Taxed Twice on Cash? ITAT Says Only Commission Is Taxable

Mumbai's Income Tax Appellate Tribunal ruled that large cash flows passing through a business cannot be taxed twice. If you handle others' money as an agent or courier, only your actual commission or profit is taxable — not the full amount you receive and pass on.

Here's what happened: ITAT Mumbai ruled that ₹381 crore in cash receipts and payments by an angadia firm could not be fully taxed as unexplained income under Sections 69A or 69C of the Income Tax Act.. The tribunal held that pass-through cash — money received from senders and delivered to recipients — belongs to clients, not the agent, so taxing the full amount is double taxation.. Only the commission or reasonable fee actually earned by the angadia for the service is taxable, and the amount must be determined based on evidence, not arbitrary estimation..

What you should do: Document every cash receipt and payment if your business handles client funds — maintain a clear paper trail showing money in equals money out for agency or collection work.. Separate your commission or fee income in your books from pass-through amounts; never mix client funds with your own revenue in bank or cash records.. If you receive a Section 69A or 69C notice on large cash flows, consult a chartered accountant immediately and cite the economic-reality principle — full pass-through amounts are not your assessable income..

Under Indian tax law, a cash entry in your books is taxable only if it represents YOUR income or YOUR unexplained expenditure — an agent who can show matching outflows to the same client funds has a strong legal defence against addition.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.