Irfan Ahmad Shah Vs Shashi Bhushan Singh (ITAT Mumbai Bench)
Money Passing Through An Agent’s Bank Is Traffic, Not Income-Only Commission Can Be Taxed; Gross Cash Deposits Not Addable U/s 69A
Background
The assessee was the proprietor of Irfan Enterprises. He acted as an intermediary or commission agent for telecom & payment-service providers such as Idea Money Wallet, Airtel Payment Bank, Vodafone M-Pesa & Money on Mobile.
His activities included mobile recharge, domestic money transfer, payment of electricity bills, railway-ticket booking & other allied services. The assessee collected cash from retail customers, deposited it into his bank accounts & thereafter remitted corresponding amounts to the concerned principal or service-provider companies. His real income from these transactions consisted only of the commission earned for facilitating the services.
For AY 2017-18, the assessee filed his return declaring total income of ₹3,28,950. The case was selected for scrutiny, inter alia, because of high-value cash receipts & an abnormal increase in cash deposits during the demonetisation period.
Addition Made by the AO
The AO noticed aggregate cash deposits of ₹36,78,300 in the assessee’s bank accounts during demonetisation. The assessee explained that the money represented cash collected from customers in the ordinary course of his payment-service business.
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