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Facts
The Assessing Officer reopened the assessment of the assessee for AY 2012-13, issuing notices under Sections 147 and 148 of the Income Tax Act. The AO made an addition of Rs. 29,31,364/- on account of unexplained cash deposits in the assessee's bank account.
Held
The Tribunal held that the bank account was used by the assessee's son for his money transfer business, and the assessee had only earned commission income, which was already offered to tax. Therefore, no addition was warranted.
Key Issues
Whether the entire cash deposits in the assessee's account, used by his son for business, constitute unexplained income of the assessee, and if the reopening of assessment was valid.
Sections Cited
147, 148, 143(3)
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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: DR. B.R.R. KUMAR, VICE-MS. SUCHITRA KAMBLE
O R D E R
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:
- This appeal has been filed by the assessee against the order dated 19.08.2025 passed by the Ld. Addl/JCIT(A), Panaji (hereinafter referred to as the “Ld. CIT(A)”), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) for Assessment Year 2012-13.
The assessee has raised following grounds of appeal:-
1. On the facts and circumstances of the case as well as law on the subject the learned CIT(A) has erred in confirming the action of the Ld. Assessing Officer in reopening assessment u/s. 147 by issuing notice u/s 148 of the I.T. Act, 1961.
2. On the facts and circumstances of the case as well as aw on the subject, the learned CIT(A) has erred in confirming the action of the Ld. Assessing Officer in making addition of Rs.29,31,364/- on account of estimation of profit in the business of money transfer.
3. It is therefore prayed that assessment framed u/s 143(3) r.ws. 147 of the Act may kindly be quashed and/or addition made by Lil Assessing Officer and confirmed by the Learned CIT(A) may please be deleted.”
The assessee filed his return of income on 15.05.2012 declaring a total income of Rs. 3,03,350/- for the year under consideration. Based on information received that cash deposits amounting to Rs. 29,31,364/- were made in an account maintained with Union Bank of India, the Assessing Officer issued a notice u/s 133(6) of the Act, which remained uncomplied with. Thereafter, pursuant to the notice issued u/s 148 dated 30.03.2019, the assessee filed a return of income declaring total income of Rs. 3,16,440/-. The Assessing Officer, noting non- compliance with statutory notices and being unsatisfied with the explanation on record, treated the cash deposits of Rs. 29,31,364/- as unexplained income and added the same to the total income of the assessee.
During the course of assessment proceedings before the Assessing Officer, the assessee explained that he is a salaried teacher and that the said bank account was used by his son, Shri Priteshkumar Bhanushankar Dave, for money transfer business. Cash was collected from labourers and deposited in the account and thereafter transferred through account payee instruments to beneficiaries. Only commission of Rs. 40/- per instrument / transaction was earned and the same was already offered to tax. The modus operandi was stated to have been accepted in scrutiny assessments of the assessee’s son for earlier years. The Ld. CIT(A) confirmed the addition.
Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.
Before us, the Ld. AR reiterated the submissions made before the lower authorities and submitted that the assessee is a salaried teacher and had no independent business activity. The cash deposits were not the income of the assessee but represented business receipts of his son from money transfer activity, wherein only commission income was earned. It was submitted that the Bhanushankar Kasalshibhai Dave Vs. ITO Asst. Year : 2012-13 - 3– total deposits of Rs. 29,31,964/- consisted of 523 transactions and the assessee had offered commission income of Rs. 10,460/- (523 × Rs. 20/-) in the return filed u/s 148. The same business model had been accepted by the Department in the past assessments in the case of assessee’s son. Therefore, the addition of the entire cash deposits was unjustified and liable to be deleted.
The Ld. DR, on the other hand, supported the orders of the revenue authorities.
We have heard the rival contentions and perused the material available on record. In the present case, it is noticed that the account of the assessee has been used by his son for transfer of amounts collected from labourers to various places. In the case of the son, the amount of commission has been determined @ Rs. 40 per instrument/transaction. The assessee has also shown similar income @ Rs. 40 per instrument/transaction. The modus operandi is clearly discernible from the bank statements, which reflect cash deposits followed by immediate transfers through banking channels. We are satisfied that the commission charged at Rs. 40/- per instrument/transaction is reasonable and correct. Since such commission income has already been offered to tax, we hold that no addition is called for in this case.
In the result, the appeal of the assessee is allowed.
This order is pronounced in the open Court on 23.01.2026