RANJAN PANDURANG PHADKE,MUMBAI vs. ITO 19(3)(2), MUMBAI

The only issue in dispute in the present appeal relates to the addition of ` 12 lakh under section 68 of the Income Tax Act, 1961 (for short "the Act").

In the course of hearing before the learned Commissioner (Appeals), assessee produced certain additional evidence such as copy of passport of Shri Pramod P. Phadke, along with an affidavit of Shri Pramod P. Phadke, confirming the fact that the money belongs to him. In the said affidavit, the assessee’s brother also explained the source from which the cash deposits were made in his bank account. On the basis of the evidence produced, the learned Commissioner (Appeals) called for a remand report. However, on perusing the remand report the learned Commissioner (Appeals) observed that in spite of opportunity being given to the assessee, he could not submit documentary evidence in support of the claim made by his brother

Learned Authorised Representative contesting the findings of the Assessing Officer and the learned Commissioner (Appeals) submitted, under misconception of facts, the Assessing Officer has made the addition. Learned Authorised Representative submitted, as the assessee’s brother was residing abroad, he has authorised assessee to operate his bank account and on the basis of such authorisation, the assessee had withdrawn the amount of ` 12 lakh from the said bank account of his brother to invest in fixed deposit of equal amount in joint name of himself and his brother. He submitted, the allegation of the Assessing Officer that the fixed deposits are in the individual name of the assessee is, therefore, factually incorrect. In this context, the learned Authorised Representative drew our attention to the certificate issued by the bank on 29th October 2013 a copy of which is placed in the paper book. Learned Authorised Representative also referring to the affidavit of his brother submitted that the assessee has not only furnished the passport copy to prove the fact that his brother is residing abroad but also has submitted an affidavit of his brother wherein he has accepted / confirmed source of investment in fixed deposit. Learned Authorised Representative submitted on maturity of the fixed deposits, the entire amount has been transferred to 5 Shri Ranjan Pandurang Phadke assessee’s brother’s account. He, therefore, submitted, the amount cannot be treated as unexplained cash credit of the assessee.

Learned Departmental Representative relying upon the observations of the Assessing Officer and the learned Commissioner (Appeals) submitted, assessee has not proved the source of cash deposit in the bank account of his brother. He further submitted, when the assessee has shown the amount of ` 12 lakh as gift taken he again cannot claim that the money belonged to his brother.

We have considered the submissions of the parties and perused the material available on record. From the very beginning, assessee has stated before the Departmental Authorities that the fixed deposit belonged to assessee and brother Shri Pramod P. Phadke, and the source of investment in such fixed deposit is also from withdrawal made from his brother’s bank account. On a perusal of the bank account of assessee’s brother in Dena Bank, it is noticed that an amount of ` 3 lakh was deposited in the bank account on 20th June 2007 through cheque and an amount of ` 9 lakh was deposited on 3rd August 2008 by cash. Apparently, these two amounts were withdrawn from the said bank account for the purpose of making fixed deposit. We have further noted from the certificate issued by the bank on 29th October 2013, that the fixed deposits are in joint name of the assessee and his brother. Therefore, the allegation of the Assessing Officer that 6 Shri Ranjan Pandurang Phadke it is in the individual name of assessee is factually incorrect. As far as source of fixed deposit is concerned, as noted earlier it came out of withdrawal from bank account of assessee’s brother Shri Pramod P. Phadke. We have also noted that out of ` 12 lakh deposited in the said bank account amount of ` 3 lakh is through cheque and not by cash, therefore, such deposit is from explained source. As far as the source of cash deposit of ` 9 lakh is concerned, assessee has submitted an affidavit of his brother explaining the source of such cash deposit. However, the Departmental Authorities have refused to believe the contents of the affidavit alleging absence of supporting documentary evidence. Be that as it may, undisputedly, the bank account from which the fixed deposits were made belonged to assessee’s brother Shri Pramod P. Phadke. It is also observed that fixed deposits are not in the individual name of the assessee but in the joint name of the assessee and his brother. We have also noted that the maturity amount of fixed deposits amounting to ` 13.50 lakh has been deposited in the bank account of assessee’s brother Shri Pramod P. Phadke, in July 2009 i.e., prior to issuance of notice under section 143(2) and 142(1) by the Assessing Officer on 5th August 2009. Thus, from the aforesaid facts, it can be concluded that since the assessee’s brother Shri Pramod P. Phadke, was staying abroad he had authorised the assessee to operate his bank account and on his instruction, the assessee withdrew money from the bank account and invested in fixed

In the result, appeal stands allowed. Order pronounced in the open Court on 24.08.2016