MOHD. AZEEM,KANPUR vs. INCOME TAX OFFICER, WARD-1(3)(1), KANPUR

THAT the Assessing Officer has failed to appreciate that the entire deposits in the bank account being relating to business, cannot be treated as undisclosed or unexplained, the AO as well as CIT(A)/NFAC, Delhi has wrongly applied the provisions of section 69A of the Act, the addition made be deleted.

THAT the Assessing Officer has erred on facts and in law in treating the entire deposit of Rs.4,27,99,685/- in the bank during the year, against which the withdrawals make for payment to potato producers/farmers have been ignored by the Assessing Officer, thus the addition made and the tax levied both are erroneous and be deleted.”

The facts of the case are that the Department received an information that the assessee had deposited a sum of Rs.71,05,400/- in his bank account in the State Bank of India, but not filed his Income Tax Return (ITR) for the relevant assessment year. After following the necessary procedure, the Assessing Officer issued a notice u/s 148 of the Act. This notice remained un-complied with. Subsequently, this case was transferred to NFAC, but in the absence of digital footprints, it was transferred back to the Jurisdictional Assessing Officer for completion of assessment proceedings. Thereafter, notices were issued to the assessee but no replies were received. A draft assessment order was also shared electronically and by speed post, seeking objections, but again no response was received. After giving a show cause notice, the Assessing Officer thereafter proceeded to complete the assessment on the basis of the information that was in his possession. He further called for a copy of all bank accounts maintained under the PAN of the assessee for the F.Y. 2014-15. On perusal of this information, he found that a total amount of Rs.4,17,84,058/- had been credited in the said bank account during the assessment year.

Aggrieved with the said assessment order, the assessee filed an appeal with the Ld. CIT(A)/NFAC. The Ld. CIT(A) records that he issued several notices to the assessee but the assessee had not responded to the notice. Furthermore, the assessee had filed the appeal against the wrong section. However, in the interest of justice, the Ld. CIT(A) decided to admit the appeal and decide the same on the basis of the statement of facts and documents submitted along with the appeal. The Ld. CIT(A) records that the assessee was an individual carrying on the business of commission agent of an agency called Mama & Company, at A-87, Naveen Sabzi Mandi, Chakarpur, Bhauti, Kanpur. The assessee claims that the proprietor of the business, Mrs. Mehar Jahan had been regularly filing her return of income and had a Mandi License that was provided by Naveen Sabzi Mandi, Uttar Pradesh for doing the business as commission agent of potatoes. It was she who was operating the bank account bearing no. 33242032840 which was maintained in the name of Mama & Company. However, during the time of withdrawals, the assessee had submitted his individual PAN No. AIRPA8061C and the bank staff without verifying the same, mentioned that PAN number as that PAN number of the account holder. This was a mistake on the part of the bank staff and resultantly the assessment had been done in the hands of the assessee instead of Mrs. Mehar Jahan, the proprietor of Mama & Co. It was further submitted without prejudice to the same, that the notices had not been served on the assessee during the assessment proceedings and the AO without proper appreciation, Page 4 of 6 ignored the withdrawals against each credit entry and added the total amount credit into the bank account as the income of the appellant. However, the Ld. CIT(A) did not accept these submissions of the assessee. It was pointed out by him, that no evidences have been produced to show that Mrs. Mehar Jahan had been filing Income Tax Return and also no copy of correspondence from the bank authorities had been produced, that would confirm the fact that the account was wrongly mapped to the assessee’s PAN. The Ld. CIT(A) also observed, that the assessee had made no effort to comply with the notices either by the Assessing Officer or by him and no efforts were made to explain the credits in the said bank account. Therefore, he held that the additions have rightly been made by the Assessing Officer and he dismissed the appeal of the assessee.

The assessee is aggrieved with this dismissal of his appeal, and has accordingly come before us. However, on the appointed date of hearing, there was no compliance by the assessee. Considering the long history of non-compliance by the assessee, we do not deem it appropriate to let this case linger after considering the facts stated. It has been submitted by the assessee that he is not the owner of the said bank account, but the said bank account is in fact being operated by Mrs. Mehar Jahan, proprietor of Mama & Company and that she had regularly been filing income tax returns, in which she had shown the said bank account. However, the bank account had been mapped against the wrong PAN. If there is any truth to these submissions, then the credits in the said bank account cannot be assessed in the name of the assessee. They have to be confronted to Mrs. Mehar Jahan and assessed in her hands. It appears that Page 5 of 6 since these explanations were not submitted before the Assessing Officer, the Assessing Officer has not had occasion to verify these facts. We, therefore, restore the matter to the file of the Assessing Officer, with a direction that he may verify the facts of the submissions made by the assessee and if it so emerges that the amounts deposited in the said bank account represent the income of Mrs. Mehar Jahan, he may take such action as per law so as to assess the same in her hands. If, however, the assessee is unable to justify his submissions, the Assessing Officer may take appropriate action as per law. We, may caution the assessee, that the failure to respond to queries raised by the Assessing Officer would create a presumption against him that he is not in a position to substantiate his claim and therefore he is instructed to make due compliance before the Assessing Officer in the restored proceedings. As the matter is being restored to the file of the Assessing Officer for de novo assessment, the appeal of the assessee is held to be allowed for statistical purposes.

In the result, the appeal of the assessee is allowed for statistical purposes.