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2023 (12) TMI 133 - AT - Income TaxAddition U/s. 69A r.w.s 115BBE - unexplained cash deposits - Deposits were made by the assessee during the demonetization period with SBNs which is an unaccounted money under the guise of collection of bills and also providing pre-paid and post paid bookings - it is the contention of the assessee that the sources for the alleged cash deposits are partly out of closing cash balance as on 8/11/2016 and partly out of the receipts during the demonetization period - assessee firm is a service point for IDEA Cellular for collection of bills and also provide pre-paid and post-paid bookings / recharges - HELD THAT - In this line of business, the assessee like agents / service providers merely collects the cash from the customers after providing services like facility of sales, bill collections, post-paid and prepaid recharges for Mobile SIMs and Top-up sales for which commission is received by the assessee as an agent and deposits the collected amounts initially into the assessee s (service provider or agent) account and later remits the same to the IDEA Cellular s account through ECS. It is also pertinent to note that the assessee being a service provider on behalf of IDEA Cellular is responsible for collection of moneys from the pre-paid and post-paid subscribers and the IDEA Cellular holding the position of Principal pays commission / incentives to its agents / service providers (assessee in the present case). Therefore, the assessee acted merely as an agent to the IDEA Cellular and during the demonetization period, the RBI as well as the Central Government have also approved for making payments towards pre-paid mobile top-up to a limit of Rs. 500/- for every top-up through their Notifications mentioned supra. Further, the Ld. AR has also demonstrated that the assessee remitted the collection of receipts to the IDEA Cellular Services through its books of account. Therefore, we can safely come to a conclusion that the deposit of cash on receipt from various persons for sale of pre-paid and post-paid recharge bookings is not the sales of the assessee nothing but the amount collected on behalf of IDEA Cellular. Considering all these facts and circumstances of the case, we are of the considered the view that the assessee is entitled to deposit the SBNs or the amounts collected during the demonetization period into its bank account and the sources are fully established by the assessee - Appeal of assessee allowed.
Issues involved:
The case involves the assessment of unexplained cash deposits made during the demonetization period by an assessee, leading to a dispute regarding the taxable income and liability to pay income tax. Summary: The appeal was filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals) arising from the assessment of cash deposits during the demonetization period. The assessee, a firm engaged in IDEA Cellular sales and services, had deposited significant amounts of cash in its bank account, leading to scrutiny by the assessing officer (AO). The AO treated the cash deposits as unexplained money under Section 69A of the Income Tax Act, 1961, and initiated penalty proceedings. The Ld. CIT(A)-NFAC upheld the addition of Rs. 10,14,000 as unexplained income, leading to the appeal before the ITAT Visakhapatnam. In the appeal, the assessee contended that the deposits were sourced from legitimate business activities as an agent for IDEA Cellular, supported by RBI and Central Government notifications allowing payments in demonetized currency for specific purposes. The ITAT observed that the assessee functioned as an agent/service provider for IDEA Cellular, collecting cash from customers for services and remitting the amounts to the principal, IDEA Cellular. The ITAT found that the assessee's actions were in compliance with the notifications issued during the demonetization period, allowing payments for pre-paid mobile top-ups. Therefore, the ITAT set aside the orders of the Revenue Authorities and allowed the grounds raised by the assessee, concluding that the cash deposits were legitimate and not unexplained income. The ITAT's decision was pronounced in the open court on 10th August 2023.
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