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Judgment
This appeal by the assessee is emanating from the order of the NFAC, Delhi in Appeal No. ITBA/NFAC/S/250/2025-26/1078187277(1), order dated 04.07.2025.
Heard both the sides and perused the records.
Brief facts of the case are that the assessee is a proprietorship concern engaged in business of advertising and brand promotion of products, corporate and business entities through newspaper, advertisements and Digital marketing. During the year under consideration, the assessee had made cash payment against credit cards payment amounting to Rs. 14,42,400/-. The appellant deals in transactions on behalf of his clients and recovers the same in cash from them. The asseseee keeps the above transactions via his credit card dues through cash collected by him from his clients. AO observed that on perusal of bank statement of Axis Bank and PNB available on record, it reveals that assessee had withdrawn frequent cash through ATM and cheques amounting to Rs. 5,62,100/-. Hence, after reducing his house hold expenses, benefit of Rs. 3,82,500/- which comes to Rs. 10,59,900/- was added to the income of the assessee by the AO u/s. 69C of the Act as unexplained expenditure. Aggrieved, assessee appealed before the Ld. CIT(A), who vide order dated 20.8.2025 has upheld the addition. Against the aforesaid, assessee is in appeal before the Tribunal.
After hearing both the sides and perusing the records, I find that AO has made the addition of Rs. 10,59,000/- u/s. 69C on the ground that cash payments were made towards credit cards amounting to Rs. 14,42,400/- and withdrawals of Rs. 5,62,100/- from two bank accounts. As regards cash withdrawals from all bank accounts the assessee’s AR submitted that assessee maintained four bank accounts during the relevant year and cash withdrawals were made from all accounts to meet financial obligations, including credit card payments. AO wrongly considered withdrawals from only two bank accounts (PNB and Axis Bank) ignoring the remaining cash from HDFC and SBI, which materially affects the assessment. The details of the same are given in the tabulated form:-
| Rajesh Kumar Morodia | FY 2016-17 | |
| Bank name | Account No. | Total amount withdrawn |
| HDFC Bank | 50200017789801 | Rs. 3,28,500 |
| Axis Bank | 916020010252950 | Rs. 3,23,100/- |
| Punjab and National Bank | 176000101148159 | Rs. 2,29,884 |
| State Bank of India | 30558214119 | Rs. 1,85,246 |
| Total amount withdrawn from banks | Rs. 10,66,730/- | |
It was further submitted that the AO considered only Rs. 5,62,100/- from two accounts and ignored approximately 50% of actual cash withdrawals, leading to a fundamentally incorrect addition.
It was further submitted that as regards cash received from family, friends, and reimbursements are concerned, in addition to withdrawals from bank account, the assessee also funded credit card payments through borrowings from family and friends and reimbursements from Mrs. Lalita, which are fully documented and verifiable.
| Name | Amount of Borrowings |
|---|---|
| Mrs. Lalita (Declaration attached) | Rs. 50,000 |
Mr. Gajinder Singh Ahuja (Declaration attached) | Rs. 1,50,000 |
| Mrs. Sonali Singh (declaration attached) | Rs. 85,000/- |
| Mrs. Puspaanjali (declaration attached) | Rs. 1,00,000/- |
| Mr. Jainudin (declaration attached) | Rs. 50,000 |
| Total | Rs. 4,35,000/- |
It was further submitted that additionally Rs. 50,000/- paid on behalf of Mrs. Lalita was fully reimbursed in cash, further sustaining the source of funds.
I note that in appeal, Ld. CIT(A) has not decided the matter on merit and only noted that there is no explanation from the assessee, he upheld the action of the AO by passing a non-speaking order. Therefore, in view of the factual matrix, as aforesaid and in the interest of justice, I remit back the issues in dispute to the file of the AO to decide the same afresh, after giving adequate opportunity of being heard to the assessee by considering and examining all the details, documentary evidences filed by the Assessee, as discussed above, especially the cash withdrawals from four banks and cash receipt from family, friends and reimbursement as mentioned above. AO is further directed to consider the issue of assessment u/s. 115 BBE of the Act, if any, in accordance with law and in view of Hon’ble Madras High Court in SMILE Microfinance Ltd. vs. ACIT in WP(MD) no. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.)
In the result, the Assessee’s appeal is allowed for statistical purposes