Income Tax Appellate Tribunal - Patna
Kamlesh Kumar,Bathua Bazar, Gopalganj vs Income Tax Officer, Siwan on 27 March, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
"PATNA BENCH, PATNA
(VIRTUAL HEARING AT KOLKATA)
SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
SHRI SONJOY SARMA, JUDICIAL MEMBER
ITA Nos. 489 & 493/PAT/2025
Assessment Year : 2018-19
Income Tax Officer, Vs. Kamlesh Kumar,
D.M. Kothi Road, Siwan - Bihar - Bathua Bazar, Gopalganj,
841226 Siwan - 841225
[PAN: AMWPK6374R]
APPELLANT RESPONDENT
CO Nos. 1 & 2/PAT/2026
(Arising out of ITA Nos.
489 & 489/PAT/2023)
Assessment Year : 2018-19
Kamlesh Kumar, Vs. Income Tax Officer, Ward
Pahamwa, Bathuwa Bazar, 2(3), Siwan,
Gopalganj,
Siwan - 841425
[PAN: AMWPK6374R]
APPELLANT RESPONDENT
Assessee by : Sh. Gyan Prakash, Adv.
Revenue by : Smt. Rinku Singh CIT(DR)
Date of hearing : 24.03.2026
Date of Pronouncement : 27.03.2026
2
ITA Nos. 489 & 493 /PAT/2025
CO Nos. 1 &/PAT/2026
Kamlesh Kumar
ORDER
PER BENCH These appeals are filed by the Revenue and cross objection filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (hereafter "the Act") by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter "the Ld. CIT(A)] dated 13.02.2025, DIN & Order No. ITBA/NFAC/S/250/2024-25/10732381(1). These all appeals were heard together, therefore, we are passing a common order for all the appeals. The substantive appeal filed by the revenue is ITA No. 489/Pat/2025 against the deletion of Rs. 12,29,69,000/- by the Ld. CIT(A) and ITA No. 493/Pat/2025 is penalty u/s 271AAC deleted by the Ld.CIT(A) at Rs. 94,99,355/-.
2. Revenue has filed the following grounds of appeal in ITA No. 489/Pat/2025 i. Whether on the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs 12,29,69,000/- made by A.O by accepting additional evidence submitted by the Assessee without allowing the Assessing officer an opportunity to examine and submit his report/argument, as per Rule 46A of the Income tax Rule, 1962.
ii. Whether on the facts and in the circumstances of the case and in law, the action of the CIT(A) in not allowing the Assessing officer any opportunity of being heard was in contravention of Rule 46A of the Income tax Rule, 1962. iii. Any other ground that may be urged at the time of hearing. 2.1 Revenue has filed the following grounds of appeal in ITA No. 493/Pat/2025 3 ITA Nos. 489 & 493 /PAT/2025 CO Nos. 1 &/PAT/2026 Kamlesh Kumar Whether on the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the consequential penalty addition of Rs. 94,99,355/- on the basis that the quantum addition of Rs 12,29,69,000/- made by A. O was deleted by Ld. CIT(A) by accepting additional evidence submitted by the Assessee without allowing the Assessing officer an opportunity to examine and submit his report/argument, as per Rule 46A of the Income tax Rule, 1962 ii. Appeal in Hon'ble ITAT has already been filed against the said Ld. CIT(A) erroneous order deleting quantum assessment order made by the A.O. which formed the basis for levying of penalty amounting to Rs. 94,99,355/- and thereby necessitating filing of appeal against the Ld. CIT(A) order deleting the penalty addition.
lii. Any other ground that may be urged at the time of hearing.
3. The grounds of cross objection raised by assessee are as under;- (CO No. 01/Pat/2026):
"Ground No. 1-Penalty u/s 271AAC(1) unsustainable in law The Ld. CIT(A) has rightly deleted the penalty levied u/s 271AAC(1) of the Act. It is submitted that the penalty was levied solely on the basis of the quantum addition made u/s 69C of the Act. The Ld. CIT(A), vide order dated 13.02.2025, has categorically deleted the quantum addition itself. Once the foundation of penalty has been removed, the consequential penalty automatically becomes unsustainable in law. Hence, the action of the Ld. CIT(A) does not call for any interference.
Ground No. 2-No "mis-reporting" or "under-reporting" of income The Cross-Objector declared his entire commission income of ₹6,17,231 and filed return declaring total income of ₹4,16,770. There is no concealment, mis- reporting or under-reporting, hence section 271AAC(1) is not attracted.
Ground No. 3-Cash withdrawals cannot be deemed income The amount of ₹12,29,69,000 represents business cash withdrawals from disclosed bank accounts for onward payment to customers of money transfer companies. Such withdrawals do not constitute income and cannot be treated as "undisclosed income".
Ground No. 4-Section 69/69C wrongly invoked Section 69/69C is a deeming provision and cannot be applied merely on suspicion. All transactions were through banking channels and duly explained. Therefore, the foundation of penalty is illegal. Ground No. 5-Violation of natural justice 4 ITA Nos. 489 & 493 /PAT/2025 CO Nos. 1 &/PAT/2026 Kamlesh Kumar The penalty order was passed ex-parte, without granting effective opportunity of being heard, in violation of principles of natural justice. Ground No. 6-No violation of Rule 46A The learned CIT(A) exercised co-terminus powers and relied upon Form-26AS, agreements and certificates which are fundamental to determining the real nature of income. The allegation of Rule-46A violation is misconceived. Ground No. 7-Departmental appeal is misconceived The Departmental appeal is based entirely on a non-existent quantum addition and therefore deserves to be dismissed.
3 A Grounds of Gross-Objection (Ground-wise reply to Departmental Grounds):
Ground No. 1:
The Revenue has erred in challenging the order of the Ld. CIT(A) deleting the penalty levied u/s 271AAC(1) of the Act.
Reply:
The Ld. CIT(A) has rightly deleted the penalty as the very basis of penalty le. quantum addition of Rs. 12,29,69,000/- stood deleted by the same appellate authority. It is a settled principle of law that when the quantum addition does not survive, consequential penalty cannot be sustained. Ground No. 2:
The Revenue alleges violation of Rule 46A of the Income Tax Rules, 1962. Reply:
The allegation is incorrect and misconceived. The Ld. CIT(A) has passed a reasoned order after considering material already on record. The deletion of addition was based on appreciation of facts and legal position. Even otherwise, penalty proceedings are independent and once the addition itself is deleted, Rule 46A becomes irrelevant for sustaining penalty Ground No. 3:
The Revenue contends that the assessee failed to substantiate cash withdrawals Reply:
The assessee is a money transfer agent and the cash withdrawals were made for onward payment to customers of reputed money transfer companies. The withdrawals do not constitute income of the assessee. The commission income has already been duly disclosed and taxed. Hence, there is no misreporting or under-reporting of income to attract section 271AAC Ground No. 4:5
ITA Nos. 489 & 493 /PAT/2025 CO Nos. 1 &/PAT/2026 Kamlesh Kumar Any other ground raised by the Revenue.
Reply:
The respondent craves leave to submit that all other grounds raised by the Revenue are general, vague and devoid of merit and are liable to be dismissed.
4. Prayer The Respondent/Cross-Objector humbly prays that this Hon'ble Tribunal may be pleased to
a) Dismiss the appeal filed by the Revenue on ground of Law of Limitations;
b) Uphold the order of the learned CIT(A) dated 13.02.2025;
c) Allow this Cross-Objection;
3.1 The grounds of cross objection raised by assessee are as under (CO No. 2/Pat/2026):
"Ground No. 1-Penalty u/s 271AAC(1) unsustainable in law The Ld. CIT(A) has rightly deleted the penalty levied u/s 271AAC(1) of the Act. It is submitted that the penalty was levied solely on the basis of the quantum addition made u/s 69C of the Act. The Ld. CIT(A), vide order dated 13.02.2025, has categorically deleted the quantum addition itself. Once the foundation of penalty has been removed, the consequential penalty automatically becomes unsustainable in law. Hence, the action of the Ld. CIT(A) does not call for any interference.
Ground No. 2-No "mis-reporting" or "under-reporting" of income The Cross-Objector declared his entire commission income of ₹6,17,231 and filed return declaring total income of ₹4,16,770. There is no concealment, mis- reporting or under-reporting, hence section 271AAC(1) is not attracted.
Ground No. 3-Cash withdrawals cannot be deemed income The amount of ₹12,29,69,000 represents business cash withdrawals from disclosed bank accounts for onward payment to customers of money transfer companies. Such withdrawals do not constitute income and cannot be treated as "undisclosed income".
Ground No. 4-Section 69/69C wrongly invoked Section 69/69C is a deeming provision and cannot be applied merely on suspicion. All transactions were through banking channels and duly explained. Therefore, the foundation of penalty is illegal. Ground No. 5-Violation of natural justice 6 ITA Nos. 489 & 493 /PAT/2025 CO Nos. 1 &/PAT/2026 Kamlesh Kumar The penalty order was passed ex-parte, without granting effective opportunity of being heard, in violation of principles of natural justice. Ground No. 6-No violation of Rule 46A The learned CIT(A) exercised co-terminus powers and relied upon Form-26AS, agreements and certificates which are fundamental to determining the real nature of income. The allegation of Rule-46A violation is misconceived. Ground No. 7-Departmental appeal is misconceived The Departmental appeal is based entirely on a non-existent quantum addition and therefore deserves to be dismissed.
3 A Grounds of Gross-Objection (Ground-wise reply to Departmental Grounds):
Ground No. 1:
The Revenue has erred in challenging the order of the Ld. CIT(A) deleting the penalty levied u/s 271AAC(1) of the Act.
Reply:
The Ld. CIT(A) has rightly deleted the penalty as the very basis of penalty le. quantum addition of Rs. 12,29,69,000/- stood deleted by the same appellate authority. It is a settled principle of law that when the quantum addition does not survive, consequential penalty cannot be sustained. Ground No. 2:
The Revenue alleges violation of Rule 46A of the Income Tax Rules, 1962. Reply:
The allegation is incorrect and misconceived. The Ld. CIT(A) has passed a reasoned order after considering material already on record. The deletion of addition was based on appreciation of facts and legal position. Even otherwise, penalty proceedings are independent and once the addition itself is deleted, Rule 46A becomes irrelevant for sustaining penalty Ground No. 3:
The Revenue contends that the assessee failed to substantiate cash withdrawals Reply:
The assessee is a money transfer agent and the cash withdrawals were made for onward payment to customers of reputed money transfer companies. The withdrawals do not constitute income of the assessee. The commission income has already been duly disclosed and taxed. Hence, there is no misreporting or under-reporting of income to attract section 271AAC Ground No. 4:7
ITA Nos. 489 & 493 /PAT/2025 CO Nos. 1 &/PAT/2026 Kamlesh Kumar Any other ground raised by the Revenue.
Reply:
The respondent craves leave to submit that all other grounds raised by the Revenue are general, vague and devoid of merit and are liable to be dismissed.
4. Prayer The Respondent/Cross-Objector humbly prays that this Hon'ble Tribunal may be pleased to
a) Dismiss the appeal filed by the Revenue on ground of Law of Limitations;
b) Uphold the order of the learned CIT(A) dated 13.02.2025;
c) Allow this Cross-Objection;
4. At the outset of hearing, the appeal filed by the revenue in ITA No. 489 & 493/Pat/2025 are delayed by 182 days. The revenue has filed condonation application stating the reasons of delay in filing the appeals. After going through the reasons given in the condonation applications, we noted that the revenue had sufficient cause for not filing the appeal on time. Therefore, considering the reasons given the applications, we are condoning the delay relying on the relying of the judgment of Collector, Land Acquisition vs Mst. Katiji, (1987) 167 ITR 171 (SC), we condone the delay and the appeals are taking up for adjudication. ITA No. 489/Pat/2025
5. Briefly stated the facts of the case are that the case of the assessee was selected for scrutiny assessment under e-assessment scheme on the reason that cash withdrawal. Accordingly, notice u/s 143(2) of the Act dated 21.09.2019 was sent on the email of the assessee against which 8 ITA Nos. 489 & 493 /PAT/2025 CO Nos. 1 &/PAT/2026 Kamlesh Kumar the assessee furnished reply on 30.09.2019. Subsequently, notice u/s 142(1) of the Act was issued on different dates which were served upon against which the assessee furnished reply on 20.02.2021 and show cause notice was issued to the assessee stating that while the whole amount of withdrawal from bank should not be added in the taxable income. From the detail furnished by the assessee it was noticed that during the year, the assessee has withdrawn huge cash of Rs. 12,29,69,000/- as under:
SI No. Name of the Account No. Cash withdrawal Bank 1 Punjab National 4745002100001037 Rs. 5,99,91,100/-
Bank 2 IDBI Bank 1376102000000286 Rs. 6,29,78,000/-
Rs. 12,29,69,000/-
6. Further, on perusal of submission filed by the assessee, it was found that the assessee was carrying business of "money transfer"
during the year under consideration with the collaboration/agreement with following companies:
(1) Unimoni Financial Savicer Limited (2) Supreme Securities Ltd.
(3) Youfirst money express Private Limited 9 ITA Nos. 489 & 493 /PAT/2025 CO Nos. 1 &/PAT/2026 Kamlesh Kumar (4) Transfast Financial Services Private Limited (5) Transcorp International ltd.
(6) Ebix payment services Private Limited (7) Ebix money express Private Limited As per notice u/s 142(1) of the Act dated 23.02.2021, the assessee was asked to produce agreement/MoU which has been executed between the assessee and this company to carry out business of "money transfer"
but in repeated to file agreement/Mou the assessee failed to submit the same which creates suspicion about the genuineness of this transaction and agreement must have been with the assessee but did not submit. On perusal of the bank statement, it was found that the amount credited in the bank account of the assessee was withdrawn by him in cash at same day and/or very next day for which no explanation has been furnished by the assessee, the assessee was given various opportunities but the assessee was not interested to file the requisite details, therefore, the entire cash withdrawn amount of Rs. 12,29,69,000/- was treated as income u/s 69C of the Act as unexplained expenditure.
7. Aggrieved from the above order, the assessee filed appeal before the Ld. CIT(A). During the course of appellate proceedings, the assessee submitted copy of such agent agreement with money transfer services dated and in this regard as per 26AS certificate the assessee has been given commission of Rs. 6,17,231/- for such agent services by different 10 ITA Nos. 489 & 493 /PAT/2025 CO Nos. 1 &/PAT/2026 Kamlesh Kumar agencies and noted that the assessee had very acquented .with the abovementioned companies for business and commission agent money withdrawn from Punjab National Bank and IDBI Bank was treated as business transaction and not unexplained expenditure and the reason for withdrawal is valid and explained, therefore, he deleted the addition.
8. Aggrieved from the above order, the Revenue is in appeal before the ITAT. The Ld. DR strongly supported the order of the AO and strongly objected that the Ld.CIT(A) accepted the additional evidence and no opportunity was granted to the AO and he further submitted that during the course of assessment proceedings various opportunities was given to the assessee which is clear from the assessment order but the assessee did not file, the Ld. CIT(A) has violated the rule of 46A of the I T Rules and requested that the very basis on the basis of documents filed by the assessee the ld. CIT (A) has allowed the appeal . It was the duty of the Ld. CIT(A) to give opportunity to the AO before accepting the additional evidence and reason should have been recorded but here the ld. CIT (A) has committed error and deleted the addition without verifying the nature of transactions carried out by the assessee for the above named companies.
9. On the other hand, the Ld. AR relied on the order of Ld. CIT(A) and he submitted that the order of Ld.CIT(A) is correct since the additional evidence submitted were very much relevant to decide the issue that is 11 ITA Nos. 489 & 493 /PAT/2025 CO Nos. 1 &/PAT/2026 Kamlesh Kumar why he accepted the additional evidence and decided the issue in favour of the assessee. Further, in respect of penalty, the Ld. Counsel relied on the order of Ld. CIT(A).
10. Considering the rival submission and perusing the entire material available on record and the orders of authorities below. We noted that the assessee is engaged in the business of "money transfer" with the above noted 7 companies but the assessee did not provide requisite documents to the AO and the AO provided various opportunities to the assessee. However, during the course of first appellate proceeding, the copy of the agreement was provided and the Ld.CIT(A) did not call remand report and accepted the additional evidence without considering the conditions of rule 46A. For the sake of convenience, we are reproducing Rule 46A which is as under:
46A. (1) The appellant shall not be entitled to produce before the 8[8a[Joint Commissioner] (Appeals)] 9[or, as the case may be, the Commissioner (Appeals)], any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the 10[Assessing Officer], except in the following circumstances, namely :--
(a) where the 10[Assessing Officer] has refused to admit evidence which ought to have been admitted ; or
(b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the 10[Assessing Officer] ; or
(c) where the appellant was prevented by sufficient cause from producing before the 10[Assessing Officer] any evidence which is relevant to any ground of appeal ; or
(d) where the 10[Assessing Officer] has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the 11[11a[Joint Commissioner] (Appeals)] 12[or, as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission.12
ITA Nos. 489 & 493 /PAT/2025 CO Nos. 1 &/PAT/2026 Kamlesh Kumar (3) The 14[14a[Joint Commissioner] (Appeals)] 15[or, as the case may be, the Commissioner (Appeals)] 13 shall not take into account any evidence produced under sub-rule (1) unless the 16[Assessing Officer] has been allowed a reasonable opportunity--
(a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or
(b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant.
(4) Nothing contained in this rule shall affect the power of the 17[17a[Joint Commissioner] (Appeals)] 18[or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the 19[Assessing Officer]) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 2
11. The Ld.CIT(A) should not have accepted the additional evidence as per Rule 46A because the AO provided various opportunities to the assessee and he could have obtained remand report from the AO and he should have recorded the reason in writing as per Rule 46A(2) . The AO also noted that money was immediately withdrawn after crediting into account of the assessee are very next day and source is also not explained by the assessee. Therefore, considering the totality of facts and circumstances of the case, we are remitting this issue back to the file of AO for denovo assessment and decide the issue as per law without influencing in the previous assessment order and the assessee is directed to substantiate his case with cogent documents in support of his claim and not seek unnecessary adjournments for early disposal of the. Appeal of the Revenue is allowed for statistical purposes.
12. ITA No. 493/Pat/2025 is consequential penalty appeal against the substantive assessment order passed by the AO u/s 143(3). The AO has 13 ITA Nos. 489 & 493 /PAT/2025 CO Nos. 1 &/PAT/2026 Kamlesh Kumar imposed the penalty of Rs. 94,99,355/- u/s 271AAC of the Act. Since we are remitting the substantive addition, therefore, the penalty to be also decided by the AO as afresh. Therefore, this penalty order become infructuous and dismissed.
13. CO No. 1/Pat/2026 and CO No. 2/Pat/2026 are also arises from the order of the Ld. CIT(A) and the very basis for the order of the Ld. CIT(A) is remanded back to the AO for deciding afresh, therefore, the CO filed against the Ld. CIT(A) does not survive. Therefore, the CO filed by the assessee are become infructuous.
14. To sum up- ITA No. 489/Pat/2025 filed by the revenue is allowed for statistical purposes and ITA No. 493/Pat.2025 filed by the revenue is become infructuous and dismissed. Cross Objections01 &02/PAT/2026 filed by the assessee are also become infructuous and dismissed.
Order pronounced on 27.03.2026
Sd/- Sd/-
(Sonjoy Sarma) (Laxmi Prasad Sahu)
Judicial Member Accountant Member
Dated: 27.03.2026
AK, Sr. P.S.
14
ITA Nos. 489 & 493 /PAT/2025
CO Nos. 1 &/PAT/2026
Kamlesh Kumar
Copy of the order forwarded to:
1. Appellant
2. Respondent
3. Pr. CIT
4. CIT(A)
5. CIT(DR)
//True copy//
By order
Assistant Registrar, Kolkata Benches