Seenuvasan Karthik Vs ITO (ITAT Chennai)
Chennai ITAT Deletes Addition on Cash Deposits Used for Procuring Demand Drafts, Holds Assessee Acted Merely as a Conduit
The Chennai ITAT deleted the addition of ₹51.43 lakh made under section 69A in respect of cash deposits, holding that the assessee had merely acted as an intermediary for customers by collecting cash and purchasing demand drafts in favour of the Registrar for property registration purposes. The Tribunal noted that the bank statements clearly showed that each cash deposit was immediately followed by the issuance of a corresponding demand draft, and the assessee had also furnished details of 193 customers, including their names, addresses, identity proofs, cash received, demand draft amounts, and beneficiaries. It observed that neither the Assessing Officer nor the CIT(A) had recorded any adverse findings on these documents. Following its earlier decision in Bose Saravanan v. DCIT, the Tribunal held that the assessee had acted only as a conduit, the deposited cash did not belong to him, and the authorities had erred in treating the entire bank credits as unexplained money without appreciating the corresponding debit entries towards demand drafts. Accordingly, the Tribunal directed deletion of the entire addition.
Cases Discussed
- Bose Sarvanan vs. DCIT (ITAT Chennai), ITA No.2217/Chny/2025 dated 11.05.2026
FULL TEXT OF THE ORDER OF ITAT CHENNAI
