The ITAT Surat ruled that the bank transactions in question reflected a cheque discounting business and could not be treated as unexplained cash credits under Section 68. Only the estimated commission income was retained for taxation.
ITAT Surat Upholds Taxation of Only Commission Income, Deletes ₹3.15 Crore Addition
The ITAT Surat has upheld the taxation of commission income generated from cheque discounting activities while deleting a ₹3.15 crore addition made under Section 68 regarding unexplained cash credits. The Tribunal found that the bank transactions were consistent with the assessee's legitimate cheque discounting business.
In its judgment, the ITAT clarified that Section 68 could not be applied to the entirety of the cheque discounting business and emphasized the need for a careful examination of business activities against the framework of cash credits. The court upheld only the estimated commission income, ruling that this portion was taxable while discarding the larger amount attributed to vague cash credits.
This decision reinforces the need for practitioners to support claims of business income robustly, ensuring they segregate legitimate earnings from questionable cash credits clearly.
Citations
- ITAT Surat (2026) ITAT 78
