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Facts
The Assessing Officer (AO) made an addition of Rs. 88,81,984 representing cash deposits, stating the source was unexplained. The CIT(A) upheld this finding. The assessee contended that the deposits represented business transactions and only profit should be taxed.
Held
The Tribunal acknowledged the assessee's failure to justify the source of deposits but questioned whether the entire amount could be treated as income, especially as a commission agent.
Key Issues
Whether the entire amount of unexplained cash deposits in the bank can be treated as income of the assessee, particularly when the assessee is acting as a commission agent.
Sections Cited
69A, 115BBE
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Income Tax Appellate Tribunal, ‘B’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi dated 03/03/2025 in DIN No. ITBA/NFAC/S/250/ 2024-25/1073908333(1) for the assessment year 2017-18.
In the present case, the addition was made by the AO amounting to Rs. 88,81,984, representing cash deposits made by the assessee. According to the AO, the source of the cash deposits in the bank was not explained. Hence, the addition was made under section 69A read with section 115BBE of the Act. On appeal, the learned CIT(A) also upheld the finding of the AO in the absence of any explanation from the assessee regarding the source of the cash deposits, despite having issued notices to the assessee intimating the date of hearing.
Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. The learned AR before us contended that the impugned cash deposits represent business transactions and, therefore, at most, only the element of profit embedded in such deposits should have been brought to tax. Nevertheless, the learned AR fairly admitted that the assessee could not appear before the authorities below with a proper justification for the source of the cash deposits. The learned AR, however, undertook the responsibility of ensuring necessary compliance before the AO and therefore prayed that the matter be set aside to the file of the AO for fresh adjudication.
On the other hand, the learned DR did not raise any serious objection if the issue is set aside to the file of the AO for fresh adjudication as per the provisions of law.
We have heard the rival contentions of both parties and perused the materials available on record. Admittedly, the assessee failed to avail the opportunities granted by the lower authorities to justify the source of the cash deposited in the bank. However, the question arises whether the entire amount deposited in the bank can be treated as income in the given facts and circumstances, especially when the assessee is acting as a commission agent. In our considered view, this aspect needs to be analyzed at the level of the AO.