Explained cash deposits through agency operations: bank deposits routed as customer collections and remittances were not treated as unexplained income.

Cash deposits in the assessee's bank account were held to be explained where the surrounding banking pattern, 26AS data, and accepted commission receipts showed that the assessee was acting as a commission agent collecting cash from customers and remitting it to payment service companies through banking channels. The absence of written agreements did not, by itself, dislodge that explanation when the material on record substantiated the source and onward movement of the funds. On that basis, the addition treating the deposits as unexplained income was unsustainable and was deleted.

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Issues: Whether the addition made on account of cash deposits in the assessee's bank account was sustainable, where the assessee claimed to have acted as a commission agent collecting cash from customers and remitting the amounts to payment service companies through banking channels.

Analysis: The assessee was found to be engaged in facilitating money transfer services for two companies and to have received commission income from those transactions, which was accepted by the assessing authority. The bank statement showed regular deposits followed by remittances, with no significant accumulation of funds, and the surrounding evidence, including the 26AS and transaction pattern, supported the explanation that the cash deposits represented customer collections routed onward to the companies. In these circumstances, the absence of written agreements was not sufficient to dislodge the explanation when the material on record substantiated the source of the deposits.

Conclusion: The addition in respect of cash deposits was unsustainable and was directed to be deleted, in favour of the assessee.

Final Conclusion: The appeal succeeded and the assessment addition arising from the bank deposits was deleted.

Ratio Decidendi: Where the surrounding evidence, banking pattern, and accepted commission receipts substantiate that cash deposits were received from customers and promptly remitted in the course of agency operations, such deposits cannot be treated as unexplained income merely for want of formal agreements.

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