TaxTMI 
TaxTMI 
2025 (8) TMI 294
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....ason "Large cash deposit in bank account". 2.3 That the notice u/s 143(2) of the Act was issued on 10.08.2018 fixing the date of hearing on 27.08.2018 which was served upon the assessee electronically as well as through speed post. 2.4 Notices u/s 142(1) along with questionnaire were issued on 29.08.2018, 15.11.2018 and 14.12.2018 which were also served upon the assessee. 2.5 That in compliance to notices issued u/s 143(2) and 142(1) of the Act from time to time online submissions supported with documents, bank statements etc. were made and kept on record. 2.6 That the written reply as per questionnaire submitted by assessee were examined by test check basis. 2.7 That as per AIR information available with the Revenue, the assessee had deposited cash amounting to Rs. 3,60,66,220/- in his two saving bank accounts i.e. SBI and HDFC Banks. 2.8 That however the assessee in his return of income for Assessment Year 2016-17 under presumptive basis has shown gross receipts at Rs. 2,24,242/- and his presumptive income at Rs. 1,90,606/-. 2.9 To verify the source of cash deposit made by the assessee during the year, vide Notice u/s 142(1) dated 29.09.2018 the assessee was ....
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....is the source of cash deposit made in your bank account to the extent of Rs. 3,60,66,220/- during the year (Rs. 1,84,42,300 with HDFC Bank Account and Rs. 1,76,23,920/ with State bank of India). The amount of cash deposited by you is not in consonance with your business receipts. Kindly Substantiate you claim of source of cash deposited with documentary evidence, failing which entire amount of Rs. 3,60,66,220/- will be treated as unexplained cash credit found credited in your bank account and will be added to your total income. The assessee failed to make compliance of the Notice issued u/s 142(1) and further a Notice u/s 144 was issued on 03.12.2018 proposing ex-parte assessment and addition of Rs. 3,60,66,220/- to his total returned income as unexplained cash deposit. 2.13 That the assessee in response has submitted the following: - 1. "As per the AIR Information with respect to PAN my case was selected for assessment based on deposited cash amounting to Rs. 3,60,66,220/- during the financial year 2015-16 (Rs. 1,84,42,300/-with HDFC bank and Rs. 1,76,23,920/- with state bank of India) With respect to the above 1 respectfully submit the following: My wife S....
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....es in cash amounting to Rs. 33,636/-to collect and deposit this amount during the financial year 2015-1-6. Hence the net income from commission after deduction of expenses is Rs. 1,90,605/- which has been properly shown in Income Tax Return for A.Y. 2016-17." 2.14 That following is recorded in the assessment order:- Here it is important to mention that the assessee himself has submitted that he has only acted as collection agent for both the parties and the cash deposited in his bank account is not related to his business. He neither poses any valid license to conduct himself as collection agent nor furnished any documentary evidence as submitted in support of his claim. 2.15 That in notice u/s 142(1) dated 14.12.2018 the assessee was called upon to furnish following: - Further the assessee was asked to provide the following vide this office Notice u/s 142(1) dated 14.12.2018 which is as follows. In continuation with your reply you are further requested to submit your response to following: - 1. Provide certificate in respect to TDS deducted on commission. 2. Submit Ledger copy of Alka Gupta sales and Tarun Trading Company in support of you....
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....agent only for firms mentioned above only because that I am well converse with the business in which these firms are engaged. I have stopped the same after the financial year 2015-16. I don't have any established firm or office to run the business of commission. Also, most of the commission agent and broker working individually don't get themselves registered under the shop and establishment act. Under the same impression and due to the lack of awareness, I also didn't get registered myself under the shop and establishment act and hence I can't produce the registration certificate under shop and establishment act (Gumastha) before you. I earned the commission income from these firms during the financial year 2015-16 and declare the same in my income tax return." 2.19 That during the course of the assessment proceedings Shri Tarun Gupta proprietor of M/s Tarun Trading Co. and Smt. Alka Gupta of proprietor of M/s Alka Gupta Sales were called by issuing summons u/s 131 and their statements were recorded. They were unable to answer the questions asked and they answered that all the activities related to business were looked by Shri Harsh Gupta who is elder son of Shr....
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....mpany were not audited, and turnover shown was contradictory to turnover stated. 7. The commission stated is unrealistically low which again shows that it is not genuine. The assessee had filed his ROI for A.Y. 2016-17 to justify cash deposited in successive years by him and entities related to him. 8. The assessee has filed his ROI for A.Y. 2016-17 on 22.05.2017 the period after demonetization The assessee further filed his ROI for A.Y. 2017-18 on 31.03.2018 wherein he had mentioned cash deposit to the tune of Rs. 37,70,700/- with State Bank of India and Rs. 1,29,00,000/- with HDFC, Bank during demonetization. Huge cash were also deposited by Shri Tarun Gupta proprietor of M/s Tarun Trading Company during the period of demonetization and proceedings against him pending before this office. 2.21 That in view of the above premises as and by way of an assessment order u/s 143(3) the assessee's total income exigible to tax was computed and assessed at Rs. 3,63,69,420/-[(Income as per ROI Rs. 3,03,200/- plus Rs. 3,60,66,220/- (unexplained cash credit u/s 69A of the Act)] (supra). That the aforesaid assessment order bears Number: ITBA/AST/S/143(3)/2018- 19/1014439711....
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....uld be explained. It was therefore contended that the assessee has miserably failed to offer any explanation regarding cash credits in his both saving accounts in any credential manner to full and complete satisfaction of Assessing Officer. The Ld. DR has reasoned that if the assessee is "cash collection agent" as is sought to be projected during the assessment proceedings then why has he not produced any licence if any required to do such work of cash collection agent/agency. The assessee has miserably failed to establish the type of cash collection business he does (Hard core business activity). The Ld. DR then contended that if any cash collection business he has done then it was incumbent upon him to have given the names of entities from whom he collected such huge sums of money in cash. The assessee has besides not produced any license of cash collection agent/agency has also not produced any agreement and or contract on record. The assessee has well-orchestrated a story that he used to do cash collection agent/agency business for and on behalf of one M/s Alka Gupta sales whose sole proprietor is assessee's wife and another M/s Tarun Trading Company which is sole proprietary c....
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....ry is coined which has no legs to stand. The Ld. DR then emphatically contended that in so far as Alka Gupta sales are concerned in audit report no past turnovers are shown which speaks volumes about assessee and his family members. Party wise ledger account despite Ld. A.O requesting were not provided too. Finally, it was stated that CIT(A) has ignored above vital facts contended today which are all based on records of the case in the inquiry held and hence the "impugned order" should be set aside and order of Ld. A.O should be upheld. 3.2 Per contra Ld. AR appearing for and on behalf of the assessee had contended that the "impugned order" is just and proper. It is not liable to be interfered with by this Tribunal. At the outset it was contended by the Ld. AR that basis page 44 of PB which is copy of assessment order in respect of assessee for Assessment Year 2010-11 those facts stated therein clearly shows that no new story is concocted or created in an orchestrated manner. There is thus no new business model as alleged by Ld. DR. It was next contended by Ld. AR that what assessee receives is commission charges. He does not get any recovery amount for himself. It was urged tha....
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....cal statute to repeat and reiterate again. The Ld. A.O in the instant case has taken cognizance of overall facts and circumstances after conducting a detailed inquiry in lawful manner which are all reflected in the assessment order and has given his logical reason which cannot be faulted with at all. The plea of balance sheet and profit and loss account of M/s Alka Gupta Sales who deals in mobile handsets, mobile vouchers (recharge), RCM wholesale activities are for banking purposes is all false and, in any event, has no bearing on the case. The Ld. DR clarified at the end of the hearing that there is no material on record within the meaning of Section 69A of the Act how the money in cash was procured, against what, and from whom, as volume of cash is too high. The Ld. AR has not placed on record a systematic history of assessee's business and his past business history of his family members with material particulars to inspire confidence and credence. Further what kind of purchases were made are also not spelt out/not proved. Ld. DR also contended that assessee as commission agent/agency cannot file return u/s 44AB of the Act. After that hearing was concluded. 4. Observations, f....
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....posited in his two saving accounts by someone else. It is an admitted position that huge amount cash (supra) was deposited by the assessee himself in both these accounts. Under these facts it can safely be said that assessee is owner of such money (cash deposit). The assessee has stated time and again during the course of the proceedings both before the original as well as at 1st appellate stage that such a huge cash deposit belongs to Mrs. Alka Gupta his wife who is carrying out business as sole proprietor of M/s Alka Gupta Sales and his son Tarun Gupta who is sole proprietor of M/s Tarun Trading Company. They are into wholesale business of trading of RCM consumer products, selling of mobile recharge vouchers etc. They sell recharge vouchers to retailers and collect cash from these retailers on daily basis. That in order to avoid heavy cash deposit charges both the sole proprietary firms have appointed assessee as "collecting agent" on some commission basis. That the assessee used to collect cash deposits and deposit the same in to his two saving accounts on daily basis on behalf of both the sole proprietary firm and used to immediately transfer the same to the firm's respective b....
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....ommercial practice but in the instant case the assessee besides charging his "commission" is also depositing huge cash amounts in his saving bank account with HDFC & SBI which perse shows that such arrangements are not prudent arrangements even in commercial sense or popular sense. Basis this we have no hesitation in holding that the assessee cash deposits in his two saving bank accounts are nothing but his own money and that he has failed to offer any plausible explanation worth a credence within the meaning of Section 69A so that Ld. A.O could draw an affirmative opinion about a satisfactory explanation regarding sources of cash deposit earned as and by way of a legitimate business transactions. We disagree with the analogy about "family arrangement" as contended, canvassed by the assessee. If each individuals are separate legal entity with PAN before tax authorities having different occupations in their respective fields then each of them are liable to explain his or her sources of income independently of each other. It is a case when father is questioned about his income, he says income belongs to wife and son, where simultaneously wife is having a separate PAN and files her re....
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.... commission/collection fee as a consideration for rendering his services and another that money within the meaning of Section 69A belongs to his wife and son's sole proprietary firm (supra). Money is collected in cash from debtors of sole proprietary firm's and are deposited in his saving bank account of SBI & HDFC and then transferred to sole proprietary firm accounts. No TDS is deducted. Names of debtors are not disclosed so on and so forth which are all from the records. We therefore are of the considered view that Ld. A.O has rightly formed an opinion that such explanation is not satisfactory with regard to sources of money. The ultimate source from whom money is collected in cash to staggering amount of Rs. 3,60,66,220/- ought to have been disclosed by the assessee and assessee has miserably failed to do so. The burden of proof is on assessee and assessee has not been able to discharge the burden. Merely stating that money belongs to his wife and son though deposited in to his two-saving bank account and then retransferred to wife and son's sole proprietary firm account just to save bank cash collection charges is not sufficient proof in law in the absence of any material docu....
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....h balance is Rs. 33,213/-. In financial particulars of business there is not even a whisper of two sole proprietary firm's (supra) which perse speaks volume about assessee and his explanation that whopping amount of Rs. 3,60,66,220/- belongs to his wife and son's two proprietary firms. No details of such entities are furnished, and revenue is kept in dark with regard to cash deposits in two saving bank account i.e. SBI & HDFC. Had the explanation of assessee was true and correct such particulars would have appeared not forming part of his income. Needless to state true and material particulars are required to be stated in ROI. We basis cash flow statement on page 8 of PB also notice cash flow of Rs,51,26,169/- Rs. 65,126,169/- from wife's sole proprietary firm to assessee's account. 4.12 We basis SBI account page 10 to 14 of PB also notice financial flow from assessee to M/s Alka Gupta Sales. Thus, we hold that if assessee as per his ITR is a service provider as commission agent whose income should be strictly as per declaration in ITR should be commission income why such huge amounts are first deposited in cash, then transferred and credited into M/s Alka Gupta Sales account an....
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....ntity, genuineness of transactions etc. are not at all shown proved. Revenue has taken strong objection, and we agree with contentions of Ld. CIT-DR on this aspect. 4.16 We observe that which major ingredients are not satisfied which the Ld. DR has contested strongly in the hearing which are identity, genuineness and creditworthiness. None is proved by the assessee and this crucial aspect is totally ignored by Ld. CIT(A) in the "impugned order". Generally, in income tax laws in respect of several transactions burden of proof is on the assessee to establish identity, genuineness and creditworthiness as and by way of several documentary evidence but none is shown by the assessee. Hence basis criteria which are foundational in nature is just not satisfied and Ld. CIT(A) ought to have seen and appreciated such a foundational criteria but unfortunately Ld. CIT(A) has ignored this aspect consequently "impugned order" is bad in law and illegal. 4.17 We concur with the argument of Ld. CIT-DR that in so far as M/s Alka Sales (assessee wife's sole proprietary firm) is concerned no past turnover of such firm is mentioned in audit report. We have carefully perused page 55 of PB and we no....
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....ee in law by virtue of Section 69A owes a just and plausible explanation to the revenue as to how he has got such huge amount that too is cash deposited by him in his two bank accounts. The level of explanation regarding "sources" must be reasonable, just and proper which should in the opinion of Ld. A.O should be satisfactory. 4.21 The assessee in the instant appeal gives explanation that such huge amount of cash found in his accounts has been collected from debtors of his wife and son's sole proprietary firms (supra). However, assessee has miserably failed to give list of such debtors when sought and requisitioned by revenue 4.22 That during the inquiry, the assessee has produced his wife and son, who were too examined by revenue but they both have miserably failed to give any explanation about their debtors. Hence even upon examination of sole proprietors of two firm's (supra) names of debtors from whom money was procured and then deposited in cash in saving bank accounts (supra) have not surfaced. Sources have remained unexplained. 4.23 Further both the sole proprietor's of two firms named by assessee have brought in to picture one Mr. Harsh Gupta who too further could....