Loading judgment…
Facts
The assessee's case was selected for scrutiny due to high-volume transactions (Rs. 16.66 crores) in an Axis Bank account linked to his PAN, leading the AO to make an addition under Section 69A as unexplained money. The assessee claimed the account was fraudulently opened and operated by a third party, Mr. Nilesh Dedhia, using his PAN without his knowledge, and he had filed a complaint with the EOW. The CIT(A) confirmed the addition, noting the assessee's lack of follow-up on the EOW complaint.
Held
The Tribunal admitted additional evidence (EOW complaint and police reply) and found that lower authorities failed to adequately investigate the assessee's fraud claim or the individuals implicated by the assessee. The Tribunal held that the assessee cannot be asked to prove a negative fact and that the revenue should have investigated the named persons. Consequently, the case was remitted back to the CIT(A) for a detailed enquiry, including issuing notices under Section 133(6) to concerned parties, and then to adjudicate the addition.
Key Issues
Whether an addition under Section 69A is justified for credits in a bank account claimed by the assessee to be fraudulently operated by a third party, and the extent of investigation required by tax authorities in such cases.
Sections Cited
69A, 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY, JM &
: Shri Aditya Ramchandran, AR Appellant /Assessee by Revenue / Respondent by : Shri Alok Kumar, CIT-DR Date of Hearing : 30.01.2025 Date of Pronouncement : 04.02.2025 O R D E R
Per Padmavathy S, AM:
This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi [for short 'the CIT(A)] dated 24.09.2024 for the AY 2018-19. The assessee raised the following ground of appeal:-
Sachin Ramesh Bhinde “1. On the facts and circumstances of the case and in law, the CIT (A) erred in confirming the addition of ₹ 16,66,23,021 made by the Assessing Officer under Section 69A by considering the total of deposits in the bank account opened in the name of the appellant but which has been operated by somebody else as unexplained money of the appellant.”
The assessee is an individual and filed the return of income declaring a total income of Rs. 2,71,670/-. The assessee's case was selected for complete scrutiny for the reason that there have been transactions of high volume in the bank account held in the name of the assessee with Axis Bank Ltd. The Assessing Officer (AO) issued various notices to the assessee calling for details pertaining to the entries in the Axis Bank A/c. Since the assessee did not file any response, the AO concluded the assessment by treating the amount of Rs. 16,66,23,021/- which is credited to the Axis Bank A/c as addition under section 69A of the Income Tax Act, 1961 (the Act). Aggrieved the assessee filed further appeal before the CIT(A). Before the CIT(A), the assessee submitted that the impugned Bank A/c which is opened in the name of M/s Vineet Enterprises though linked to assessee's PAN Number, the assessee is in no way connected to the opening of the said Bank A/c. The assessee further submitted that his name and PAN has been illegally used to open and transact the impugned Bank A/c and that he is not aware of the existence of such a Bank A/c. The assessee also submitted that from the detailed obtained from Axis Bank, he has come to know that one Mr. Nilesh Dedhia has handled the impugned Bank A/c with Axis Bank fraudulently without assessee's knowledge. The assessee brought to the notice of the CIT(A) that he has filed a complaint with Economic Offence Wing (EOW) on 04.10.2021 against various individuals who are involved in the opening and operation of the impugned Bank A/c including Mr. Nilesh Dedhia. Accordingly the assessee prayed that the addition under section 69A be Sachin Ramesh Bhinde deleted. The CIT(A) however did not accept the submissions of the assessee and confirmed the addition by holding that “5. Findings: The matter is taken up for adjudication as hereunder: The Grounds of appeal, the submissions of the assessee, the facts and circumstances of the case and the case laws adduced by the assessee have been carefully considered. The facts of the case are that the assessee was found to have an Account No.- 914020007095788 in respect of Vinit Enterprises (PAN-AMNPB9795J) bearing Customer Id-851623669 in Axis Bank Ltd. During the year under consideration, the assessee credited Rs.3,82,000/- in cash to the account, deposited Rs. 16,66,23,021/-therein and made a cash withdrawal of Rs.50,04,000/- from this Bank Account. During assessment, the assessee did not comply with show cause notices/opportunities in respect of the additions contemplated. An addition of Rs. 16,66,23,021/- was made to income on this count. In appeal, the assessee has, in his submissions, claimed that the assessee has not being using the said bank account and has alleged that he is a victim of some fraud perpetrated by his previous employer, an employee of his previous employer, the branch manager of Axis Bank, Mulund West Branch and other staff of the said bank branch and that he has filed a complaint with EOW on 04.10.2021 against his previous employer, an employee of his previous employer, the branch manager of Axis Bank, Mulund West Branch and other staff of the said bank branch. This is the sole reason given for opposing the impugned addition. The contentions of the assessee have been considered. It is noted that the assessee has submitted a copy of aforesaid application made by him to Sr. Police Inspector, EOW Mumbai dated 02.10.2021 received by EOW on 04.10.2021. However, even in response dated 29.04.2024 to notice issued in appeal proceedings, assessee has not mentioned anything at all about either the action taken by the EOW on his application, nor the progress made by the EOW on his application, nor the efforts made by him to pursue the application made by him with the EOW in the two and a half long years since the application was made by him to EOW, Mumbai. It is clear that the assessee has no interest in the application made by him to EOW Mumbai. Such indifference to the application made by himself and such indifference to the outcome of his application clearly indicates that the so called application Sachin Ramesh Bhinde made by him is nothing but a red herring created by him to obfuscate the issue. Any reasonably prudent person would have followed the application and at least sought to know what action had been taken on his application in two and a half long years of filing the application. However, assessee has shown by his utter inaction that he remains utterly uninterested in his very own application. Hence, applying the test of preponderance of probability which is the touchstone of standard of proof in civil proceedings which proceedings under the Income Tax Act are, no credence can be given to his bland averment sans any evidence that the assessee has not been using the said Bank account and has been the victim of some alleged foul play at the hands of his previous employer and the employee thereof and the branch manager of Axis Bank, Mulund branch and other staff of the said Bank branch. This view is fortified by the facts that, on the other hand, the PAN linked with the account is of the assessae, the address given therein is of the assessee as per the assessee's own admission and prima facie, there is no reason to indicate that the said bank account does not belong to the assessee. As a result, the Grounds of Appeal are dismissed.”
The ld. AR reiterated the submissions made before the CIT(A). The ld. AR also submitted additional evidences in terms of the copies of complaint filed by the assessee before the EOW and the communication received from the Senior Inspector of Police as a response to the complaint filed by the assessee. The ld. AR further submitted that these documents could not be filed before the CIT(A) for the reason that the copies were not available with the assessee and that the reply from Senior Inspector of Police was received subsequently the order of the CIT(A). Accordingly, the ld. AR prayed for admission of additional evidences. On merits the ld AR submitted that the assessee is not aware of the existence of the bank account and came to know of the same only during the assessment proceedings. The ld AR further submitted that the assessee has filed the complaint with EOW once he came to know of the bank account fraudulently opened using assessee's personal details. Accordingly the ld AR argued that the assessee has discharged his onus of proving that the account is not owned by him and that the assessee cannot be asked to prove a negative fact.
Sachin Ramesh Bhinde 4. The ld. DR on the other hand vehemently argued that the complaint filed by the assessee before EOW is subsequent to the initiation of assessment proceedings and therefore is an afterthought. The ld. DR further submitted that the assessee has not pursued the complaint filed and therefore the CIT(A) has righty confirmed the addition.
We heard the parties and perused the material on record. With regard to the addition made towards credits in the Axis Bank A/c, the additional evidences now produced go the root of the issue and the core reason for the lower authorities sustaining the addition. For a proper adjudication of the issue and for substantial cause, the additional evidence is admitted and taken on record. Before proceeding further it is relevant to take note of the following observations in the reply of Senior Inspector of Police:-
1) For the KYC of the disputed Axis Bank account as proof of your residence/identity, it was found that photocopies of 1) Ration card in the name of your grandmother, Smt Prabhaben Sundari Bhinde, 2) Your Aadhaar Card Ne 664890212675, 3) Your PAN card no, AMNPB9795J etc. have been submitted 2) The said Axis Bank Account was opened in the name of a proprietary firm, Vinit Enterprises, and that the office address of that firm is your residential address 3) Since the address given for opening the said bank account is your residential address, it has been found that the cheque book and other confidential documents of the bank have been sent to your address. 4) For operating the impugned bank account, the opponent Shri Nilesh Dedhiya's mobile number. 9224594424 and the e-mail id nishah21@gmail.com were given 5) In the said enquiry, you and your acquainted 1) Nesh Dednia 2) Ankush Dahiya 3) Prakash Dahiya and 4) Bhavin Shah's involvement in Sachin Ramesh Bhinde opening the said bark account has been found during preliminary enquiry.
On the perusal of the above, we notice that from the preliminary enquiry the Senior Inspector of Police has found involvement of the assessee and people against whom the assessee has filed the complaint in opening the Bank A/c. Further it is noticed that the Senior Inspector of Police has closed the case since no response or interest after 27.10.2021 from the assessee. We also notice that the CIT(A) has confirmed the addition made by the AO for the same reason that the assessee has not pursued the complaint filed before EOW leading to preponderance of probability against the assessee (refer to the relevant findings as extracted in the earlier part of this order). A combined perusal of the facts and the additional evidences filed before us, we notice that the assessee has not pursued the complaint filed before the EOW properly and the preliminary enquiry report of the Senior Inspector of Police does not support the assessee's claim that he is not aware of the opening and operation of the impugned Bank A/c with Axis Bank. Having held so, we notice that the addition has been made by the AO merely based on the fact that the account is linked to the PAN of the assessee and that the address mentioned in the bank account is that of the assessee and that the CIT(A) / AO have not taken any initiative to verify factually the claim of the assessee that the impugned Bank A/c has been opened and operated fraudulently. We see also see merit in the contention of the ld AR that the assessee cannot be asked to prove a negative fact. In our view the revenue ought to have taken necessary steps to examine contentions of the assessee against Mr. Nilesh Dedhia who is claimed to have opened the impugned account illegally. It is also relevant to notice that additional evidence submitted now by the assessee with the report of the Senior Inspector of Police has the details pertaining to the respondent of assessee's complaint Mr. Nilesh Dedhia including the residential address, phone number and Sachin Ramesh Bhinde the email ID which according to the ld AR supports the claim that the assessee is not aware of the opening of the impugned bank account. Since the report of the Senior Inspector of Police containing the details of Mr. Nilesh Dedhia and the findings of the preliminary enquiry was not submitted before the CIT(A), we think it fit to remit the appeal back to the CIT(A) for the purpose of conducting detailed enquiry based on the information available in the report and by issuing notice under section 133(6) to the concerned parties. The CIT(A) is further directed to take suitable action based on the findings and adjudicate the issue of impugned additions in the hands of the assessee in accordance with law. The assessee is directed to file the relevant documents before the CIT(A) and co-operate with the appellate proceedings. It is order accordingly.
In result, the appeal of assessee is allowed for statistical purposes.