SATHASIVAM PRAKASHKUMAR,,TIRUVALLUR vs. ITO, NCW - 7 (2),, CHENNAI

आदेश/ O R D E R

PER S. JAYARAMAN, ACCOUNTANT MEMBER:

The assessee explained before the A O that one Mr. Prasanth, residing at Mogappair West has requested his friend Mr. P. Gopivaradhan, Relationship Manager of Indus Ind Bank to facilitate cash deposit of Rs. 55 lakhs in to his account and further to take a DD in favour of 1. S. Sridharan, 2. T. Sethna, 3.

S. Sundaramoorthy, 4. P.L. Manjunath. Based on his request, Mr. P.

Gopivaradhan had approached him to favour Mr. S. Prasanth to deposit in one of his bank account bearing A/c. No. 159444444096 with Induslnd Bank, Mogappair Branch. The said cash deposit of Rs. 55 lakhs in his bank account does not belong to him and it belongs to Mr. S. Prasanth . The A O recorded a sworn statement from Mr. Prasanth and based on that statement issued summons to four persons from whom Shri. Prasanth sworned to have taken the impugned cash and also required the assessee and Shri. Prasanth to coordinate with each other and produce all the four persons before him. Since, these four persons were not produced before him and the assessee has failed to establish that the impugned cash deposits are not his cash, the Assessing Officer added such cash deposits as an unexplained cash credit u/s. 68 and completed the assessment. Aggrieved, the assessee filed an appeal before the CIT(A). The Ld. CIT(A) dismissed the appeal. Aggrieved against that order, the assessee filed this appeal with following grounds of appeal:

“1. Learned AO erred in adding Rs. 55,00,000 u/s. 68 being cash deposit in appellant’s bank a/CIT(A) with Indus Ind Bank and the learned CIT(A) erred in confirming the addition. 1.2 Learned CIT(A) failed to appreciate that AO herself has brought out in the asst. Order facts, on the basis of sworn statements of (i) appellant, (ii) Mr. Prashanth [who made cash deposit into appellant’s above bank A/c] and (iii) Mr. P. Gopivardhan [relationship Manager of above bank who connived in depositing above amount in appellant’s bank A/c and who issued 4 drafts for Mr. Prashanth] and thus appellant having proved the source for the deposit by producing the above 2 persons before AO, CIT(A) erred in confirming the addition u/s. 68 in the hands of the appellant. 1.3 Appellant having proved the source, having produced the 2 persons connected with the transaction, cannot be expected to produce the persons in whose favour 4 drafts were issued by the bank to the exclusion of the appellant, even though appellant furnished full name and address of the 4 persons and in fact some of them also have appeared before AO. 1.4 Instead of proceeding with Mr. Prashanth [who made cash deposit into appellant’s above bank A/c and who accepted the same as his money] and assessing the sum in his hands whose PAN with complete address were given to the AO and appellant understands that the very same AO is having Jurisdiction over this person, the latter erred in adding this sum for the only reason that the 4 persons did not appear before her inspite of the fact that some of them have appeared before AO. 1.5 Learned CIT(A) erred in holding that she is not satisfied with the explanation while answers to her conclusion, under items (1) to (7) of her order, are in the sworn statement reproduced in the asst. Order itself. For the reasons stated above and those that may be adduced at the time of hearing Hon’ble ITAT be pleased to delete the addition made u/s. 68 and render justice. Appellant craves leave of the ITAT to file additional ground/evidence at the time of hearing.”

Prasanth u/s. 143(3) r.w. 147 dated 02.12.2019 for the assessment year 2016-17 and submitted that the A O of Shri S. Prasanth has held in that order that the sources of the cash deposits of Rs. 55 lakhs made in the bank account of Shri. S. Prakash Kumar has been explained and completed his assessment by accepting the income returned by him (Shri. S. Prakash). Since, the sources of cash are explained by Shri. S. Prakash which is accepted by the department, the addition made in the hands of Shri. Sadasivam Prakash Kumar, the assessee, is not sustainable as he has complied within the scope of section 68 of the Act and sustaining any addition would amount to double addition and hence pleaded that the assessee’s appeal be allowed.

4. Per contra, the ld. DR invited our attention to the following portion of the order of the ld CIT (A)

“……………. And recorded a statement Mr. Prasanth was also summoned and a statement recorded from him also extract of the relevant portion of Mr. Prasanth’s statement is reproduced for ready reference below Q.No.1 I am showing one Affidavit filed by Mr. Sadasivam Prakash Kumar dated 03.11.2018 to the effect that during the FY 2015-16, you have instructed your friend Mr. P. Gopivaradhan to facilitate to deposit a sum of Rs. 55 lakhs in cash in a bank account to take DD in favour of (a) S. Sridharan, (b) T. Sethna, (c) S. Sundaramoorthy, (d) P.L. Manjunatha? And: Yes Q.No.2 What is the source for the cash you have handed over to Mr. S. Prakash Kumar through Mr. P. Gopivaradhan?

Ans: This money is belonging to the above said persons who are doing construction business in Trichy. Q.No.3 Who are the four persons as mentioned in Ques No.

In the appellate proceedings, the AR submitted the names of the four persons with DD number and amounts paid against name is below (1) S. Sridharan, (2) T. Sethna, (3) S. Sundaramoorthy, (4) P.L. Manjunath As per the Ld. Authorized Representative, appellant has discharged his primary onus of proving that the said cash of Rs. 55 lakhs belongs to him. After carefully considering the submission made and the AO's order the following conclusion is arrived at:

1. 1. The appellant has not explained why his bank account was used as a conduct for accommodation entry of the impugned amount 2. Appellant has not explained why the need arose for depositing cash into his bank account, which apparently was used to make payment to four unknown persons.

3. If money belonged to Mr. Prasanth why was his bank account not used for the cash deposit? 4. Which prudent businessman will risk the use of is bank account to park other people’s money? 5. Simply filing self-serving affidavits does not absolve the appellant from explaining the real source of cash 6. There is no corroborative evidence to explain the trail of cash in this assessee. The four persons who received the payments in DD are real persons or dummy persons? 7. Why the need to make a payment to them? What was the urgency? There are no details of their PAN, IT returns in fact non responded to the AO's summons to them either. This leaves glaring loopholes in the appellant’s claims that the cash of Rs. 55 lakhs did not belong to him. In the result, I am not convinced with the explanation of the appellant. There is therefore no requirement to interfere with the order of the Assessing Officer. Appeal stands dismissed.” and submitted that it is clear from the extracted sworn statement of Shri. S.

Prasanth that the sources of the impugned cash deposits in the bank account were belonging to 1. S. Sridharan, 2. T. Sethna, 3. S. Sundaramoorthy,

When the A O asked that when they are all in Trichy and Shri S. Prasanth being in Chennai, how did they hand over cash, he stated that from their relatives and friends circle residing in Chennai they could have taken the money and given to him and they are all assessed to income tax etc. When the AO required the assessee as well as Shri. Prasanth to produce all those persons before him neither the assessee nor Shri. Prasanth produced them before the Assessing Officer. However, it is seen from the assessment order of Shri Prasanth, relied on by the Ld. AR, that Shri Prasanth has taken a different story before his A O that the sources of cash deposited in the bank accounts are from sale of agricultural land belonging to him, his sister and mother. He took advance from the above four persons in the earlier assessment year and since, the project did not materialize those amounts were repaid to them etc. Thus, it is clear that Shri. Prasanth has taken totally a contradictory position before his A O, from the position he has sworned before the A O of this assessee, which is extracted, supra. Inviting our attention to the paperbook , wherein the copies of IndusInd Bank statements are placed , the Ld DR submitted that the narration in the bank statement of the assessee reveals that “ cash deposit branch construction business” on 21.4.2015 . Thus, it indicates that the assessee was also in construction business” . Further , it is clear from the bank statement that Shri Prasanth Kumar Samuthravadivel was also holding account with IndusInd Bank and it is clear from his statement that he did not have such huge cash balance on 21.4.2015 and further his statement has reveals huge cash deposits were made in July and September 2015 also.

Therefore, the Ld DR submitted that when Shri Prasanth Kumar Samuthravadivel himself is having bank account with the same bank, what was the need to receive and hold such huge amount in the cash form with him and why it has to be deposited in the assessee’s bank account instead of in his own account etc has not been explained/ examined and so also the sources of other deposits . Therefore, the Ld DR submitted that the impugned cash trail is not explained / examined Shri. Prasanth has taken many versions. It is also clear that the assessee has neither established that the impugned cash deposited in his bank account is not his cash nor Shri. Prasanth proved the position he has taken in the sworn statement recorded by the A O by producing 1. S.

Sridharan, 2. T. Sethna, 3. S. Sundaramoorthy, 4. P.L. Manjunath before the A O.

Therefore, the Ld. DR supported reasoning and the order of the Ld. CIT(A) and submitted that neither the assessee nor Shri. Prasanth has satisfactorily explained the sources of the impugned cash credits, the credit worthiness of the sources or the creditors and the genuineness of the transactions.

Therefore, the Ld DR submitted that the addition made u/s. 68 and sustained by the ld CIT(A) is in order and hence pleaded that the order of the lower authorities be confirmed. Per contra, the Ld. AR submitted that in the order passed u/s. 7(1) of Right to Information Act, 2005 dated 21.06.2021, the AO confirmed that S. Sridharan, (b) T. Sethna, (c) S. Sundaramoorthy, (d) P.L.

Manjunath appeared before the A O and furnished confirmation letters while completing the reopened assessment in the case of Shri. S. Prasanth. In respect of Mr. T. Sethna, confirmation letter was not submitted. Therefore sufficient compliance was made. However, the Ld DR submitted that they have appeared before the A O of Shri. S. Prasanth and not before the Assessing Officer or before the Ld CIT(A) of the assessee , Shri. Sadasivam Prakash Kumar.

Shri. Sadasivam Prakash Kumar , the assessee, explained before the A O that one Mr. Prasanth, deposited cash of Rs. 55 lakhs in his bank account and further to took DD in favour of 1. S. Sridharan, 2. T. Sethna, 3. S.

Sundaramoorthy, 4. P.L. Manjunath. The said cash deposits do not belong to him and it belongs to Mr. S. Prasanth . The A O recorded a sworn statement from Mr. Prasanth in which he sworned that the sources of the impugned cash deposits were belonging to 1. S. Sridharan, 2. T. Sethna, 3. S.

Sundaramoorthy, 4. P.L. Manjunath, who were in construction business in Trichy and they have handed over cash to Shri. Prasanth to execute the project in Chennai. Since, it did not happen, he returned back Rs. 13.75 lakhs to each of them through DD and they are all assessed to income tax etc . Based on that statement, the A O issued summons to four persons from whom Shri.

Prasanth sworned to have taken the impugned cash and also required the assessee and Shri. Prasanth to coordinate with each other and produce all the four persons before him. Since, these four persons were not produced before him and the assessee has failed to establish that the impugned cash deposits are not his cash, the Assessing Officer added such cash deposits as an unexplained cash credit u/s. 68 and completed the assessment. On appeal, the Ld CIT(A) dismissed the appeal giving the reasons which are extracted supra.

Before us, the Ld. AR pleads that the A O of Shri S. Prasanth has held in his assessment order that the sources of the cash deposits of Rs. 55 lakhs made in the bank account of Shri. S. Prakash Kumar has been explained and completed his assessment by accepting the income returned by him (Shri. S.

Prakash). Since, the sources of impugned cash are explained by Shri. S.

Prakash which is also accepted by the department, the addition made in the hands of Shri. Sadasivam Prakash Kumar, the assessee, is not sustainable. On the other hand, the Ld DR pointed out that Shri. Prasanth has taken a contradictory stand before his AO then what was sworned by him before the Assessing Officer of this assessee and from the material, supra, pointed out that Shri. S. Prasanth has taken many versions, cash trails are not explained or proved, neither the assessee nor Shri. S. Prasanth has satisfactorily explained all the ingredients required u/s. 68 of the Income Tax Act and therefore, the orders of the lower authorities are in order. It is clear from the above that neither the assessee nor Shri. S. Prasanth has explained the impugned credits neither before the AO nor before the appellate authority as required u/s. 68 of the Act.

However, considering the totality of the facts and circumstances, we are of the view that the issues in this appeal are to be remitted back to the AO for a fresh examination. The assessee /Shri. S. Prasanth, as the case may be, shall place all material based on which they rely in support of their contentions before the AO and comply with requirements of the AO in accordance with the law. The AO after affording adequate opportunity to the assessee/Shri. S. Prasanth, as the case may be, and after considering the material etc placed before him shall pass an order in accordance with law.

Order pronounced on 06th July, 2021 at Chennai.