The appellate tribunal determined that cash deposits from an E-Mitra kiosk operator during demonetization were justified as legitimate customer payments and not unexplained income.

ORDER

PER: RATHOD KAMLESH JAYANTBHAI, AM

The present appeal arises on account of the order of the National Faceless Appeal Centre, Delhi dated 04/09/2023 [here in after ld. NFAC] for assessment year 2017-18. The said order in turn arise from the order dated 21.12.2019 passed under section 143(3) of the Income Tax Act, by ITO, Ward 7(2), Jaipur.

2. In this appeal, the assessee has raised following grounds: -

“1. That the ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in confirming the addition of Rs. 2237511/- on account of amount received in cash from persons for online fund transfer through novapay online portal and deposited in Bank.

2. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of Appeal.”

3. Succinctly, the fact as culled out from the records is that in this case, return of income was e- filed u/s 139(1) of the Income-tax Act 1961 on 01.06.2017, declaring total income of Rs 4,13,210/- During the year under consideration the assessee is running an E-Mitra Kiosk and providing service of deposit utility bill of various consumers to the Government Department like water bill and electricity bills. As per computation of income filed the assessee has declared income from business and profession of Rs. 4,35,256/- u/s. 44AD on total turnover of Rs. 9,96,782/-. The case of the assessee was selected for the examination of the issue of cash deposits during the demonetization period. The case was selected for manual scrutiny after obtaining the prior approval of Pr. CIT-3, Jaipur. Accordingly, notice u/s 143(2) of the income-tax Act, 1961 was on-line issued on 29.09.2018 on ITBA Portal which was served upon the assessee through E-Mail or Regd. Post. Notice u/s 142(1) was on-line issued on 05.06.2019 fixing the case for hearing on 12.06.2019 but compliance of the same was not made.

3.1 As regards the issue of cash deposited in the bank account during the demonetization period the assessee submitted that the assessee is running an E-mitra Kiosk which was authorized Government of Rajasthan and providing service to customers of deposition of electricity bills, water bills, etc. He has further stated that he collects cash from customers for electricity. water, telephone bills payment and the same was deposited in his current account, paid to concerned agency from his account. For the same, he received commission which has duly shown in his ITR filed for the relevant period. In support of his claim, he has furnished copy of bank account, daily transaction summary, payment sheet of M/s Aksh Optifibre Ltd., details of cash deposits during December along with copy of deposit slips for verification. He has further stated that during the demonetization period, the assessee has deposited total cash of Rs.56,01,800/-, He furnished the details that during the month of November-2016, amount of Rs.5,44,512/- and in December-2016 amount of Rs.28,19,777/- was collected in cash, from customers for payment of electricity / PHED bills and university fee payment. He has also explained that In December-2016, he has deposited amount of Rs.35,13,200/- out of which SBN was only Rs.27,500/- Other than M/s Aksh Optifibre Ltd., he is also authorized agent of M/s Nova Pay Solutions and M/s Pay Point India. He has filed the copy of statement of Nova Pay for the month of December only. He has not filed any details regarding that for which purpose the cash was collected, from whom such cash was collected. Therefore, in absence of the