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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI AMARJIT SINGH, JM
Assessment Year 2009-10 against the order of the learned Commissioner of income-tax (Appeal)-33, Mumbai [the learned CIT(A)], wherein the addition of ₹5,03,23,960/- deposited in the bank account of M/s PK Trading Company was added as income of the assessee as unexplained cash credit. Similarly, for Assessment Year 2010-11 ₹42,50,000/-, for Assessment Year 2011-12 ₹ 71,13,698/-, for Assessment Year 2012-13 ₹ 1,33,05,911/- and for Assessment Year 2013-14 ₹1,88,83,290/- is added under section 68 of the Act confirmed by learned CIT(A) by the same order.
For the sake of clarity, we take the facts for Assessment Year 2009-10 first. The fact shows that assessee is an individual showing income from business and income from other sources. He filed return of income on 31st July, 2009 at ₹1,41,030/-.
Case of assessee was reopened by issue of notice under section 148 of the Act on 31st March, 2016. Reasons recorded shows that:-
i. information is received from Deputy Director of income-tax (Investigation), Unit-8 vide letter dated 28th March, 2016, stated that in bank account of assessee with Union Bank of India in the name of M/s PK Trading Company, Gowalia Tank Branch, where in credit transaction of ₹5,03,23,960/- has taken place.
The return of income field by assessee is processed on 30th ii. December, 2010 at the same income.
In response, the above notice on 7th April, 2016 and 24th May, 2016 along with 05. copy of return of income already filed, requesting the same to treat return and response to above notice.
In response to the questionnaire about the transaction, on 26/9/2016, assessee submitted that i. he has not aware of such bank account opened by him in past and ii. he has never been proprietor of any concern with M/s PK Trading.
iii. he has not opened any bank account with Union Bank of India.
He is 10th passed and unqualified salaried person working as a sales iv. person in M/s Unicharm India Pvt. Ltd. since Financial Year 2011-12 and residing in Dombivli, since 2007. v. Prior to that he was also carrying of business of trading in confectionery & general items in small scale, vi. it is beyond his capacity to carry out such a huge transactions. vii. he is having savings bank accounts in in bank of India, Dombivli Branch and ING Vysya Bank Ltd. on 18th February, 2016, in response to summons under section 131 of the viii. Act before the Dy. Director of Investigation, Mumbai, he has stated the same thing.
The Assessing Officer issued notice under section 133(6) of the Act to the Branch Manager, Union Bank of India Gaondevi Branch on 5th October, 2016, calling for details of KYC, trade licenses, details of introducer, specimen signature and Xerox copies of cheques used for withdrawals. In response to that, the branch manager submitted copy of account opening, form of KYC details, statement of account delivery date and Xerox copy of specimen signature card.
Further issued letter to Senior Police Officer on 14th October, 2016, as well as 08. reminder dated 9th November, 2016, for copy of FIR. But no information was received.
Based on this, on 22nd November, 2016, show cause notice was issued. Show 09. cause notice states that as per KYC details received from Union Bank of India, assessee has submitted his photograph, copy of ration card in the name of father of the assessee where name of assessee appears, copy of PAN card and mobile bill. It was further stated that Union Bank issued a letter dated 18th January, 2008, addressed to M/s PK Trading, Room no. 51, second floor, Jiya Masum chawl, N M Joshi Marg, Lower Parel, Mumbai-400 013, which is residential address of the assessee. Further, the signature of the application form and other documents are same as signed on the PAN card. The Gaondevi police station did not confirm the filing of the FIR and therefore, Assessing Officer asked assessee that why the credit entries in the bank account of M/s PK Trading Company should not be added to the income of the assessee under section 68 of the Act. The Assessing Officer tabulated the credit entries from FY 2008-09 to FY 2012- 13.
Assessee submitted reply reiterating the same facts. Assessee further stated that same fraudulent third party has carried out the transactions in his name. The
The learned Assessing Officer once again tries to inquire the details. He issued summons under section 131 of the Act on 13th December, 2016, to M/s Yash Impex at the given address but the person present there Mr. Dilip Kumar Jain was ignorant of whereabouts of Yash Impex. Ld AO issued a letter to Senior Police Officer on 13th December, 2016, for copy of FIR. But no information was received. LD Assessing Officer issued summons to the bank manager and his statement was recorded on 19th December, 2016. The relevant questions are question no. 11 to 16 of his statement which are as under:-
11. I am showing you an account opening form along with KYC documents of Account No 352201010036448 of M/s PK Trading 5 | P a g e
Ans. I have gone through the papers shown to me and of the opinion that the above mentioned account was opened with our branch after following necessary procedures like obtaining account opening form duly signed by the party and the introducer and obtaining necessary KYC document ration card, PAN card, telephone bill, Letter of thanks was issued to actri account holder and introducer
Please go through the Xerox copy of PAN card and mobile bit submitted while opening the above referred account No 352201010036448 If you see the Xerox copy of the PAN card it is seen that the PAN has been attested by Union bank officer on 7 kg. 2007 whereas the account was opened on 18 January 2008 why there is a gap of nine months between attestation and opening the account?
Ans. The PAN card is attested on 7 April 2007 for any other purpose of the party and may have kept the Xerox copy of the attested PAN the same Xerox is submitted for opening the account. As far as telephone bill is concerned it pertains to the bill date 21 January 2007 which was 21 submitted for opening the account.
13. Please give details of the introducer of account of M/s PK Trading Ans. The introducer of this account is M/s. Yash impex proprietor Shri Satish Kundanmal Porwal who is owning PAN No AADPP9461D 14. Is the account of M/s Yash Impex proprietor Shri Satish Kunnanme Porwal operative as on date?
Ans. No. the account is inoperative and closed on 8 September 2009 am providing the account opening form of M/s Yash Impex
15. Please confirm whether this account is opened in your branch by Shri Nayan Arvind Lalan or someone else has opened the account in his name.
Ans. From the records available in the branch, I am of the opinion that the account was opened personally by Shri Nayan Arvind Lalan as proprietor of M/s. P. K. Trading Signature of Shri Nayan Arvind Lalan on the PAN card and the account opening form appears to be identical. The above account of M/s PK Trading was operated for a period of five years and numerous cheques are presented for payment in this account during this period which have been passed by several officers working in the branch and the signature variation was never reported. Further I would like to state that I will submit the copies of few cheques drawn on the account for further confirmation.
12. Thereafter learned Assessing Officer made addition as per paragraph no. 14 to 17 as under:-
From the above statement inference can be drawn that As per the procedure for opening a new account with the bank, Mr. Nayan Arvind Lalan has to submit his details such as photograph, identity proof. specimen signature card etc personally.
No third party can open account in any other name.
The signature on the account opening form and PAN card should be identical.
As regards attestation on PAN card copy it is explained by the manager that assessee must have got it attested for some other purpose from the bank and submitted the Xerox copy of the same for opening this account also.
Further, after obtaining PAN number of the introducer of the account Shri Satish Kundanmal Porwal from the manager, a summons u/s. 131 of the Income Tax Act. 1961 was issued to the Shri Satish Kundanmal Porwal, proprietor of M/s. Yash Impex to appear before the undersigned on 21-12-2016 to his residential address. Shri Satish Kundanmal Porwal did not attend on the said date. On verification of the address of Shri Satish Kundanmal Porwal it is gathered that Shri Satish Kundanmal Porwal and Shri Nayan Arvind Lalan are residing in the same building i.e. Zia Masum Chawl, Shri Nayan Arvind Lalan is residing on 2nd floor and Satish Kundanmal Porwal is residing on the 1st floor of the same chawl and it is very much possible that Shri Satish Kundanmal Porwal is very much known to Shri Nayan A Lalan and introduced him to open the account in Union Bank of India.
16. The simple device of opening and operating the bank account with Union Bank of India and further not producing the substantial evidence of filing FIR with police or further proceeding regarding the said case and his inability to produce Shri Satish Kundanmal Porwal before the police, bank manager or before the undersigned can be viewed as a way out to escape from the tax liability As such the assessee simply made baseless allegations and challenged the re-opening of assessment. It is very much clear that the case was
17. During the year under consideration, the assessee has derived Income from Salary and other sources.
18. Subject to the above remarks, the Total Income of the assessee is computed as under:-
I. Income as computation 1,41,030/- Add Unexplained Cash Credit U/s. 68 5,03,23,960/- (as discussed in Para 16 above)
TOTAL INCOME 5,04,64,990/-
Assessed under section 143(3) r.w.s. 147 of the Income-tax Act, 1961. Interest under section 234B and 234C of the Act is charged as per law. The tax computation sheet ITNS 150 forms part of this order and a copy of the same are enclosed herewith. Issue demand notice and challan accordingly. Issue Penalty Notice u/s. 271(1)(c) of the Income Tax Act, 1961.
Thus, the addition of ₹5,03,23,960/- was made in the hands of the assessee.
“6. I have perused the facts highlighted in the assessment order and the written and oral arguments made during appellate proceedings. My observations are as under.
6.1 During the course of appellate proceedings, the submission made by the appellant has been reproduced above. In addition to the above, the appellant in the statement of facts has mentioned that even the telephone nos. provided in the account opening form belongs to Mr. Satish Kundanmal Porwal, therefore definitely such voluminous transactions must have been made by him and even the banking authorities must have informed on day to day basis about the cash deposits and withdrawals to Satish K Porwal.
6.2 The appellant has submitted that he has no connection with the said bank account He has pointed out the involvement of introducer Mr. Satish Kundanmal Porwal, proprietor of M/s Yash Impex But he could not explain as to how documents of address proof and identity proof belonging to the assessee for opening bank account could have gone to Mr. Porwal. Factually, it does not seem correct that the appellant came to know about the said bank account after the DDIT (Inv.) issued summons and examined him as Union Bank of India at the time of opening the bank account, had issued letter dated 18.01.2008 informing customer no account Id., and account opening date addressed to M/s. P.K Trading, room no. 51, 2nd floor, Jiya Masum Chawl, N.M.Joshi Marg, Lower Parel, Mumbai- 400013 which was residential address of the assessee.
6.3 The appellant had not explained whether he had any business or other relation with Mr. Porwal The account was operated for a 10 | P a g e
6.4 The Chief Manager of UBI in his statement has stated categorically that no person can open account in name of any third party in his branch. He also stated that signature of the appellant on his PAN card and account opening form seems to be identical. For opening the bank account, the assessee had submitted his photograph, copy of ration card no. 020605 in his father's name wherein his name appears at sr. no. 3, copy of his PAN Card no. ACDPL5255B, mobile bill for his mobile no. 9820997621.
6.5 As stated by the appellant, Ld. Metropolitan Magistrate has directed the police to conduct enquiry vide order dated 13.12.2017. Investigation of Police is under progress and next date before Metropolitan Magistrate, Girgaon is fixed on 29.11.2018. The AR of the assessee was asked to tell about the possible time period by which the criminal case is likely to be completed However, he had no definite answer. Therefore, it is felt that the time taken to decide the criminal case may take longer and the present appeal against an order passed by the AO where an outstanding demand has already been raised should be disposed of. The AR did not make request for further adjournment on the last date of hearing on 16/11/2018 when the case was finally heard.
6.6 Considering the totality of the facts and circumstances of the case, in my considered opinion, the bank account was opened and operated by the appellant himself. Therefore, the order of the AO making addition arising out of transactions in the aforesaid bank account with Union Bank of India in the hands of the assessee is confirmed. As no sub quantum of addition has been made by the
15. Assessee , aggrieved, has preferred the appeal before us.
We have heard Ms, Ruchi M Rathore on behalf of the assessee and Mr. CT Mathews, Senior Departmental Representative. During the course of hearing Assessee has also raised two additional grounds as under:-
“(i) Ld. CIT(A) has erred in upholding the addition made by the Assessing Officer u/s 68 in respect to credit in bank account disregarding the jurisdictional High Court decision in the case of Bhaichand H Gandhi (141 ITR 67) (Bom) in which it is held that "The pass book supplied by the back to the assessee could not be regarded as a book of the assessee that is a book maintained by assessee or under his instructions"
Judgments relied CIT v/s Bhaichand H Gandhi (141 ITR 67)(Bom) Smt. Manasi Mahendra Pitka v/s ITO (ITA No. 4223/Mum/2015 dated 12.08.2016.
(ii) Ld. CIT(A) has erred in upholding the addition made by the Assessing Officer u/s 68 in respect to credit in bank account though cross examination of the bank manager was not given by the Assessing Officer though his statement is relied upon. Judgments relied
CIT v/s Odeon Builder Pvt. Ltd (2020) 17 SCC 311”
The learned Departmental Representative vehemently objected to the additional ground. However, as these are legal grounds, does not require any further facts to be investigated, goes to the root of the matter, we admit the same.
Coming to the first Additional ground that whether Provisions of Section 68 of the Act can be applied or not in deposits in the bank statements. We find that the issue is squarely covered against the assessee by the decision of Hon'ble Bombay High Court in case of shri Arunkumar J. Muchhala Vs. CIT 319 ITR 256 (Bom), wherein Hon'ble Bombay High Court has held that where huge amounts credited to the bank account of the assessee, source of which is not explained, the provision of section 68 of the Act are applicable. While deciding so, Honourable High court also considered decision relied up on in CIT vs. Bhaichand H. Gandhi (supra) in paragraph no. 7. In view of this, we dismiss additional ground raised.
For the time being, we do not adjudicate the additional ground no.2, the reasons will follow in the subsequent findings.
Coming to the addition on the merits of the case, we found that assessee is a person who has filed ROI at very small sum compared to the amount of additions made. Genesis of addition is a bank account was found in the name of M/s PK Trading, whose proprietor is found to be assessee himself, wherein huge amount of sum were deposited and withdrawn . Bank account was opened with Union Bank of India and for that purposes his PAN card,
Bank accounts where the above sum is deposited is also placed before us at page no. 90 onwards. Saliet features of this bank account is bank account is operated from 18th June 2008, to 18th October, 2016. i.
ii. Surprisingly, bankers do not know about business of P K Trading co. iii. Most of the cheques credited in the bank account are of denomination of ₹1 lacs, iv. All cheques of denomination of Rs 1 Lakh, were credited in the bank account from CD 36046 A/c. v. On the very next day, Rs 1 lakhs is withdrawn through self cheques. vi. Whenever, there is a credit amount not received from A/c CD 36046, , on the next date the amount is given to Yash Impex by retaining the minimum balance in the bank account. on 4th April, 2008 a RTGS of ₹9,88,000/- was received from Diamond vii. Star International through Khand Bazar Branch of bank of Baroda , immediately thereafter on 5th April, 2008 ₹8,90,000/- is transferred to Yash Impex.
On 22nd January, 2008 ₹14,94,453/- was received from State Bank of viii. India and immediately same was transferred to CD 36046 A/c amounting to ₹13,35,000/-. x. Some of the high value transactions were also in the name of other persons mentioned, modus operandi of transferring from CD 36046 of ₹ 1 lach each in the xi. bank account credited and withdrawn in cash subsequently was carried out.
On 29th October, 2008, the credit of ₹39,61,000/- was received and on xii. 29th October, 2012, itself ₹26,60,000/- was transferred to Yash Impex. xiii. Like these transactions were carried out where sum is received and paid from Pushparatna Avenue.
Therefore, on examination of the bank account, from 18th October, 2008, xiv. to 18th October, 2016 sum of ₹9,81,61,540/- has been deposited in this bank account and same have been withdrawn on the date of credit or within a short span of time leaving a meager sum as balance of ₹125.57 paisa.
Assessee has filed the complaint before police. The assessee has also approached bank manager of Union Bank of India placed at page no. 14 onwards. All these request of the assessee remain unanswered.
Glaring fact remains that all the transactions mostly received in this bank account are transfer entries from CD A/c no. 36046 of the same bank. In answer to question no. 13, Chief Manager Union Bank of India in his statement dated 19th December, 2016, has categorically stated that introducer of this A/c is Yash Impex [proprietor Shri Satish Kundanmal Porwal] with a PAN No. AADPP9461D. Therefore, it is apparent that the beneficiary of this account 15 | P a g e
In the statement of the bank manager, in response to question no.15, he promised to submit copies of few cheques drawn in the account. However, no such evidences placed later on.
Ld AO found that assessee as well as Shri Satish Kundanmal Porwal, both were staying at the same building.
The learned Assessing Officer confirmed the addition for reason that assessee could not produce the evidence of filing FIR as well as inability of assessee to produce Shri Satish Kundanmal Porwal before police and bank manger before the Assessing Officer. The learned CIT (A) confirmed the addition for the reason stated in paragraph no. 6.5 of his order.
On careful consideration of the facts and evidences produced before us, this is a clear case of fraudulent transactions, may be with the connivance of the assessee along with several other persons. In this case real beneficiary is some one who has taken benefit of operating this bank account, who has introduced money in this bank account as well as taken away the credits. Here ownership of bank account is shown in the name of assessee but beneficiary is some other person. Thus, if income in this bank account does not belong to assessee, provision of Prohibition of Benami Transaction [ Prohibition] Act applies . Further, the evidences produced before us which are stated to be received from bank authorities also shows that in the specimen signature card, the signature of somebody (allegedly assessee) is obtained which has been approved by some officers. However, there is no reference in whose presence it was signed, how it is captured and who verified it. Reference is specifically to page no. 77 of the paper book. There are apparent infirmities in the dates which are mentioned on respective documents submitted for opening of the account. It is rather unusual
In paragraph no. 15, the learned Assessing Officer issued summons under section 131 of the Act to Shri Satish Kundanmal Porwal of M/s Yash Impex, however, he did not appear. It is also not known how the summons is issued and served upon him. Shri Satish Kundanmal Porwal is also having the permanent account number, which is mentioned by the Bank Manager in answer to question no. 13. There is no evidence whether the ld AO found whereabouts of that person and his return filing status.
Now before us assessee has submitted the copy of the complaint filed before the metropolitan Magistrate and also complaint before Commissioner of Police on 13th February, 2017. 17 | P a g e
We are also conscious of the fact that in this type of transactions, multiple economic offence laws are triggered. In some of such laws Ld Assessing Officer himself is authority to initiate/ or inform to respective authorities. and in some of the case those may be referred to the respective authorities. It is the bounden duty of the authorities to take the issues to its logical conclusion. We are surprised that bankers were oblivion to the facts about suspicious transactions carried out in the bank account. On examination of bank account, Ld DDIT, LD AO and LD CIT (A) also remained passive. Therefore, we are of the opinion that such transactions need to be probed further to curb such a malpractice.
In view of this, we set aside all these appeals back to the file of the learned Assessing Officer with following directions.
i. To obtain information of the above bank account such as the ownership of CD account wherefrom the cheques were received, signature of persons who withdrew cash of Rs 1 lakhs on more than 100 occasions, where and how cheque books were issued , who are the owners of the bank accounts where the sums are diverted, These evidences may be obtained by the learned Assessing Officer by use of powers under section 133(6) as well as under section 131 of the Act. The Assessing Officer may also use any other provisions of the law which he is empowered to . ii. to obtain the complete details of Yash Impex, whose permanent account number is available in the statement recorded by the Bank Manager. iii. The Assessing Officer may also invoke the provisions of section 147 of the Act in all those persons who entered in to these transactions, after issuing them notices , keeping in mind provisions of section 153(6) of the Act. iv. If the account is found to be operated by the assessee, the assessee is also duty bound to state whether he is an accommodation entry provider or owner of the money. No doubt, onus lies on the assessee. If the assessee gives names of the beneficiary as mentioned in the bank account, the addition deserves to be made in the hands of the beneficiary. v. If, on examination it is found that it is a case of money laundering , the Assessing Officer is further directed to take necessary action by reporting appropriately. vi. The Assessing Officer is further required to issue notice to all the concerned persons including the assessee prior to taking any action against those persons. Further, the Assessing Officer is directed to give proper opportunity of hearing to the assessee as well as other persons before deciding the issue. vii. Thereafter the ld AO may decide the issue on merits of the case
In the result, all these five appeals are allowed for statistical purposes..
Order pronounced in the open court on 28 .04.2022.