ITAT held that cash deposits collected from customers for DMT services were merely pass-through funds and not the assessee's taxable income, deleting the Rs 86.98 lakh addition.
Vanshika verma | Jun 28, 2026 |
ITAT Deletes Rs 86.98 Lakh Addition on Cash Deposits Routed for DMT Transactions
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has ruled in favour of taxpayer Smt. Sweety Agarwal, deleting an income tax addition of Rs.86,98,551 made by the AO for Assessment Year 2018-19.
The assessee was the proprietor of M/s Ekta Telecom, which worked as a commission agent for Idea Mobile Commerce Services Ltd. and Aditya Birla Idea Payments Bank Ltd. The business facilitated Direct Money Transfer (DMT) and Immediate Payment Service (IMPS) transactions through RBI-approved mobile applications.
According to the case records, the customers deposited cash with the assessee for transfer of money through these platforms. The cash collected was deposited in the bank account and remitted immediately to the companies through NEFT/RTGS. For these services the assessee received commission less than 1% of the value of transaction.
During the assessment proceedings, the AO observed large cash and cheques deposited in the assessee’s bank accounts. The AO accepted the income from commission declared by the assessee but treated the amount of Rs. 86,98,551 deposited in the SBI account as unexplained income. The AO said that the assessee had not properly explained the source of deposits. The CIT(A) also confirmed the addition.
However, the ITAT noted that bank statements clearly showed a pattern of cash deposits and immediate transfers to the two companies. The Tribunal further observed that the highest balance in the bank account on a single day was only Rs. 2,15,649 indicating that the account was only being used to channel customer funds and not to retain them as the assessee’s own money.
The Tribunal noted that the commission received from the companies was already reflected in Form 26AS and accepted by the department. Therefore, the source of the cash deposits was recorded as customer collections on behalf of the companies.
Holding that the deposits did not represent the assessee’s income, the ITAT ruled that the addition of Rs. 86,98,551 was unjustified.
As a result, the appeal filed by the assessee was allowed, and the disputed tax addition was deleted.
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