2012 (2) TMI 33 - AT - Income Tax

Unexplained money assessee appointed as collecting agent by a company required to collect the sale proceeds of the aforesaid company from its customers and deposit the same in bank wherefrom it was remitted to company through DD Revenue contending deposits in bank as unexplained money Held that - Assessee produced evidences regarding its appointment as Collecting agent & that deposits related to sales collected and its remittances to company through reconciliation of bank statements of assessee and company. Further, past records of assessee reveal that she had mere income of 1.25 lacs p.a. & have there is no such asset or any other business activities from which it can be said that the assessee had earned a sum of Rs.46.55 lacs from undisclosed sources. Therefore, addition made is deleted Decided in favor of assessee.

Summary

Issues:
1. Addition of Rs.46,55,800/- under section 69A of the Act.

Analysis:
The case involved an appeal by the assessee against the order of CIT (A)-II, Jaipur, regarding the addition of Rs.46,55,800/- under section 69A of the Act for the assessment year 2007-08. The assessee, a housewife from a lower middle-class family, had been appointed as a Collecting Agent by a company to collect sale proceeds and remit them through DDs. The AO noted a cash deposit of Rs.46,55,800/- in the assessee's bank account and made the addition as the source of the cash was not explained. The CIT (A) rejected the explanation, leading to the appeal before the Tribunal.

During the proceedings, it was revealed that the assessee was appointed as a Collecting Agent by M/s. Jai Ambey Ganga Chemicals Pvt. Ltd. The company confirmed this appointment through an affidavit. The assessee's bank account transactions showed that the collected funds were deposited and transferred to the company through DDs. The Tribunal observed that the assessee, with a modest income, could not have deposited such a large sum from undisclosed sources. The company's confirmation and matching dates of transactions further supported the assessee's claim of working as a Collecting Agent.

The Tribunal found ample evidence to support that the assessee was indeed a Collecting Agent for the company, collecting cash from customers and remitting it through DDs. The confirmation from the company and the matching bank transactions proved that the deposited amount was not unexplained cash but funds collected on behalf of the company. As a result, the Tribunal allowed the appeal and deleted the addition made by the lower authorities under sections 68 and 69 of the Act.

In conclusion, the Tribunal ruled in favor of the assessee, highlighting the evidence establishing her role as a Collecting Agent for the company. The confirmation from the company, along with the bank transactions, proved that the deposited amount was not undisclosed income but collected funds. The Tribunal emphasized that the case did not warrant any addition under the specified sections of the Act, leading to the deletion of the addition made by the lower authorities.