TaxTMI 
TaxTMI 
2026 (6) TMI 851
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....r (AY) 2016-17. 2. The assessee is an individual and is a Chartered Accountant. The assessee filed a return of income for AY 2016-17 on 14.10.2016 declaring total income of Rs. 2,95,197/-. The A.O received information that the assessee has deposited substantial amount of cash into his bank account. Since the income declared by the assessee in the return of income is not commensurate with the cash deposit, the A.O had a reason to believe that the income of the assessee has escaped assessment and accordingly reopened the assessment by issue of notice u/s. 148 of the Act. The assessee submitted before the A.O that the impugned bank account was opened for the purpose of paying taxes on behalf of the clients and that the entire amount deposit....
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....bits in the bank account of the assessee to substantiate that these are the debits in the bank account is supported by the documentary evidence. With regard to the amount enhanced by the CIT(A), the ld. AR submitted that the assessee has transferred the impugned amount from Axis Bank to HDFC Bank which again is used to make payment towards taxes. The Ld. AR in this regard drew out attention to the HDFC bank statement containing the impugned entries (Page 359 of paper book). Accordingly, the Ld. AR submitted that the assessee has received the money in his fiduciary capacity to make payment towards taxes on behalf of clients and the money deposited in the bank account does not belong to the assessee. 4. The Ld. Departmental Representative ....
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....nts collected are used towards various tax payments on behalf of the clients of the assessee. Considering the overall facts and circumstances, we see merit in the submission that the assessee has acted as a conduit for payment of taxes on behalf of the clients and that the deposits reflecting in the bank account of the assessee does not belong to the assessee. Further, the debits in the bank accounts reflecting the payment of taxes also substantiate the submissions of the assessee. Accordingly, we are of the considered view that the addition made treating the credits in the bank account of the assessee as unexplained cannot be sustained considering various evidences submitted by the assessee. Therefore, we direct the A.O to delete the addit....
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.... and are therefore entirely dependent upon my professional assistance for compliance with various statutory obligations under the applicable laws. In the course of my professional practice, auch clients have paid cash to me solely for the purpose of remitting their statutory dues, including income Tax, Tax Deducted at Source (TDS), Value Added Tax (VAT), and Service Tax, on their behalf. I hereby state that the amounts so received from clients were immediately deposited into my bank account purely as a temporary measure and were thereafter utilized exclusively for making statutory payments on behalf of such clients, without retaining any portion thereof as my income. During the Financial Year relevant to Assessment Year 2016-17, I....
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....handled exclusively for statutory compliance purposes and that the said bank account was used solely for remitting statutory dues on behalf of my clients. Accordingly, such amounts cannot be treated as my income under the provisions of the Income Tax Act. 1961, including Sections 68, 69, or 69A of the Income Tax Act. 1961. In the course of my professional practice, it is a common and bona fide practice, and consistently followed, that Clients entrust funds for payment of statutory dues; The same are deposited into bank and remitted to Government accounts; Such transactions are duly recorded in the books of Accounts and are not in the nature of income. The entire transaction is duly recorded in my regular books of account, including....