Cash Deposits Related To 'Shroff Business' Is Not An Undisclosed Income: ITAT

The assessee/respondent is in a Shroff business and derives income from commission. The AO had information that there was a cash deposit of Rs.224.53,23,993 during the year in 16 bank accounts of the assessee. Accordingly, the assessee was asked to explain. The assessee stated that being in the business of Shroff, the money deposited represented that collected from customers or on behalf of customers, and the cash deposit did not belong to the assessee.

The AO did not find the explanation of the assessee satisfactory, stating that no proof was filed by the assessee. The AO observed that the assessee did not file any details of customers' confirmations of owning these deposits. Accordingly, he added the entire cash deposit of Rs. 224.53,23,993 to the income of the assessee as unexplained under section 68 of the Income Tax Act.

The matter was carried in appeal before the CIT (A), where the assessee pleaded that the identical addition sought to be made in assessment year 2008-09 by way of reopening of the assessment was quashed by the High Court.

The CIT (A) held that the additions made by the AO were not found justified. As the A.O. himself has dropped re-assessment proceedings in which the transactions under consideration were part of the total transactions. The AO got details of all the beneficiaries. The additions made in the hands of the appellant are not found justified, hence deleted.

The appellant/department appealed before the ITAT against the order passed by the CIT (A).

The ITAT noted that the issue of cash deposits in the bank account of the assessee was examined exhaustively at various levels. No merit has been found in the contention of the revenue that it represented any undisclosed income of the assessee.

The tribunal noted that the assessee was in the business of Shroff and earned only commission on the monetary transactions carried out by it. The cash deposits represent money belonging to his customers.

Case Title: The DCIT Versus M/s. Sidhanath Enterprise

Citation: ITA No. 374/Rjt/2017

Dated: 29-06-2022

Counsel For Appellant: CIT/DR Sushil Madhuk

Counsel For Respondent: A.R. Vimal Desai

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