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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN & SHRI S. JAYARAMAN
आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:
ITA Nos.98 to 102/Chny/2017 are the appeals filed by the assessee against the Order of the Commissioner of Income Tax (Appeals)-1, Madurai, in to 126/2007-08 and 0118/2008-09 dated 26.10.2016 for the AYs 2001-02 to 2006-07.
Shri Sailendra Mamidi, CIT, represented on behalf of the Revenue and Shri S.Sridhar, Adv., represented on behalf of the assessee. to 102/Chny/2017 :- 2 -:
As the issues in these appeals are identical, the appeals are disposed off by this common order.
It was submitted by the Ld.AR that there was a search u/s.132 on the premises of the two branches of the assessee’s bank on 25.03.2006 and concluded on 20.05.2006 at Erode & Tiruchengode branches. In the course of the search, it was noticed that certain Fixed Deposits had been made by certain persons in the two branches without complying with the KYC norms. Consequently, the Revenue seized the principle and interest accrued thereon in respect of the Fixed Deposits held by the different persons in the two branches on the ground that the branches could not establish the identity of the persons who had deposited the sums and their source of income. It was a submission that the search revealed that the assessee had accepted the deposits and it was a fact that the compliance of the KYC norms in respect of the some of the deposits were not completed. It was a submission that no Fixed Deposits receipts were found with the two branches. The deposits were recorded in the books of the branches in the normal course. No incriminating material for doubting the deposits were found. The deposit money was appropriated by the Department. It was a submission that the assessee did not receive any income nor was there undisclosed income in the hands of the assessee. It was a submission that in the absence of any seized or incriminating material indicating the generation of the undisclosed income by the bank, the provisions of Sec.68 read with Sec.153A of the Act could not be made to 102/Chny/2017 :- 3 -:
in the case of the banks. It was a submission that in the absence of an income element, no addition could be sustained in the hands of the assessee. It was an alternate prayer that the deposits were the misadventures by two of the Managers resulting in the business loss of the bank akin to embezzlement loss. It was a submission that the moneys received by the bank from its customers in the form of deposits in the course of the business was lost by the bank due to the breach of the terms of the employment of the two Managers and consequently, the loss representing the seizure by the Revenue was liable to be allowed to the bank.
In reply, the Ld.DR submitted that in the course of search, deposits had been found with the two branches of the assessee’s bank and such deposits could not be identified by the assessee bank with the persons holding the deposit. It was a submission that the assessee having shown the deposits in its books, was duty bound to show and identify the persons who are holding the deposits as also the identity of the depositors. The onus was on the assessee. If the assessee is unable to explain the source of the deposits then in view of the provisions of Sec.68, the same is assessable in the hands of the assessee. It was a submission that it was on account of the search on the two branches of the assessee which showed the incriminating material in the form of the deposits which were not identified with the depositors. It was a submission that after the amounts had been seized by the Revenue as and when any of the to 102/Chny/2017 :- 4 -:
depositors came forward with the evidence of the deposit, the same had been returned by the Revenue to the depositor. It was a submission that the order of the AO and the Ld.CIT(A) was liable to be sustained.
We have considered the rival submissions.
A perusal of the order of the AO and the Ld.CIT(A) clearly shows that a total of Rs.4,96,71,083/- representing the principle and interest accrued on Fixed Deposits held by different persons in Erode & Tiruchengode branches of the assessee’s bank had been seized. The branches could not establish the identity of the persons who had deposited the sums and their source of income. It is noticed that some of the depositors had made their claim before the Revenue and the same had also been considered at the time of assessment. The addition made by the AO for the years under appeal were reduced to nearly Rs.3.78 Crs. Before the Ld.CIT(A) also certain deposits were considered as genuine and the addition for the AY 2001-02 was restricted to Rs.56,692/-, for the AY 2002-03 was restricted to Rs.6,40,106/-, for the AY 2004-05 was restricted to Rs.54,14,811/-, for the AY 2005-06 was restricted to Rs.1,56,70,493/-and for the AY 2006-07 was restricted to Rs.41,81,935/-.
These are after considering the various evidences produced by the assessee before the lower authorities. The assessee has not able to produce any further evidence before the Tribunal in respect of the additions sustained by the Ld.CIT(A). The fact that the deposits were to 102/Chny/2017 :- 5 -: found in the two branches of the assessee’s bank and the fact that the two branches were unable to identify the depositors and thereby not complying with the onus placed on the assessee to prove the identity of the deposits makes the addition sustainable in the hands of the assessee.
It must be appreciated that the stock in trade of the assessee is money.
The assessee has been found with un-substantiated deposits which is for the assessee to explain the deposits and the assessee having failed to do so, the addition of the same in the hands of the assessee is validly done.
The alternate prayer of the assessee that this is a loss incurred by the assessee in respect of the seizure by the Department does not hold water in so far as the two Managers are employees of the bank and they acted as the Agents of the bank. This is not a case where two Managers embezzled any of the amount from the bank. This is a case where moneys have been deposited in the bank and the bank is unable to identify the depositors. It is for the bank to show that the deposits were in fact belonging to some other persons and it is not the undisclosed monies of the bank which has been deposited in fictitious names in the two branches and making the Managers of the said two branches scapegoats. This being so, in the absence of the further evidence being produced by the assessee, we find no reason to interfere in the orders of the Ld.CIT(A) and consequently, the same stands confirmed. to 102/Chny/2017 :- 6 -:
In the result, the appeals filed by the assessee in to 102/Chny/2017 are dismissed.
Order pronounced in the Open Court on May 09, 2018, at Chennai.