Case Law Details
Smt Sweety Agarwal Vs ITO (ITAT Kolkata)
The ITAT Kolkata considered an appeal against the order of the Commissioner of Income Tax (Appeals), NFAC, for AY 2018-19. The principal issue was whether cash deposits of ₹86,98,551 in the assessee’s State Bank of India account could be treated as income.
The assessee was the proprietor of M/s Ekta Telecom and acted as a commission agent for Idea Mobile Commerce Services Ltd. and Aditya Birla Idea Payment Bank Ltd., which provided Direct Money Transfer (DMT) and Immediate Payment Service (IMPS) facilities through online applications. The assessee accepted cash from customers on behalf of these companies and deposited the amounts into the bank account before remitting the funds to the companies through NEFT/RTGS. The assessee earned commission of less than 1% on the total amount transferred.
The Assessing Officer reopened the assessment under Sections 147 and 148 after noting cash and cheque deposits and commission receipts reflected in the taxpayer annual summary. Although the assessee filed a return declaring income of ₹1,55,110 and explained that the deposits represented customer funds collected for money transfer services, the Assessing Officer was not satisfied with the explanation and added ₹86,98,557 as unexplained income. The CIT(A) upheld the addition, observing that the assessee had not produced sufficient evidence before the lower authorities.
The Tribunal examined the material on record, including Form 26AS and the SBI bank statement of M/s Ekta Telecom. It found that the assessee was functioning as a commission agent for the two companies, collecting cash from customers and promptly remitting the amounts to the companies through banking channels while earning commission on the transactions. The Tribunal also noted that the commission income had been accepted by the Assessing Officer.
Further, the Tribunal observed that the pattern of transactions in the bank account showed regular remittances after every cash deposit and that the highest balance in the account on any single day was only ₹2,15,649. It also noted that the SBI account records contained details of beneficiary transactions during the relevant period.
Based on these facts and evidences, the Tribunal held that the assessee had satisfactorily substantiated the source of the cash deposits. It concluded that the deposits represented customer funds collected for digital money transfer services and that the addition treating the deposits as the assessee’s income could not be sustained. Accordingly, the Tribunal set aside the order of the CIT(A), directed the Assessing Officer to delete the addition, and allowed the appeal.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This appeal preferred by the assessee is against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld.CIT(A)”], dated 20.05.2025 for the Assessment Year (AY) 2018-19.
2. At the time of hearing, the Ground Nos.2 & 3 are not pressed and therefore, the same are dismissed as not pressed. Similarly, the Ground No.1 is general in nature and does not require any specific adjudication.
3. The issue in Ground No.4 is against the confirmation of addition of Rs.86,98,551/- by the Ld. CIT(A) as made by the Assessing Officer (in short, ‘AO’) on account of deposits/credit entries in State Bank of India (SBI) by treating the same as income of the assessee.
4. The facts in brief are that the assessee Smt. Sweety Agarwal was the
proprietor of M/s Ekta Telecom at the relevant point of time and the said firm was the commission agent of Idea Mobile Commerce Service Ltd and Aditya Birla Idea payment Bank Ltd. The said companies dealt in direct money transfer through online apps under due approval of the Reserve Bank of India (RBI). These companies appointed the assessee as their distributor / commission agent and the companies used to pay the commission on the amount transferred through DMT or IMPS (Direct money transfer / Immediate Payment Service) and the assessee was given commission of less than 1% on the total amount transferred. However, the assessee despite having taxable income, did not file any return of income. The Assessing Officer (in short, ‘AO’) on perusal of certain information available in the taxpayer annual summary (TAS) in the profile of the assessee noted that the assessee has deposited in cash as well as by cheques Rs.1,69,85,250/- as credited / deposited in Axis Bank, besides receiving commission of Rs.10,761/- from Aditya Birla Idea Payment Bank Ltd. and also Rs.1,56,595/- from Idea Mobile Commerce Services Ltd. The AO gave several opportunities to the assessee during the assessment proceedings, however, there was only part compliance on the part of the assessee. The AO noted that assessee had not filed return of income u/s 139(1) of the Act and hence the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act, calling for return of income for A.Y. 2018-19. Thereafter, the assessee complied by filling return of income by declaring total income of Rs.1,55,110/- and claiming a refund of Rs.8,370/-. The statutory notices u/s 142(1) and 143(2) of the Act along with the questionnaire, calling upon various details and evidences were issued and served upon the assessee. The assessee partly replied the notices issued by the AO. The assessee submitted reply dated 12.10.2022 that Sweety Agarwal, the proprietor of M/s Ekta Telecom, engaged in the business in facilitating direct money transfer services via mobile applications. These services were offered through platforms managed by Aditya Biala Idea Payment Bank Ltd. and Idea Mobile Commerce Services Ltd. The assessee used to accept cash on behalf of these companies from the customers in the remote areas and used to deposit in the said bank account. Therefore, the money remitted to these companies through banking channels were accepted from the customers. However, the AO was not satisfied with the explanation of the assessee that the entire money of ₹ 2,57,94,007/-was received from customers and remoted to the two companies. The finally noted that the assessee could not explain the deposits of Rs.86,98,557/- into the bank account with SBI and added the same to the income of the assessee.
5. CIT(A) upheld the order of AO by holding that assessee has not filed any correct evidences before the AO and also before the Ld. CIT(A) and therefore, conclusion drawn by AO remained uncontroverted and thus justify the addition made by the AO.
6. We have heard the rival contentions and perused the material on records. Undisputedly the assessee is a commission agent of two companies, namely, Idea Mobile Commerce Services Ltd. and Aditya Birla Idea payment Bank Ltd. who use to deal in money transfer through online apps (DMT / IMPS) under the valid license of the SBI. The assessee used to accept cash on behalf of two companies from various customers and used to deposit money his bank accounts. Thereafter, immediately the money is used to be remitted to the accounts of these companies through banking channels, i.e., NEFT/RTGS. We note that the assessee used to collect the cash from small individual who used the self-service mobile app from appellant firm, namely, M/s Ekta Telecom to transfer money. We note that assessee received commission by both the companies on the money transferred amounting to Rs.1,69,85,250/- which rightly reflected in 26AS on the Income-tax Appeal. However, the addition was made by the AO and confirmed by the Ld. CIT(A), on the ground that the assessee had failed to provide agreements with these companies. We have examined the form 26AS as well as the bank statement of M/s Ekta Telecom with SBI and find that the assessee was collecting the money from the customers and used to transfer the same to these two companies, through RTGS/NEFT to the account of these companies in lieu of commission.
7. We note that from the pattern of entries of the bank account that the highest balance on any single day was only Rs.2,15,649/- and there were regular remittances after every deposit. We also note that this SBI has furnished the copy of account of M/s Ekta Telecom bearing Number 36934742195 giving various transactions of the beneficiaries during the period from 14.08.2017 to 16.01.2018. Considering the facts and evidences available before us, we are of the firm view that the assessee is a commission agent of two companies who are operating money transfer apps. We also note that the AO has accepted the income declared by the assessee by way of receipt of commission from the said transactions. Therefore, we conclude that the assessee has substantiated the source of cash deposit. Thus, making addition in respect of cash deposited in the bank account is totally wrong and cannot be sustained. Consequently, we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Since, we have allowed the Ground No.4 in favour of the assessee, therefore, the other Grounds raised by the assessee are not being adjudicated at this stage. Accordingly, the appeal of the assessee is allowed.
8. In the result, the appeal of the assessee is allowed.
The order is pronounced in the open Court on 25/06/2026.
Author Bio
