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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: SRI SANJAY GARG & DR. MANISH BORAD
order
: December 11th, 2023 ORDER
Per Manish Borad, Accountant Member:
The captioned appeals filed by the Revenue pertaining to the Assessment Years (in short ‘AY’) 2010-11 & 2011-12 are directed against separate orders passed u/s 250 of the Income Tax Act, I.T.A. Nos.: 487, 488, 489, 490/KOL/2022 Assessment Year: 2010-11 & 2011-12 Ritu Saraf. 1961 (in short the ‘Act’) by ld. Commissioner of Income Tax (Appeals)- NFAC, Delhi [in short ‘ld. CIT(A)’].
In the instant appeals filed by the Revenue, two relate to quantum addition for AY 2010-11 & AY 2011-12 and the remaining two are against the deletion of penalty u/s 271(1)(c) of the Act. We will first take & 489/KOL/2022 and since the issues raised are identical, we will take up the grounds for AY 2010-11 which reads as follows: “(i) That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by AO to the tune of Rs.18,06,22,150/- as undisclosed income of the assessee for the A.Y. 2010-11, ignoring the direct and circumstantial evidence brought on record by the Assessing Officer to establish that the entire amount so deposited in the bank account of the assessee is her undisclosed income for the A. Y. 2010-11. (ii) Whether on the facts and circumstances of the case and in law the order of the Ld. CIT(A) suffers from perversity as it ignores the facts brought on record by the Assessing Officer establishing the fact that the assessee has not discharged the burden of proof lies on her with the aim to evade taxes due. (iii) The appellant craves leave to add further grounds or alter the grounds at the time of hearing.” 3. Brief facts of the case as culled out from the records are that the assessee is an individual earning income from other sources. She did not file her return of income for AY 2010-11. Information was received by the AO that during the year there is a huge cash deposit of Rs. 18.06 Crore in the Savings bank account. Ld. AO issued notice u/s 148 of the Act dated 29.08.2013 which was duly served upon the assessee on 19.09.2013. During the course of assessment proceedings, the assessee along with her elder brother .: 487, 488, 489, 490/KOL/2022 Assessment Year: 2010-11 & 2011-12 Ritu Saraf. appeared and recorded the statement on oath stating that she earns income from tuition and she opened the account on the advice of her elder brother Mr. Piyus Saraf. She was not aware about the transactions made in her account and she only used to sign blank cheques and give them to her elder brother. Ld. AO noticed that in the bank account huge cash has been deposited and cheques have been issued to various parties. On the subsequent dates of hearing, the assessee did not appear in person or through her Authorized Representative. Ld. AO had no option except to frame the best judgment assessment u/s 144 of the Act and added the total cash deposit in the bank account at Rs. 18,06,22,150/- to the income of the assessee. 4. Aggrieved, the assessee preferred appeal before ld. CIT(A) and submitted that the alleged cash deposit in the bank account is not her income and her bank account has been used by way of depositing the cash and issuing the cheques to various beneficiaries. Prayer was made that at the most commission income ranging from 0.1% to 0.15% may be added in the hands of the assessee. Ld. CIT(A) based on the decisions referred by ld. A/R of the assessee partly allowed the appeal and sustained the addition only to the extent of 0.15% of the total cash deposits made during the year. 5. Aggrieved, the Revenue is now in appeal before this Tribunal. Ld. D/R submitted that there is no explanation by the assessee about the source of cash deposited in the bank account and the assessee has failed to discharge her onus to explain the source of I.T.A. Nos.: 487, 488, 489, 490/KOL/2022 Assessment Year: 2010-11 & 2011-12 Ritu Saraf. the said sum nor the assessee has filed any details about the beneficiaries and therefore, the addition made by the AO deserves to be confirmed. Written submissions filed by the Revenue are as follows:
Kindly refer to the above subject and a direction to the effect that a view should be shared with the Hon'ble Bench as regards properly determining the beneficial ownership of the said bank deposits totalling Rs. 18,06,22,100/- and Rs. 7,72,30,197/- in course of the hearing on 04/05/2023 for the A.Y. 2010-11 and 2011-12 respectively. The additions of the above amounts were made in the hands of the assessee as her undisclosed incomes for the respective years. From the facts of the case and arguments put forward on our part, it is evident that the 'onus' clearly lies with the appellant to prove that she was not the beneficiary of the credits in question as her AR was trying ague during the hearing. The assessee's contention before the AO by way of the sworn statement is that she had her bank account opened at the instruction of her elder brother Shri Piyus Saraf, that she was not aware of the transaction happening in her said account and that she only used to sign the blank cheque books under his instruction. Shri Piyus Saraf, in turn, stated in his statement u/s 131 that the use of his sister's account was done at the instance of one Shri Rajesh Agarwal, a distant relative on the assurance of some monetary consideration in cash. No proof to that effect was made available to the AO and the notice u/s 131 to Shri Rajesh Agarwal through the Inspector could not be served as well, because he (Shri Agarwal) had reportedly left the address long back. There was non-compliance on the part of the assessee, both, vis-a-vis responding to Section 148 and Section 142(1) notice and also the 2(two) show-cause notices. The assessee also failed to produce Shri Rajesh Agarwal before the AO. The additions as mentioned above followed and the penalty u/s 271(1)(c) of the I.T. Act was levied for Rs. 5,57,10,274/- and Rs. 2,37,10,662/- for the Assessment Years 2010-11 and 2011-12 respectively which is the subject matter of the appeal before the Hon'ble ITAT. .: 487, 488, 489, 490/KOL/2022 Assessment Year: 2010-11 & 2011-12 Ritu Saraf. Much as the department strongly believes in the fact of the assessee having squarely failed to discharge her primary 'onus' to disprove the additions and the consequent penalties (levied) in her hands with documentary evidence and proper compliance, in which case the AO's actions are proved correct, if the Hon'ble 'B' Bench feels that any point still remains to be examined to determine the beneficial ownership of the said bank credits without any iota of doubt, the file may, perhaps, be restored back to the AO. Without prejudice to the above, it is respectfully submitted that the department deems the action of the AO as correct on the facts of the case and that the Ld. CIT(A) is manifestly wrong to apply 0.15% of the total cash deposits as the assessee's commission on which the penalty should be accordingly levied according to him without the support of any evidence.
On the other hand, ld. Counsel for the assessee submitted that the assessee is a student and also earning income from tuition. She has no means to earn the huge sum added in her hands. She has believed her brother who has misused the bank account for the purpose of providing accommodation entries. Ld. CIT(A), considering that the assessee is engaged in providing accommodation entries, has rightly sustained the addition only to the extent of commission income earned for carrying out such accommodation entries through her bank account. Reference was also made to various judgments referred by ld. CIT(A) for partly allowing the assessee’s appeal and filing the addition at the rate of 0.15% to the cash deposits.
We have heard rival contentions and perused the records placed before us. Revenue is in appeal for AY 2010-11 & AY 2011- 12 against the finding of ld. CIT(A) giving relief to the assessee by sustaining the addition only to the extent of 0.15% of the total cash deposits of Rs. 18,06,22,150/- for AY 2010-11 and Rs. .: 487, 488, 489, 490/KOL/2022 Assessment Year: 2010-11 & 2011-12 Ritu Saraf. 7,72,30,197/- for AY 2011-12. We observe that the assessee who is an individual and source of her income is from tuition has claimed that her brother misappropriated her bank account and utilized it for providing accommodation entries and in this process, cash was deposited in her bank account and cheques were issued to various parties. The bank account is held by the assessee with Axis Bank. A total sum of Rs. 18,06,22,150/- and Rs. 7,72,30,197/- has been deposited in cash in her bank account during AY 2010-11 & AY 2011-12. Perusal of the bank statement reveals that immediately after depositing the cash, cheques have been issued to various persons of which few are namely Shiv Ratan Saraf, SDS Commerce, Ramesh Tiwari, Linkpoint Commercial (P) Ltd. etc. Majority of the alleged sum has been given through cheque to SDS Commerce and Linkpoint Commercial (P) Ltd. During the course of assessment proceedings, the assessee failed to file any concrete evidence for the source of the alleged sum nor any information was provided about the beneficiaries to whom the alleged sum has been paid. It remains a critical situation that a person who has no regular means of earning has deposited a huge sum in crores in her bank account and payment through a banking channel has been given to few parties and the assessee failed to file any detail, as a result, ld. AO has made the addition. However, when the matter travelled before ld. CIT(A), he has stated that the assessee is an entry provider and based on the judicial precedence has given substantial relief to the assessee by sustaining the addition only to the extent of earning commission income of 0.15% of the alleged sum. .: 487, 488, 489, 490/KOL/2022 Assessment Year: 2010-11 & 2011-12 Ritu Saraf.
Now, such application of 0.15% rate as commission income could have been justified in case the assessee had been an entry provider and in the bank account there had been transfers through banking channel both inflow and outflow and complete details of all had been maintained. In other words, if in a particular bank account sum is received through banking channel and immediately thereafter, the cheques are issued then in such cases a person may be treated as entry provider depending upon the facts and circumstances of the case. But in the instant case, the facts are different. The source of credit in the bank is not through any banking channel or RTGS or cheque but it is purely a cash deposit and immediately after deposit of cash cheques have been issued to selected parties around the year. We are surprised to notice that ld. CIT(A) failed to take note of this vital fact from the bank statement where it is clearly visible that major portion of the alleged sum has been given to two concerns namely M/s. SDS Commerce and M/s. Linkpoint Commercial (P) Ltd. It was incumbent upon ld. CIT(A) who is also having co-terminus power to that of the AO to have thoroughly examined this aspect and should have initiated necessary enquiry about the whereabouts of M/s. SDS Commerce and M/s. Linkpoint Commercial (P) Ltd. and other persons named in the bank statement. In today’s time when all the bank accounts are computerised and is a time of anywhere banking, the information about M/s. SDS Commerce and M/s. Linkpoint Commercial (P) Ltd. could have easily been taken out. Once these details are available about these two concerns along with other beneficiaries, information should have been called as to