The Delhi bench of the Income Tax Appellate Tribunal (ITAT) ruled that the cash deposit made in the bank account was thoroughly and properly explained, resulting in the deletion of an addition of Rs. 7.43 crore.”
The assessee has been engaged in the business of providing security, housekeeping, and manpower supply since 2009 under the name and style Vandana Enterprises. During the FY 2016-17, the assessee was under an arrangement as business correspondent with First Rand Bank (FRB), a South African company, registered as a foreign company in India under the Companies Act and carried out business of banking as a scheduled Commercial bank after obtaining license from the Reserve Bank of India (RBI).
As per the business correspondent agreement executed between the parties services to FRB by the assessee under the aforesaid arrangement included supply manpower for their operations, selling/ marking of banking products, payments and administration of expenses and the collection of loan installment from their micro borrowers who are thousands in numbers spread over all over the region of Mumbai and its suburb.
The assessee was collecting monthly installments from borrowers on behalf of FRB in terms of aforesaid arrangement and thereafter the amount of cash was collected from borrowers of FRB was then deposited to his bank account maintained with ICICI, HDFC Bank and Axis Bank wherein, the day to day collection made by the assessee on behalf of FRB were deposited in the assessee‟s bank account along with list of details of borrowers from whom amount was collected and later the monies were transferred to the account of FRB by the assessee
During the course of assessment proceedings in response to first notice issued by the AO including explanation for huge cash deposit made in the bank account, the assessee replied with all the cogent evidence before the AO together with supporting documents duly explaining the source of cash deposit made in the bank account. Ignoring the explanation of the assessee , the AO proceeded to determine the total income of the assessee at Rs. 89,78,73,732/- as against the returned income of Rs. 36,86,850/- thereby making an addition of Rs. 89,41,86,882/- on account of total cash deposit.
The two-member bench of the tribunal, comprising Amit Shukla (Judicial member) and M. Balaganesh (Accountant member), observed that the assessee had duly explained that the phone numbers provided were complete. The first two digits were given in the previous column, and the remaining eight digits in the next column, thereby ensuring completeness of both mobile and landline numbers. Additionally, the assessee had conducted enquiries on a few borrowers on a test-check basis and found them to be genuine, having also verified their PANs. These details were placed on record before the lower authorities. Therefore, the observations made by the learned AO in the assessment order in this regard are completely devoid of merit.
Further observed that there is absolutely no case for making any addition on account of cash deposit made by the assessee in his bank account and that the entire cash deposit made in his bank account stands thoroughly and properly explained. Accordingly, grounds raised by the assessee were allowed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
