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Facts
The assessee, a salaried employee, received significant cash deposits in his bank account, which the AO treated as unexplained income. The assessee claimed the funds belonged to his employer company, which had ceased operations and was under investigation.
Held
The Tribunal held that the source of the cash deposits was explained as belonging to the employer company. However, the utilization of these funds and whether the assessee derived any personal benefit needed further verification.
Key Issues
Whether the cash deposits in the assessee's bank account were unexplained income, or if the source was adequately explained by the employer company's circumstances.
Sections Cited
69A, 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI. LAXMI PRASAD SAHU & SHRI. SOUNDARARAJAN K
Per Laxmi Prasad Sahu, Accountant Member :
This appeal filed by the assessee against Order passed by the CIT(A) vide Order dated 03.01.2025, on the following grounds of appeal:
2. Briefly stated, the facts of the case are that assessee Shri. Ram Kumar Tallah is an individual. He was a salaried employee working for M/s. Dreamz Infra India Ltd. He had filed return of income for Assessment Year 2014-15 on 15.02.2016 declaring total income of Rs.14,94,080/- comprising of salary income and interest received. Later on, as per information, it was noticed that the assessee has deposited cash in his bank account of Rs.2,81,96,500/-. He being a SP No.42/Bang/2025 (in Page 3 of 7 salaried employee, huge cash deposited was noted. Accordingly, notice under section 148 of the Act was issued to the assessee on 27.03.2021 with the prior approval from the competent authority. Accordingly, the assessee filed return of income. Thereafter, other statutory notices were issued to the assessee. Assessee filed written submissions. From the documents submitted, it was observed that the assessee has received salary from the said company till March, 2013. Subsequently, the credit reflected in high number of cash deposits are transferred through internet through other bank accounts. Large number of payments favouring Times of Money Limited apart from credit card payments amounting to Rs.58 lakhs were also observed. The salary was transferred from M/s. TGS- Ecommerce Pvt. Ltd. The total summation of credit and debit transactions since account opening is Rs.2,87,63,230/- and Rs.2,87,45,230/- respectively. Out of this cash deposits, withdrawals were Rs.2,62,74,090/- and Rs.3,69,00,800/- respectively. The assessee submitted reply and the relevant part is incorporated by the AO in his Order. The learned Counsel submitted that he utilized amount for real estate promotions and was paid to M/s. Google India(P) Ltd., and the invoice were raised by M/s. Google India (P) Ltd. The entire payments have been made through bank The assessee has other subsidary companies. The AO observed as under:
During the course of assessment proceedings, assessee stated that both M/s. Dreamz Infra India Ltd., and TGS-Ecommerce Pvt. Ltd., are shut down since 2016 and Directors are also absconding. No company’s staff are available to provide the details. CBI and other government investigating agencies have initiated investigation proceedings which is clear from the newspapers. Bank statements were submitted showing the payments to Google India (P) Ltd. Assessee submitted various submissions on different dates and it was not accepted by the AO observing that the assessee is unable to explain the source of cash deposits in the bank account of the assessee. Therefore, the entire cash deposits of Rs.2,81,96,500/- was treated as income under section 69A of the Act as unexplained money and added to the total income of the assessee.
Aggrieved from the above Order, assessee filed appeal before the First Appellate Authority (FAA). The FAA dismissed the appeal of the assessee.
Aggrieved from the Order of the FAA, assessee filed appeal before the Tribunal. The learned Counsel reiterated the submissions made before the lower authorities and submitted that assessee filed return of income in response to the notice issued under section 148 of the Act. Both the authorities below have wrongly noted that the assessee did not notice return of income under section 148 SP No.42/Bang/2025 (in Page 5 of 7 of the Act and she further submitted that the assessee’s bank account has been utilized by the company’s Director Mr. Sachin Nayak and Mr. Ayappa. The cash belong to the company which was received as advance towards purchase of the property. It is duly recorded in the company’s books. However, because of some fraud, the documents have been seized by the investigating agencies. The assessee has got only salary from the company and the cash deposits are also utilized for the sales promotion in the real estate sector of the company as well as its assets but because of financial crisis, the objects of the company could not materialize. The addition could not be made in the hands of the assessee. She submitted that it is very much clear from the bank statements that the amount has been paid to M/s. Google India Pvt. Ltd., Bangalore and paid for the company’s expenditure. The complete reconciliation was submitted alongwith bank statement to prove the payments. A sum of Rs.2,74,03,000/- has been paid from master credit card towards payment to Google India Pvt. Ltd., Times of Money Ltd., for Google adwords, Facebook, Go daddy, Live Chat on behalf of Dreamz group company and other details are also placed on record at Paper Book Page No.25. Assessee has not got any benefit. He received salary only from the company. Therefore, the addition could not be made in the hands of the assessee. She also submitted that the assessee is unable to get any documents from the companyto verify the entries made in the company’s books and company has been declared as a defunct company and there is no updation in the MCA portal. He relied on the submissions made in Pages 304 to 312 of the Paper Book.
On the other hand, learned DR relied on the Order of the lower authorities.
Considering the rival submissions, we noted that the assessee is an employee of the company M/s. Dreamz Infra India Ltd., and huge amount was deposited in his bank account. As per observation of the AO, the source of cash deposits could not be explained and hence added the amount deposited as SP No.42/Bang/2025 (in Page 6 of 7 unexplained money under section 69A of the Act. As per para No.7 of the Assessment Order noted supra, the AO has noted that the company used to receive partially / completely in cash / cheque, online transfer through customers through various bank accounts. The accounts team of M/s. Dreamz Infra India Ltd., and M/s. TGS-Ecommerce Pvt. Ltd., used to withdraw cash from all accounts for various payments in cash. Out of such withdrawals of cash, M/s. Dreamz Infra India Ltd., used to deposit certain amount into assessee’s bank account for the online promotion for immediate use. As per the above observation of the AO, there is no dispute that the cash deposits belong to the company and it is also undisputed fact that assessee has accepted and acted in utmost good faith for the company as an employee only. Therefore, as per the above observation regarding source of cash, the cash belongs to the company which has been deposited into the assessee’s bank account. Therefore, the source is explained. However, the payments made from the assessee’s bank account has not been examined whether the payments have been made for the company’s expenditures. We noted from the bank statements produced before us that in many circumstances the narration given in nabk statements in the name of Google.com Bangalore, The AO has considered only the cash deposits but the utilaziation of such deposits have not been examined to prove the real beneficiary of such cash deposits. Why the AO has added the cash deposits in the assessee’s bank account in the hands of the assessee entirely? Here in the case on hand, the source is completely explained as per observation of the AO. Noted supra. The assessee has filed details of expenditure incurred from his bank account which is placed at P.B. page No. 24 to 26 . If the AO was not satisfied he could have taken action against the company since the real owner of the cash deposited is company. Accordingly, we direct to the JAO(jurisdictional Assessing Officer) to verify the withdrawals and decide the issue as per law after giving reasonable opportunity of being heard to the assessee. We further directed to the JAO that if he finds that the assessee has not got any financial benefit from such cash deposits the JAO is directed to give SP No.42/Bang/2025 (in Page 7 of 7 relief to that extent to the assessee and may take action against the company after following the due procedure as per law. The assessee is directed to co-operate in the proceedings before the JAO.
In the result, appeal filed by the assessee is allowed for statistical purpose. Since we have remitted this issue back to the JAO, therefore, the Stay petition filed by the assessee becomes infructuous.