2026 (2) TMI 758

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....f the Income Tax 1961 during the demonetisation period (Total cash deposit of Rs. 1,39,32,135/-) ignoring the fact that the assessee was a distributor of AIRTEL and was permitted to accept SCNs during the demonetization period. 2. The ld. CIT(A) erred in law and on facts in inferring that cash was not collected from authorized source in a matter consistent with demonetisation guidelines ignoring the fact that the assessee was a distributor of AIRTEL and complete details of sales backed by books of accounts and bank statements indicating that payments from the impugned bank account with PMC were made only to AIRTEL. 3. The ld. CIT(A) erred in law and on facts in inferring that cash was not collected from authorised source ignoring the fact that the assessee was a distributor of AIRTEL and the same modus operandi has been followed by him not only in the earlier years but also in the period prior to the demonetisation. 4. The ld. CIT(A) erred in law and on facts in confirming the additions made by the AO in calculating net profit of 25% on adhoc basis (Total Commission received from Airtel mobile services Rs. 36,57,300/- and 25% net profit of Rs. 9,14,325/-)....

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.... Income & Expenditure Statement] as against Commission Income of INR. 3,40,500/- [offered to tax as Commission Income on presumptive basis under Section 44AD at the rate of 8% of commission income of INR. 36,31,450/-]. 4.1. The above submissions made by the Assessee did not file any favour with the Assessing Officer. The Assessing Officer determined income of the Assessee at INR. 9,14,325/- computed at the rate of @25% of the gross commission of INR. 36,57,300/- disclosed by the Assessee in the Income & Expenditure Statement forming the basis of the rectified return filed by the Assessee. Thus, the Assessing Officer made addition of INR. 3,99,181/- [INR. 9,14,325/- minus INR. 5,15,144/-] in the hands of the Assessee. 4.2. Further, the Assessing Officer noted that the Assessee had deposited INR. 1,39,32,135/- cash during the demonetization period. According to the Assessing Officer the Assessee was distributor and had sold vouchers to retailers in cash. Since the Assessee had no direct connection with the consumer to purchaser the vouchers, the in Notification, dated 24/11/2016 [SO 3544(E)] issued by the Department of Economic Affairs] did not apply to the Assessee and therefo....

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....evant previous year (c) Copy of Agreement with Airtel Payments Bank Limited (d) Bank Statement of account maintained with PMC Bank (e) Details of receipts and payments during the relevant previous year (f) Original Income Tax Return for the Assessment Year 2017-2018 (g) Revised computation of income alongwith Income and Expenditure Statement for the Assessment Year 2017-2018 8. The above support the contention of the Assessee that the Assessee was working as a distributor of pre-paid vouchers of Bharti Airtel Ltd. and was also working as business correspondent for Airtel Payment Bank Limited [for short 'Airtel']. During the assessment proceedings the Assessee had furnished month-wise details of cash collected and paid to Airtel. SHREE AGENCY 2016-2017 MONTH AMOUNT PAID TO VENDORS COLLECTION CASH RECEIPT CHEQUE/CREDIT April 1,01,73,376.78 1,06,13,736.00 2,96,875.78 May 1,07,39,859.08 1,08,08,838.00 3,13,082.04 June 1,04,94,991.40 1,06,47,395.00 5,14,306.99 July 1,10,27,455.89 1,05,24,811.00 3,73,898.99 August 1,18,73,533.70 1,15,29,711.26 4,30,719.50 Septe....

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....r contractual relationship with Aircel Limited were deleted. We note that in the present case no inquiry/verification was done by the Assessing Officer before rejecting the documents/details furnished by the Assessee. Further, as we have noted hereinabove, the Assessing Officer had not made any addition in respect of cash deposits made during the relevant previous year other than the demonetization period. On perusal of show-cause notice, dated 03/12/2019, reproduced in Paragraph 3 of the Assessment Order it is not clear that the cash deposit of INR. 1,39,32,135/- was made by the Assessee in specified bank notes. The Assessing Officer had restricted the addition to only 50% of the aggregate cash deposits made by the Assessee and has provided no reasoning or explanation for the same. Given the aforesaid, we are of the view that the ad-hoc addition of INR. 69,66,068/- [50% of INR. 1,39,32,135/-] made by the Assessing Officer under Section 69A of the Act cannot be sustained in the facts and circumstances of the present case. The Assessing Officer is directed to delete the aforesaid addition of INR. 69,66,068/- after verifying from the Ledger Account Statement and the Bank Statement of....