Cash Deposits out of Business of Shroff cannot be Treated as Undisclosed Income U/S 68: ITAT [Read Order]

The Income Tax Appellate Tribunal ( ITAT ) Rajkot Bench presided by Ms. Annapurna Gupta, Accountant Member And Shri TR Senthil Kumar, Judicial Member has held that the cash deposits out of business of Shroff cannot be treated as undisclosed income u/s 68.

The assessee, M/s.   is engaged in Shroff business and derives income from commission. Based on the information that Assessing Officer added cash deposit of Rs. 224.53,23,993/- to the income of the assessee as unexplained u/s. 68 of the Act. Aggrieved assessee filed appeal and the CIT(A) deleted the addition. Aggrieved revenue filed appeal before the ITAT.

The counsel for the assessee submitted that identical issue had come up before the Gujarat High Court in the case of the assessee itself and the High Court had observed the fact that the assessee being in the business of Shroff, the cash deposits related to its business and did not represent any unaccounted income of the assessee.

The counsel further submitted that reopening resorted by the A.O. for the impugned year on account of cash deposits in some other bank account, subsequent to passing of the assessment order in the impugned case, was dropped by him taking note of the decision of the Gujarat High Court.

The Tribunal observed that the bank account of the assessee has been examined exhaustively at various levels and no merit has been found in the contention of the Revenue that it represented any undisclosed income of the assessee, noting the fact that the assessee was into business of Shroff and earned only commission on the monetary transactions carried out by it; the cash deposits representing money belonging to his customers.

The Tribunal has held that “we see no reason to interfere in the order of the CIT(A) deleting the addition made of cash deposits amounting to Rs. 224.53,23,993/-.. The grounds of the appeal raised by the revenue is dismissed”.

Mr. Sushil Madhuk appeared on behalf of the revenue and Mr. Vimal Desai appeared for the assessee.

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