Cash deposits by CA stated to be trading income added as ICAI does not allow such activity

Cash deposits by CA stated to be trading income added as unexplained income u/s 68 as ICAI does not allow CAs to do any business activity

ABCAUS Case Law Citation
ABCAUS 3574 (2022) (02) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in upholding the addition made by the Assessing Officer (AO) as unexplained cash credits u/s 68 of the Income Tax Act, 1961 (the Act) on account of cash deposit.

The assessee was a practicing CA being partner in a Chartered Accountant’s firm.

As per the AIR Information, the AO came to know that the assessee had deposited large amount of cash in his various savings bank accounts.

The assessee was asked to explain the source of cash deposited in the bank accounts. In his reply, the assessee accepted that the receipts belonged to him and simultaneously submitted a revised return showing the amount of cash deposits as income from trading business of Grey Fabrics.

The reasons for revising the return was mentioned as to buy peace and avoid litigation with the Income Tax Department in pursuance of AIR Information.

The AO dismissed the revised return as invalid ITR and did not accept the claim of business for want of evidences.

The deposits were treated as unexplained cash credit u/s 68 of the Act and the addition was made accordingly.

The Tribunal observed that since the assessee was a practicing Chartered Accountant, he was barred from doing any business in terms of professional code of conduct of the ICAI.

The assessee failed to produce permission of the governing body of the ICAI to allow him to said business of trading in fabrics.

Further, even before the Tribunal the assessee failed to brought on record any demonstrative evidence to justify his business activities.  There was no evidence of any VAT, GST or permission from Municipality. Nor there was any evidence in respect of purchases/ sales of Gray Fabrics.

The Tribunal opined that the revised return was filed only to cover up the queries raised during the assessment proceedings in respect of cash found to be deposited in various bank accounts.

Accordingly, the Tribunal dismissed the appeal of the assessee.

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