ZAHEER ABDULHAMID MULANI,PUNE vs. INCOME-TAX OFFICER, PUNE

आदेश / ORDER

PER SUSHMA CHOWLA, JM

The appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals), Pune-5, dated 30.11.2016 relating to assessment year 2011- 12 against order passed under section 143(3) of the Income Tax Act, 1961 ( in short ‘the Act’).

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“1. On the facts and circumstances of the case, Assessing Officer erred in invoking provisions of Sec. 68 of the IT Act, 1961 to the deposits in the bank account (in the name of the appellant and his wife) ignoring Hon. High Court’s decisions on the subject and CIT(Appeals) erred in confirming such addition and the same may be deleted as bad in law and quashed. 2. Without prejudice to the above the Assessing Officer and the CIT Appeals have erred in making and confirming respectively the addition u/s.68 of the Act, in respect of bank deposits from relatives when clear evidences were before them relating to such deposits. 3. The Assessing Officer has merely made an additions on account of alleged agreement when the same is contrary to the judicial pronouncements and CIT(Appeal) has ignored evidences and remand report before her violating the principles of natural justice and their action may be held as bad in law and quashed or any other appropriate orders passed to give relief as considered fit in the circumstances of the case. 4. Appellant craves leave to add/ alter/amend any grounds of appeal and produce additional evidence at the time of hearing.”

section 68 of the Act.

declaring total income of Rs.1,33,385/-. The case of the assessee was selected for

scrutiny under CASS. The assessee had received salary from three concerns.

However, assessee had declared the salary received from only one concern in the

return of income. When facts were brought to the notice of the assessee, he agreed

to furnish revised return of income and paid taxes thereon. The total salary of

Rs.6,26,374/- was added to the returned income of the assessee as income from

salary and penalty proceedings were initiated under section 271(1)(c) for furnishing

inaccurate particulars and concealing the income. Further, the Assessing Officer

noticed that the assessee had deposited cash of Rs.32,50,000/- with Punjab National

Bank on various dates. The assessee was asked to explain the source of cash

deposits with evidences and the bank accounts. The assessee submitted that it had

received the said amount from relatives and partly from the previous savings i.e.

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Rs.7,00,000/-. The assessee was asked to furnish the details of relatives who had

given gift and also to establish saving of Rs.7,00,000/-. The assessee was unable to

furnish evidences in respect of the same and vide office Order Sheet entry dated

07.02.2014, the assessee and Authorized Representative agreed for addition of

Rs.32,50,000/-. The said sum was added as unexplained cash deposit under section

68 of the Act. Penalty proceedings under section 271(1)(c) of the Act were initiated

for furnishing inaccurate particulars and concealing the income.

CIT(A) after delay of 22 months and 2 days. He explained the reasons for delay in

filing the appeal late before the CIT(A) which are incorporated at page 2 to 4 of the

appellate order. The assessee pointed out that he was advised that no appeal could

be filed against the assessment order as he had admitted to the addition. But the said

additions were subject to no penalty under section 271(1)(c) of the Act would be

levied. However, after the charge was taken over by another Assessing Officer, he

levied the penalty under section 271(1)(c) of the Act and thus, the assessee was

constraint to seek advice from another consultant who advised him to file appeal.

The CIT(A) condoned the delay in filing the appeal late. However, in respect of

explanation of the assessee of having received money from his relatives on occasion

of marriage or gift or loan, accumulated savings, the assessee filed explanation and

affidavit as additional evidence before the CIT(A). The said additional evidence was

sent to the Assessing Officer for remand report. The Assessing Officer in remand

proceedings issued summons to the four persons and also to the assessee, whose

statement were recorded on oath and were cross examined. The Assessing Officer

did not comment on the result of this enquiry but stressed that the assessee had

agreed for addition in the absence of evidence. The CIT(A) vide para 5.9 observed that since the assessee had agreed to the addition then the same could not be

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brushed aside. Therefore, explanation of the assessee was rejected and the addition

made by the Assessing Officer was upheld.

proceedings, the assessee had agreed to the addition subject to no penalty being

levied under section 271(1)(c) of the Act. But penalty proceedings were initiated

against the assessee and thereafter, the assessee filed appeal, affidavit of relatives

and also produced them. Our attention was drawn to the remand report at page 40 to

43 of the paper book. However, the Assessing Officer failed to come to any

conclusion. He further pointed out that the Assessing Officer in the remand report,

however, stated that the affidavit submitted by the assessee may be considered by

the CIT(A). But the CIT(A) upheld the addition made by the Assessing Officer on the

ground that the assessee, during assessment proceedings, had agreed to the

aforesaid addition.

assessee had agreed to the aforesaid addition, hence the same merits to be upheld.

present case, there was cash deposit in the bank account of the assessee, which he

claimed to have received from his relatives as under :

“1. From Mother-in-law Rs.12,00,000/- as gift

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The assessee during the course of assessment proceedings, agreed to the addition

as complete evidences were not available with the assessee. The agreed addition

was made subject to the condition that no penalty proceedings would be initiated

under section 271(1)(c) of the Act. However, successor Assessing Officer levied

penalty under section 271(1)(c) of the Act. The assessee thereon i.e. after delay of 22

months 2 days filed the appeal before CIT(A) and also made request for condonation

of delay in filing the appeal late before CIT(A). He in his petition pointed out that the

addition was made subject to no penalty being levied. However, since penalty for

furnishing inaccurate particulars and concealing the income was levied, he is

agitating the addition.

if he had agreed to the same during assessment proceedings. The assessee had

received the loan/ gift from his relatives and not from any outside party. The

assessee had been able to furnish affidavit of the said relatives before the CIT(A),

who confirmed the same before Assessing Officer. In the remand proceedings, the

said relatives were produced by the assessee, their statements were recorded and

they were also cross examined. No discrepancy has been pointed by the Assessing

Officer in the said statements recorded. In such circumstances, where initially the

assessee had agreed to the addition because of lack of evidences, reasons for which

was certain family disputes and once the evidences were available with the assessee

and also because the explanation of the assessee had not been accepted in entirety,

the assessee is at liberty to raise the issue before the CIT(A). Accordingly, we are of

the view that in view of the principle of natural justice, the person cannot be

condemned on his admission of addition, which was made for lack of availability of

evidence. Once the evidences were available with the assessee and they have been

properly examined by the Assessing Officer in the remand proceedings, then it was

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incumbent upon the CIT(A) to adjudicate the issue on merits and not dismiss the

same on the ground that the assessee had agreed to the addition. The totality of the

facts and circumstances of each case should be kept in mind before rejecting the

claim of the assessee.

Assessing Officer in the remand proceedings had issued summons to the persons

and “their affidavit were filed, they were cross examined and their statement were

recorded on oath” and the same were forwarded to the CIT(A) who has failed to take

cognizance of the same. The assessee before us, had filed said evidences i.e.

affidavit of the persons, their statement which were recorded at page 20 to 39 of the

paper book. In the totality of the evidences available with the assessee, statements of

the persons recorded and their cross examination in which no disparity has been

found or detected, then explanation offered by the assessee merits to be accepted

in toto. Accordingly, we hold that there is no merit in making addition on this count in

the hands of the assessee.

of the Act has been made in the hands of the assessee because of cash deposit in

the bank account i.e. savings account maintained by the assessee. The Hon'ble

Bombay High Court in the case of CIT Vs. Bhaichand Gandhi reported 141 ITR 67/30

taxmann.com 20 has approved the proposition that a bank Pass Book maintained by

the bank cannot be regarded as a book of the assessee for the purposes of section

68 of the Act. Applying the said principle, the Mumbai Bench of the Tribunal in the

case of Smt. Manasi Mahendra Pitkar Vs. ITO, in ITA Nos.4223 & 4224 (MUM.) of 2015 order dated 12th August, 2016 had held that where the assessee was not maintaining any books of account and section 68 had been invoked by the Assessing

Officer only on the basis of the bank pass book ; the invoking of section 68 has to fail

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because the bank Pass Book or bank statement cannot be construed to be a book maintained by the assessee for any previous year as understood for the purposes of section 68. Applying the said principle also to the facts of the present case, we hold that no addition is warranted in the hands of the assessee under section 68 of the Act on account of cash deposit in saving account. Thus, the grounds of appeal raised by the assessee are allowed.

Order pronounced on this 31st day of August, 2018.

Sd/- Sd/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 31st August, 2018 SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals), Pune-5, Pune. 4. The Pr. CIT, Pune-4, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, 5. पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.