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Facts
The assessee was a director of real estate companies. A search revealed unexplained deposits in the assessee's bank accounts for assessment years 2011-12 and 2012-13. The AO made additions on substantive basis, considering the assessee was no longer a director.
Held
The Tribunal noted that the assessee's status as director was in dispute, with evidence suggesting continued directorship until a later date than initially assessed. The matter was restored to the AO for fresh examination.
Key Issues
Whether the unexplained deposits in bank accounts were rightly added to the assessee's income, considering the dispute over the assessee's directorship in the relevant group companies.
Sections Cited
69A, 153A, 250, 132, 271(1)(c)
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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA
आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: These appeals filed by the assessee are directed against consolidated order of the Commissioner of Income Tax (Appeals)- 18, Chennai dated 07.10.2022 passed under section 250 of the & 957/Chny/2022 :- 2 -: Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Years are 2011-12 & 2012-13.
Common issue is raised in these appeals. Hence, they were heard together and are being disposed off by this consolidated order. The solitary issue that is raised is whether the CIT(A) is justified in confirming the addition u/s.69A of the Act being unexplained deposits of Rs.26,62,978/- and Rs.9,85,269/- for assessment years 2011-12 and 2012-13 respectively.
Brief facts of the case are as follows: The assessee is an individual. There was a search and seizure operation u/s.132 of the Act on 21.06.2011 in the business and residential premises of Platinum group of cases. The assessee was a director of the said group companies situated in Chennai. The companies were dealing in real estate business. Subsequent to search, notices u/s.153A of the Act was issued by the AO to the assessee for the assessment years 2006-07 to 2012-13. In response to notice, assessee submitted that return filed on 31.10.2007 may be treated as a return filed in response to the notice issued u/s.153A of the Act. The AO after examining & 957/Chny/2022 :- 3 -: the seized material and information filed during the scrutiny proceedings completed the assessment on the assessee by making additions on protective basis for assessment years 2006-07 to 2010-11 and on substantive basis for assessment years 2011-12 and 2012-13. The details of the protective and substantive additions for assessment years 2006-07 to 2012-13 are as follows:-
AY S. Particulars No. 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Income returned 136200 190870 300000 300000 216120 216180 221245 Protective addition on accountof on-money received through 1 0 0 45000000 0 0 0 0 cheques by the assessee in his bank accounts for sale of land by his companies Protective addition on account of money 2 0 0 17310000 0 0 0 0 received in cash by the assessee for sale of land by his companies Protective addition of 3 28781421 39253274 51489228 8693510 9555603 0 0 deposits in undisclosed bank accounts Substantive addition - 4 0 0 0 0 0 2662978 985269 unexplained investments u/s 69A Substantive addition - 5 0 0 0 0 0 0 7223855 unexplained investments in jewellery 28917621 39444144 114099228 8993510 9771723 2879158 8430369
The substantive addition for assessment years 2006-07 to 2010-11 were made in the hands of Shri Sukumar Reddy. The & 957/Chny/2022 :- 4 -: addition made by the AO substantively in the hands of the assessee concerning assessment years 2011-12 & 2012-13 of Rs.26,62,978/- & Rs.9,85,269/- respectively were solely for the reason that assessee was not a director of the group companies for the relevant assessment years. The findings of the AO for assessment years 2011-12 and 2012-13 are identical except for variation in figures. The relevant finding of the AO for assessment year 2011-12 reads as follows:- “5. The assessment is completed as under on the basis of the facts presented and the details furnished. During the course of the proceedings, it was found that the assessee is maintaining two bank accounts one with account number 10011121441 with State Bank of India, P. B. Branch, T. Nagar, Bazullah Road, Chennai and another with account number 1313269 with Royal Bank of Scotland, KRM Towers, No.1, Harrington Road, Chetpet, Chennai which were not disclosed in the return of income. There were deposits of Rs.26,62,978-56 and Rs. Nil respectively in these accounts. The assessee was asked to explain and show cause as to why the deposits in these bank accounts should not be considered as income from undisclosed sources and be added to the income. There was no satisfactory reply. In the sworn statement, assessee's wife stated that Late Shri B. V. Reddy was doing all the work for Platinum group of companies only. But during the period of this assessment year, the assessee was no more a shareholder and director in the Platinum group of companies. Hence, unlike earlier years, where the substantive addition has been made in the hands of Shri Sukumar Reddy and only protective in the case of the assessee, the amount is substantively added to the total income of the assessee. Hence, these amounts are considered as the income of the assessee. u/s69A of the Income tax Act, 1961. Penalty proceedings u/s271(1)(c) of the Act is also initiated for concealment and furnishing of inaccurate particulars of income.”
& 957/Chny/2022 :- 5 -: 5. Aggrieved by the order of the AO, assessee filed appeals before the FAA. The FAA confirmed the addition made on substantive basis u/s.69A of the Act. The relevant finding of the CIT(A) for assessment years 2011-12 & 2012-13 reads as follows:- “8.3 During the FY 2010-11 & 2011-12, the deposits in the two bank accounts of the assessee are Rs.26,62,978 and Rs.9,85,269 respectively. The assessee resigned from the post of Director from Platinum Group of companies during December 2009 itself. Hence, the above deposits in the two bank accounts of the assessee are clearly undisclosed income of the assessee only. Neither during the assessment proceedings nor during the appeal proceedings, the assessee has brought on record any material evidence to disprove that the above deposits in his own bank accounts do not belong to him. In view of the above, I find no infirmity in the orders of the AO assessing the same as unexplained income. Accordingly, the grounds related to this issue for the AYs 2011-12 and 2012-13 are dismissed.”
Aggrieved by the consolidated order of the CIT(A), assessee filed appeals before the Tribunal. The Tribunal vide its consolidated order dated 17.05.2024, as regards to the impugned addition made for assessment years 2011-12 and 2012-13 confirmed the view taken by the CIT(A). Thereafter, the assessee filed miscellaneous applications in MA Nos.122 & 123/CHNY/2024. The Tribunal vide order dated 08.10.2025, recalled the Tribunal order in & 957/CHNY/2022 for the assessment years 2011-12 and 2012-13. The reason for recalling the order for & 957/Chny/2022 :- 6 -: assessment years 2011-12 and 2012-13 was taking into the fact that assessee had furnished additional evidences before the Tribunal proving that assessee was director of Platinum group companies till 24.05.2013 and not till December, 2009 as mentioned in the orders of the AO and the CIT(A). Subsequent to recall of the order, the above two ITA’s were heard today.
The Ld.AR took us through the additional evidence filed and submitted that assessee was the director till 24.05.2013 covering the impugned assessment years. Therefore, the addition solely based on the reasoning that assessee had ceased to be the director in the group companies for the assessment years 2011-12 and 2012-13 by the AO and the CIT(A) is factual wrong and requires fresh examination.
The Ld.DR supported the orders of the AO and the CIT(A).
We have heard rival submissions and perused the material available on record. The addition of Rs.26,62,978/- and Rs.9,85,269/- has been made for assessment years 2011-12 and 2012-13 respectively solely for the reason that assessee was not a director in the Platinum group of companies w.e.f. December & 957/Chny/2022 :- 7 -: 2009 itself. On perusal of the additional evidence filed, it is clear that assessee was the director of the group companies till his demise on 24.05.2013. In light of the additional evidence produced, which goes to the root of the issue and for substantial justice, we restore the matter to the files of the AO. The AO is directed to examine the additional evidence and decide whether addition is required to be made for a sum of Rs. Rs.26,62,978/- and Rs.9,85,269/- for assessment years 2011-12 and 2012-13 respectively. It is ordered accordingly.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open court on 4th November, 2025 at Chennai.