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CA Acting as Conduit for Clients’ Tax Payments Cannot Be Taxed on Deposits: ITAT Chennai
Case Law Details
- Case Name
- Bose Saravanan Vs DCIT (ITAT Chennai)
- Appeal Number
- Only available for paid members
- Date of Judgement/Order
- Only available for paid members
- Related Assessment Year
- 2016-17
- Courts
- All ITAT, ITAT Chennai
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Bose Saravanan Vs DCIT (ITAT Chennai)
The appeal before the Income Tax Appellate Tribunal (ITAT), Chennai, arose from the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre for AY 2016-17. The assessee, a Chartered Accountant, had filed his return declaring an income of Rs. 2,95,197. The Assessing Officer (AO) reopened the assessment after receiving information regarding substantial cash deposits in the assessee’s bank account, considering that the declared income was not commensurate with the deposits. The AO treated the deposits as unexplained money under...
While granting relief to the assessee on the facts, the Tribunal does not appear to have been informed of the ICAI’s Code of Ethics requirement that a CA who receives or holds clients’ money should maintain a separate bank account. Mixing clients’ funds with one’s own bank account may amount to a violation of professional standards n could expose the member to disciplinary proceedings for professional misconduct, even though the amounts may not constitute taxable income under the IT Act. Had this aspect been brought to the Tribunal’s notice, it may have made observations on the professional obligations of CAs, though it may not necessarily have altered the tax outcome