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 Section 69A and made an addition of Rs. 23 crore.
The assessee explained that the bank account had been used to receive funds from clients for the specific purpose of remitting taxes such as income tax, VAT, TDS, and service tax on their behalf. During appellate proceedings, documentary evidence supporting these transactions was produced. However, the CIT(A) enhanced the addition by Rs. 6,87,60,832 after treating credits in another HDFC Bank account as unexplained.
Before the Tribunal, the assessee reiterated that he had acted in a fiduciary capacity, particularly because clients in the small town where he practised lacked adequate access to online tax payment facilities. He produced bank statements, tax challans, affidavits, and other records demonstrating that the amounts received had been utilised for payment of clients’ taxes. He also explained that funds transferred from the Axis Bank account to the HDFC Bank account were similarly used for tax remittances.
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