ITO Vs Vimal Jaydev Arya (ITAT Pune)
ITAT Pune: Entire Bank Deposits Cannot Be Taxed – Income to Be Estimated @2% on Deposits in Renukamata Society Account
The assessee filed return declaring income of ₹6.82 lakh. Based on information received from search conducted in Renuka Mata Multi State Urban Co-operative Credit Society Ltd., the AO reopened the assessment after noticing credits of ₹2.47 crore in the assessee’s account with the society during FY 2014-15. Since the assessee did not respond to notices during reassessment, the AO completed assessment u/s 144 r.w.s. 147 and treated the entire deposits of ₹2.47 crore as unexplained money u/s 69A.
Before the CIT(A), the assessee explained that she was acting as a commission agent for purchase of agricultural produce for customers. The amounts deposited were advances received from customers for making purchases at the Latur Market Yard, and her commission was about 1%. Accepting the explanation, the CIT(A) deleted the entire addition and taxed only ₹2.50 lakh as commission income.
On further appeal, the ITAT noted that investigation reports had revealed that Renukamata Society accounts were widely used as conduits for routing funds and accommodation transactions through persons of small means. Considering the pattern of continuous deposits and withdrawals and the absence of evidence that the assessee actually owned the entire funds, the Tribunal held that the whole deposits cannot be treated as income.
However, the Tribunal also observed that the assessee failed to fully substantiate the exact commission earned. Following its earlier decision in similar cases involving the same society, the ITAT held that a reasonable estimate of income should be made. Accordingly, the Tribunal set aside the CIT(A)’s order and directed the AO to estimate income at 2% of the total deposits instead of taxing the entire amount or restricting it to ₹2.50 lakh.
FULL TEXT OF THE ORDER OF ITAT PUNE
