Sanjay Audhesh Mishra Vs ITO (ITAT Nagpur)
Mere Movement of Funds for Making Client’s VAT Payment Cannot Be Taxed as Unexplained Money Under Section 69A: ITAT Nagpur
ITAT Nagpur Deletes ₹9.58 Lakh Section 69A Addition on VAT Payment
The Nagpur Bench of the Income Tax Appellate Tribunal has held that an amount received and routed for making VAT payment on behalf of another person cannot be treated as unexplained money under section 69A, where the assessee establishes the complete transaction trail through ledger accounts, bank statements, VAT challan and corresponding entries in the books of the concerned parties.
The decision was rendered in the case of Sanjay Audhesh Mishra v. ITO, Ward-3, Amravati, concerning Assessment Year 2017-18.
Facts of the Case
The assessee was an individual who had not originally filed his return of income for AY 2017-18. The Department received information regarding cash deposits aggregating to ₹77,70,705 in his savings bank account and salary income of ₹36,890 received during the relevant year.
Based on this information, the case was reopened under section 147 after issuing the statutory notices. In response to the notice under section 148, the assessee filed his return declaring total income of ₹4,45,860.
During the reassessment proceedings, the Assessing Officer noticed transactions involving the assessee, Mr. Rajesh Shankarlal Rathi and Mr. R.R. Mundhada. In the assessee’s ledger account, there was an entry of ₹9,58,720, representing payment connected with Mr. R.R. Mundhada.
