., the AO accepted the source of cash deposit and made the assessment u/s 143(3) vide order dt. 11.12.2019 (PB 75-76) after accepting the returned income.

In view of above, addition confirmed by LdJCIT(A) be directed to be deleted.”

6.

The crux of the arguments of the ld. AR of the assessee are that firstly the assessee is an E-mitra help desk agent and the alleged cash deposits are received from various persons for the purpose of purchase of tickets and other expenses carried out on the portal of E-mitra. He also correlated few of the entries in the bank statements with the actual utilization of the cash deposits which are mainly towards the purchase of Hermes tickets/IRCTC tickets. He stated that the assessee has already declared the commission income from the business activity carried out as an agent. He also submitted that in assessee’s own case for A.Y. 2017-18 during which the demonetization scheme was Sh. Rishikesh Raja vs. ITO announced, the returned income of the assessee has been accepted and during this year also similar transactions were carried out. He also stated that the peak balance in the alleged bank statement is less than the total income declared by the assessee.

7.

On the other hand, Departmental Representative vehemently supported the order of the ld. CIT(A) and also submitted that the assessee did not file necessary details before the Assessing Officer nor could file details of the name and address of persons who gave cash to the assessee before the ld. CIT(A) and therefore the alleged additions should be sustained.

8.

We have heard the rival contentions, perused the material placed on record. The assessee is aggrieved with the addition for unexplained cash deposit of Rs. 16,01,220/-. We observe that the assessee is regularly find its Income Tax Return showing income from commission. He is working as an E-mitra help desk agent for Hermes Destination Future and on behalf of its principle, he receive cash from various persons who intend to the use of E- mitra portal and makes the payment towards purchase of IRCTC tickets and other expenditure. The details has been filed in the Sh. Rishikesh Raja vs. ITO paper book from page no. 5 to 8 demonstrating the application of cash deposits. Perusal of the same indicates that maximum amount has been entitled for purchase of Hermes ticket, IRCTC ticket, OXI services OXIGE, Jaipur Vidyut and Airtel recharge etc. Perusal of the bank statements at page no. 9 to 71 also confirms the contention of learned counsel for the assessee that cash of small amount were deposited and immediately thereafter the payments are made for purchase of tickets and other charges as referred above. It is also an admitted fact that on purchase of tickets and other charges the assessee is only entitled to commission which the assessee has suo motu disclosed in its Income Tax Return. The only grave area as indicated by both the Revenue Authority is that the details of the persons giving cash to the assessee has not been furnished by the assessee. In normal course, the assessee should have maintained some records for details of the persons giving cash to him but considering the facts and circumstances of the case that the matter is almost 8 years old and also considering the fact that for subsequent assessment year the assessee’s source of income has been accepted in this scrutiny proceeding, which has been received from the same activity, we in order to put an end to dispute sustain an addition of Sh. Rishikesh Raja vs. ITO Rs. 50,000/- to cover up the deficiency as alleged by the Revenue Authorities and delete the remaining addition of Rs. 15,51,220/- and partly allow the grounds raised by the assessee.

In the result, the appeal filed by the assessee is partly allowed.

Order pronounced in the open Court on 28/03/2024.

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