ITAT Mumbai Orders Fresh Review of ₹1.95 Crore Cash Deposits

Nitin Valecha Vs ITO (ITAT Mumbai)

Cash Deposits Tell Only Half the Story – Examine the Withdrawals, Agency Role and CBDT Instructions Too

The assessee, an individual, had not originally filed his return of income for Assessment Year 2017-18. Information available with the Income-tax Department revealed cash deposits aggregating to ₹1,95,73,079 in his bank account maintained with ICICI Bank. Based on this information, proceedings under section 147 were initiated.

In response to the notice under section 148, the assessee filed his return on 21 January 2022. He explained that he was functioning as a collecting and commission agent for textile and readymade garment traders and manufacturers. According to him, the amounts deposited in his bank accounts did not belong to him but represented collections made on behalf of different parties in the course of his agency activity.

The assessee claimed that he was entitled only to commission on such collections and had offered the commission income in his return. He also pointed out that the credits in the bank accounts were followed by corresponding withdrawals and debit entries, since the money collected was subsequently handed over or transferred to the concerned principals.

Assessing Officer Treats Deposits as Turnover

The Assessing Officer did not accept the assessee’s explanation because adequate documentary evidence had not been furnished to establish that he was merely acting as a collecting or commission agent.