Syed Aijaz Haider Naqvi vs Ito Ward 1(1) Moradabad

PER MANISH AGARWAL, A.M.:

The present appeal is filed by assessee against the order dated 23.09.2025 passed by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. NFAC/2021-22/10356605 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 28.02.2024 passed u/s 144 r.w.s. 144B of the Act pertaining to Assessment Year 2022-23.

Brief facts of the case are that the assessee is an individual and a stamp vendor authorized by the Government for sale of non-judicial stamp papers where commission @ 0.098% is received. Forth repurchases of stamp papers, advance payment has to be made to the Government authorized Agency i.e. Stock Holding Corporation Ltd. and the same are than sold in cash as well as through banking channel and the cash so received from the customers was deposited in the bank account for further purchase of stamp papers. The assessee has filed its return of income u/s 139(1) of the Act on 22.07.2022, declaring total income of INR 3,52,360/- and the case was selected for scrutiny under CASS. The AO observed that the assessee has made cash deposits of INR 8,82,29,500/-in its bank accounts with Prathama U.P Gramin Bank in addition of INR 6,10,000/- by cheque deposited in the saving bank account maintained with Canara Bank. The AO asked the assessee to explain the source of such deposits however, has no reply was filed by the assessee and the order was passed u/s 144 of the Act by making addition of total deposits of INR 9,26,09,500/- vide order dated 28.02.2024.

Aggrieved by the said order, the assessee preferred appeal before ld. CIT(A) who in terms of the order dated 23.09.2025, has dismissed the appeal of the assessee and confirmed the additions as no proper explanation was given by the assessee with respect to the cash deposited.

Aggrieved by the order of ld. CIT(A), the assessee is in appeal before the Tribunal by various Grounds of appeal mentioned in the appeal memo.

Ground of appeal Nos. 1 to 4 of the assessee are with respect to the addition made of INR 9,26,09,500/- on account of deposits in the bank accounts.

Before us, ld. AR for the assessee submits that the assessee is a small stamp vendor authorized by Government to sale non-judicial stamp papers issued by the Government on commission basis and the entire cash deposited was out of the consideration received from the sale of stamps where assessee get the commission @ 0.098% only. The ld. AR further submits that all the sales of stamp paper were duly recorded in the register as per Rules and the license was issued by the Collectors, Stamps which is placed at page 3 of Paper Book. Ld. AR further filed copy of statement of Stamp purchased through Stock Holding Corporation where total commission of INR 93,862/- was given to the assessee on the sale of stamps of INR 9,56,57,870/-. This fact is further corroborated from 26AS statement. He, therefore, submits that entire cash deposited was on account of sale of non-judicial stamp papers and therefore, the same cannot be held as unexplained money u/s 69A of the Act.

Ld.AR lastly submits that under identical circumstances, case of the assessee for AY 2024-25 was taken for scrutiny and in terms of the order dated 17.12.2025 u/s 143(3) r.w.s. 144B of the Act, the AO has accepted the return of income though the case was taken up for scrutiny for large cash deposits.

On the other hand, ld. CIT DR for the Revenue vehemently supported the orders of the lower authorities.

Heard the contentions of both the parties at length and perused the material on record. In the instant case, the assessee is a licensed non-judicial stamp vendor in terms of the license issued by the District Stamp Officer dated 12.04.2021. During the year, assessee had purchased stamp papers totaling to INR 9,56,57,870/- from Stock Holding Corporation, a company authorized by the Government to issue non-judicial stamp paper on which commission of INR 93,863/- was received by the assessee. The said commission income is duly appearing in 26AS statement of the assessee. All these facts clearly established beyond doubts that the immediate source of cash deposited in the bank account was from the sale of non-judicial stamp papers and therefore, provisions of section 69A of the Act are not applicable. It is also a matter of fact that commission @ 0.098% is given by the State Government on the sale of non-judicial stamp paper. All these facts have not been controverted by the Revenue. In view of above facts and discussions, we delete the addition made by the lower authorities. Accordingly, Ground of appeal Nos. 1 to 4 of the assessee are allowed.

The remaining Ground of appeal Nos. 5 to 14 of the assessee are consequential in nature and thus, not adjudicated.

In the result, appeal of the assessee is allowed.