Krunal Bharat Bhavsar Vs ITO (ITAT Ahmedabad)
Customer’s Car, Dealer’s Payment: ₹6.35 Lakh Cannot Become His Unexplained Investment
Customer-Funded Payment Was a Trading Transaction
The Ahmedabad Tribunal has deleted an addition of ₹6.35 lakh under Section 69, holding that a car dealer’s payment to an automobile dealer, made on behalf of a customer from funds received from that customer, could not be treated as the intermediary’s unexplained investment.
The assessee had received ₹6.60 lakh from the buyer and paid ₹6.35 lakh to Kiran Motors Ltd. The Tribunal accepted that the transaction arose in the course of his vehicle-trading activity and that the income attributable to him was the ₹25,000 margin, rather than the entire purchase payment.
The decision turns on the nature of the transaction, the source of the funds and the supporting records that the authorities had failed to examine.
Investigation Information Triggered the Addition
The Assessing Officer received information from the DDIT (Investigation), Delhi, through a letter dated 30 August 2018.
During enquiries concerning Kiran Motors Ltd., a dealer in Maruti Suzuki vehicles and spares, substantial cash deposits had been noticed in its bank account. The dealer explained these deposits as cash sales to customers and furnished a customer list.
