Sivan Suratha Madasamy Vs ITO (ITAT Chennai)
Quarry Agent’s Cash Deposits and Property Sale: Chennai ITAT Condoned 124-Day Delay, Restores Appeal for Examination
A person who receives money from clients and pays it to the Government on their behalf may have substantial deposits in his bank account, although only his commission belongs to him. But that explanation must be supported by the underlying transactions. In Sivan Suratha Madasamy, the Chennai Tribunal gave a quarry contract facilitator another opportunity to establish precisely that, while also directing examination of a property sale reported in AIS.
The immediate issue before the Tribunal was procedural. The CIT(A) had dismissed the assessee’s appeal because it was filed 124 days late, without deciding either addition on merits. The Tribunal condoned the delay and restored the issues to the CIT(A) for a fresh decision.
Why were additions made?
The assessee, an individual engaged in commission-based activity, filed his return for AY 2024–25 declaring income of ₹4,97,530. During scrutiny, the AO noticed substantial cash deposits in his bank account and asked him to explain them.
The assessee stated that he worked in stone quarry and contract facilitation. In the course of that work, parties gave him money for payment into the Government treasury towards lease premium, royalty and other statutory amounts connected with their quarry contracts. His case was that these collections belonged to the parties, and that he had correctly offered only the commission earned as income.
