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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: SHRI CHANDRA MOHAN GARG & LAXMI PRASAD SAHU
This is an appeal filed by the assessee against the order of the CIT(A),1, Bhubaneswar dated 24.9.2018 for the assessment year 2011-12.
The only effective grievance raised by the assessee is that the ld CIT(A) erred in confirming the addition of Rs.51,49,900/- u/s.69 of the Act as undisclosed income.
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The facts of the case are that as per AIR information, the assessee maintains one S.B A/c. No.078001500145 with ICICI Bank, Nayagarh and the total cash deposits in the said account during the relevant previous year is Rs.51,49,900/-. Before the AO, it was the submission of the assessee that the cash deposits were sales proceeds and realization of debtors.
Accordingly, the AO treated the cash deposits as undisclosed turnover and estimated the profit at 8% of Rs.51,49,900/- u/s.44AD of the Act.
However, subsequently, before the Investigation Wing, the assessee had stated that the bank account was used by one labour contractor and the persons migrating from villages in Nayagarh used to deposit money through agents in J&K and Surat.
Thereafter, the ld PCIT initiated revisionary proceedings u/s.263 of the Act on the ground of contradictory statements by the assessee before the AO on this issue. Accordingly, the Pr CIT set aside the issue to the file of the AO to examine the above issue afresh and do the assessment order denovo.
In pursuance to the direction of ld Pr. CIT u/s.263 of the Act, the Assessing Officer framed assessment u/s.263/144 of the Income Tax Act, 1961 and made the addition of Rs.51,49,900/- u./s.69 of the Act as the assessee failed to explain the source of cash deposit in his undisclosed bank account, which was confirmed in first appeal on the ground that the assessee failed to explain the source of cash deposit.
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We have heard the rival submissions and perused the relevant materials placed on record of the Tribunal.
Ld A.R. of the assessee furnished before us an affidavit sworn by Shri Pramod Kumar Sundara, labour contractor, who used to supply labours to Surat and Jammu & Kasmir, stating that his friend, the present assessee has opened a bank account in ICICI Bank, for deposit of amount by the labourers at the respective places and withdrawn the same at Nayagarh for onward distribution of the same to the relatives of the labourers. Ld A.R. of the assessee also furnished the bank statement for the period from 1.4.2010 to 31.3.2010 of ICICI Bank A/c No.078001500145 from where, it is clearly discernible the cash deposit and withdrawals on different dates.
He also submitted that the opening balance in the bank account as on 1.4.2010 was Rs.47,572/- and the assessee usual get the amount withdrawn from the said bank account by using ATM on different dates to pass on the amount to the different family members. It was also submitted that the assessee submitted that the addition could not be made in the hands of the assessee only due to the fact that the assessee allowed cash deposits in his bank account by the said persons who were not having bank account. Where the AO was having any doubt about the creditworthiness and their source, he could have taken the action in their individuals’ hand and not in the hands of the assessee. Ld A.R. also contended that alternatively, the amounts have been deposited and withdrawn
P a g e 3 | 7 08/CTK/201 9 Assessm ent Y ear : 2 01 1-1 2 continuously, therefore, benefit of peak credit, which was Rs.56,958/- on 17.2.2011 may be given to the assessee in view of affidavit of Shri Pramod Kumar Sundara.
In reply, ld D.R. submitted that the benefit of peak credit theory could not be allowed since the assessee had accepted that the said cash deposits were not his own but made by other persons. Ld D.R. furnished a Third Member decision of ITAT Agra in the case of Smt Renu Agrawal vs ITO, (2012) 22 TAXMANN.COM 94 (Agra)(TM), wherein, it is held that where the assessee failed to prove source of amount credited in his bank account, the addition made by the AO has to be confirmed. He submitted that in this case the assessee has miserably failed to prove the source of cash deposits continuously on different dates and also made contradictory statement before the Income tax Departments regarding the cash deposits.
Hence, it was urged that the addition made by the AO and confirmed by the ld CIT(A) be confirmed.
Ld D.R. also contended that the affidavit of Shri R.K.Sundara has not been submitted before the AO and ld CIT(A), thus cannot be considered by the Tribunal at this belated stage without confronting to the AO and it requires verification and examination at the end of the AO only.
On careful consideration of the rival submissions, first of all, we may point out that there is no dispute regarding the bank account with ICICI
P a g e 4 | 7 08/CTK/201 9 Assessm ent Y ear : 2 01 1-1 2 bank in the name of the assessee. From the bank statement, it is observed that the deposits in cash have been made at places outside Odisha i.e. at Surat and Jammu & Kashmir. The amounts have been withdrawn in cash usually from the ATM at Odisha. This lends credibility to the claim of the assessee that the amount deposited on different dates have been withdrawn to be pass on to different relatives of the labourers, which is supported by affidavit furnished by the friend of the assessee Shri Pramod Kumar Sundara. Thus, Shri Sundara has owned the impugned bank account. From relevant paras 4.1 to 4.6 of assessment order, we find that the AO has stated that he issued notice u/s.142(1) of the Act on 11.4.2016 but there is no mention therein that it was served on the assessee and other several notices were also served. In absence of specific mention regarding the service of such notices, we safely presume that the assessee was not allowed due opportunity of hearing for explaining and substantiating his stand before the AO.
Definitely, we are in complete agreement with the contention of the ld D.R. that the burden to prove the source and credibility of deposits and statement of the assessee before the Investigation Wing was on the assessee but opportunity to discharge this burden has to be given to the assessee by the AO. Therefore, in the totality of the facts and circumstances of the case, we are of the view that the assessee should be given an opportunity to discharge the burden lay on his shoulder that the P a g e 5 | 7 08/CTK/201 9 Assessm ent Y ear : 2 01 1-1 2 impugned account belongs to Shri Pramod Kumar Sundara, which has not been given by the AO. Therefore, in our considered view, ends of justice would meet if the assessee is provided due opportunity of explaining his stand and explanation given before Investigation Wing and to substantiate its claim that the account belongs to Shri Sundara alongwith supporting evidence. Hence, this sole issue is restored to the file of the AO for verification, examination and adjudication of the entire explanation, stand and contention of the assessee regarding his grievance including the benefit of peak credit on the issue of cash deposits of the impugned bank account of the assessee and explanation offered by the assessee before the Investigation Wing. Needless to say, that the AO would allow due opportunity of hearing to the assessee to explain his case by way of supporting documents, if any.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on 12 /10/2020.