PRAMOD KUMAR,NEW DELHI vs. DCIT, NEW DELHI

1. “That the CIT(A) erred in not appreciating that since the appellant is admittedly part of Tarun Goyal Group , which group has been carrying on the business of providing accommodation entries during the relevant year and the amount of cash deposited in the bank account of the appellant was representing part of above business and, therefore, addition in respect thereof could not be made under section 68 of the Act and the case of the appellant could not be considered independently.

The brief facts of the case are that the assessee is an individual. He has filed return of income for the assessment year 2005-06 on 29.7.2005 declaring total income of Rs. 1,34,631/-. Subsequently search and seizure operation passed u/s 132 of the Income Tax Act, 1961 was conducted on 15.9.2008 at the group concern of one Mr. Tarun Goyal. As a result of search and seizure operation, it was found that bank account No. IB4005-111250-050 with Indusind Bank Ltd. belongs to the assessee. From the bank statement, it was found that a sum of Rs. 34,65,500/- was deposited in cash on various dates during the financial year 2004-05. Consequent this information, the assessment proceedings were reopened by issuing notice u/s 148 of the I.T. Act, 1961 on 27th March, 2012.

During the course of reassessment proceedings, assessee was put on notice as to why said cash deposited should not be added as income and cash deposit should not be brought to tax. It was explained to the AO that the assessee was only earning commission under such cash deposits and no other explanation is furnished to the AO. Therefore, the AO made addition of Rs. 34,65,500/-. Reassessment was completed vide order dated 25.03.2013. Aggrieved by this order of assessment, the assessee had preferred an appeal before the Commissioner of Income Tax (Appeals)

It was submitted on behalf of the assessee that in the assessee’s own case for the assessment year 2004-05, the ITAT vide its order dated 17.4.2015 passed in adjudication, hence, he requested that in the present appeal also the matter may be restored back to the AO for fresh adjudication by following the aforesaid decision.

We have heard both the parties and perused the records. We find considerable cogency in the submissions of the assessee’s counsel that in the case of assessee for the assessment year 2004-05, the ITAT vide its order dated 17.4.2015 passed in has restored the matter to the file of AO for fresh adjudication, on the similar and identical issues. For the sake of convenience, we are reproducing the operative portion of the order as under :-

The AO shall after examining the evidence submitted by the assessee, consider all the cases together and; a) restrict the addition u/s 68 to only the peak unexplained credit in each case after elimination circular transaction. b) To eliminate taxation of the same amount multiple times, due to the chain transactions which resulted due to layering indulged by the assessee. c) Consider the material on record and the precedence available on the issue and determine the percentage of commission, which the assessees would have earned and bring the same to tax.”

Therefore, in this case also since the case also belongs to the same group and having nexus with the assessment proceedings

Respectfully following the aforesaid precedent, we restore the matter to the file of the AO with the direction that to consider the explanation offered, if any, in the light of provision of section 69 of the Income Tax Act, 1961 and redo the assessment.

In the result, the Assessee’s appeal is allowed for statistical purpose.