Agency cash collections remitted to principals are pass-through receipts; only commission income is taxable, not unexplained money.

Cash collected by an assessee in agency business and promptly remitted to principal companies was held to be a pass-through receipt, not unexplained money under section 69A. The decisive factors were that the collections came from retailers and customers on behalf of principals, were deposited in the bank for operational convenience, and were transferred without abnormal delay. Only the nominal commission retained by the assessee, which had already been offered to tax, constituted taxable income. In the absence of any adverse finding challenging the existence or genuineness of the principal companies, the gross cash deposits could not be added as the assessee's income.

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Issues: Whether cash deposits received by the assessee in the course of agency business, and immediately remitted to principal companies, could be treated as unexplained money under section 69A of the Income-tax Act, 1961.

Analysis: The cash was found to have been collected from retailers and customers on behalf of principal companies in the ordinary course of agency business, deposited in the assessee's bank account for operational convenience, and transferred to the principals without abnormal delay. The assessee retained only a nominal commission, which had already been offered to tax. The lower authorities did not record any adverse finding disputing the existence, identity, or genuineness of the principal companies, nor any independent business activity generating the cash in the assessee's hands. On the bank trail and surrounding material, the funds were a pass-through and did not represent income accruing to the assessee except to the extent of commission.

Conclusion: The addition under section 69A was unsustainable and was rightly deleted; the issue was decided in favour of the assessee.

Ratio Decidendi: Where an assessee acts only as an agent and the cash deposited in its bank account is a pass-through collection remitted to principals, only the commission element constitutes taxable income and the gross collections cannot be taxed as unexplained money.

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