Reopening of assessment for unexplained cash deposits found to be relative's money-transfer commissions; no further tax addition.

Reopening of assessment challenged additions for unexplained cash deposits; tribunal found bank statements showed the assessee's account used by a relative to collect and remit labourers' funds, establishing the deposits as the relative's business receipts rather than the assessee's personal income. The tribunal accepted a per-instrument commission model and upheld commission income shown by the assessee at Rs. 40 per transaction as reasonable. Because such commission income was offered to tax, no further income addition was warranted and the assessee's appeal was allowed.

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Issues: Whether the addition of Rs. 29,31,364 made by treating bank cash deposits as unexplained income by estimating profit in a money transfer business is sustainable.

Analysis: The Tribunal examined the material on record including bank statements showing cash deposits followed by immediate transfers, the stated business model that the account was used for third-party money transfer transactions, and the fact that commission per transaction had been offered to tax. The Tribunal noted that identical modus operandi and commission determination had been accepted in earlier assessments in respect of the person conducting the transfer business. The Tribunal found the commission rate of Rs. 40 per transaction to be reasonable and supported by the transaction pattern evidenced in the bank statements, and observed that the assessee had declared commission income corresponding to the transactions.

Conclusion: The addition of Rs. 29,31,364 is not warranted and the appeal is allowed in favour of the assessee.

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