Assessee must give proper explanation of the amount deposited in the Bank account of the assessee or to prove that account not belong to him

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH “A”, NEW DELHI

BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER

AND

SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER

I.T.A. No. 1617/Del/2010

A.Y.: 2001-02

M/s Adventure Dsigns (P) ltd.,

C/o M/s RRA Taxindia,

D-28, South Extension, Part-I,

New Delhi – 110 049

(PAN: AAACA8407C)

(Appellant)

Vs.

Income Tax Officer,

Coy.-Ward 1(2),

New Delhi

 (Respondent)

Assessee by: Sh. Ashwani Taneja, Advocate

Department by: Mrs. Geetmala Mohananey, C.I.T. (D.R.)

ORDER

PER SHAMIM YAHYA: AM

This appeal by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals)-IV, New Delhi dated 25.1.2010 pertaining to assessment year 2001-02.

2. The grounds raised read as under:-

“1. That having regard to the facts and circumstances of the case, Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in not quashing the impugned assessment order passed by Assessing Officer u/s. 147 that too without the serving the notices u/s. 148 and 143(2) as per law, without obtaining valid approval as prescribed under the law, without recording valid reasons to believe that income has escaped assessment and without complying with the mandatory requirements as prescribed u/s. 147 to 153 in consequence thereto.

2. That in any case and in any view of the matter, action of Ld. Commissioner of Income Tax (Appeals) in not quashing the impugned assessment is bad in law and against the facts and circumstances of the case and the same has been passed in violation of principles of natural justice and without confronting any adverse material and without proving adequate opportunity of hearing.

3. That having regard to the facts and circumstances of the case, Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the action of Assessing Officer in making aggregate addition of ` 2,63,00,000/- u/s. 68 on account of unexplained amount deposited in a bank account maintained with Standard Chartered Bank that too without establishing on record that the impugned bank account and the amounts deposited therein belonged to the appellant assessee company and without establishing that these amounts were undisclosed income of the appellant company.

4. That in any case and in any view of the matter Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in not quashing the impugned assessment order passed by Assessing Officer and in not deleting various additions / disallowances made by Assessing Officer as the assessment order is not sustainable on various legal and factual grounds and more so by recording incorrect facts and finding.

5. That having regard to the facts and circumstances of the case, Ld. Commissioner of Income Tax (Appeals) has erred in law and facts in not reversing the action of Assessing Officer in charging interest u/s. 234B and 234C of the Income Tax Act, 1961.

6. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”

3. In this case, the Assessing Officer has observed that specific information was received from the Investigation Wing on the basis of which it was observed that large amounts of money had been credited in the bank account of the assessee details of which were mentioned on pages 2 and 3 of the assessment order. The Assessing Officer has observed that after obtaining information from the Standard Chartered Bank where the amounts had been deposited efforts were made to call the Directors of the Company, but no reply was received form them. The Assessing Officer stated that various opportunities were provided to the assessee to explain these entries in the bank account at Standard Chartered Bank. Despite these efforts no proper replies or explanations were provided by the assessee for establishing the identity, creditworthiness and genuineness of the various credit entries in the bank account at Standard Chartered Bank. The Assessing Officer has elaborately discussed in the assessment order that since the onus had not been discharged by the assessee with regard to the unexplained credits referred to above, the various entries remained unexplained. The efforts made to identify the persons authorized to operate account did not result in any response from any of the parties. In view of the various circumstances the total amount of ` 2,63,00,000/- was treated as unexplained income in the hands of the assessee.

4. Upon assessee’s appeal, Ld. Commissioner of Income Tax (Appeals) observed that the amount of ` 2,63,00,000/- had been deposited in the bank account of Standard Chartered Bank of the assessee. The efforts were made by the Assessing Officer to clarify the nature of these deposits and it was found that the various amounts had been deposited and drafts had been issued, which were subsequently cancelled. Despite various letters and efforts made by the Assessing Officer, the Standard Chartered Bank did not produce any documents on the basis of which it could be established that this bank account belong to some other party and whether the introducer and authorized persons to operate the account were other parties other than this assessee. Ld. Commissioner of Income Tax (Appeals) further noted that assessee has claimed to have filed an FIR with the Police but no finding had been made by the Police on the basis of FIR and there is nothing provided by the assessee to establish that there was no relationship between the relevant bank account and the assessee itself. Ld. Commissioner of Income Tax (Appeals) held that accordingly when Standard Chartered Bank has opened this account with the name of the assessee, the onus lies with the assessee to prove that this account was bogus and the Standard Chartered Bank had opened an account under a bogus name. Ld. Commissioner of Income Tax (Appeals) further observed that in the present set of circumstances there is nothing to establish that the Standard Chartered bank has colluded to prove benefit to some other party by opening a bogus bank account in the name of the assessee. Accordingly, keeping in view the fact that the bank account is in the name of assessee and the same has been opened by an authorized bank of the RBI, unless there is any evidence to prove that this account was bogus and did not belong to the assessee, there is no reason to disagree with the various observations of the Assessing Officer. Accordingly, Ld. Commissioner of Income Tax (Appeals) Ld. Commissioner of Income Tax (Appeals) confirmed the order of the Assessing Officer.

5. Against this order the Assessee is in appeal before us.

6. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that lower authorities have put the onus on the assessee to prove that the said bank

account is bogus. In this regard, assessee has categorically stated that the said account was not opened by the assessee. The bank has not replied to the query of the Assessing Officer. So adverse inference on the assessee cannot be made in this regard. In our considered opinion, interest of justice will be served if the matter is remitted to the file of the Assessing Officer to consider the issue afresh. Accordingly, we remit this issue to the file of the Assessing Officer to consider the issue afresh. Needless to add that the assessee should be given adequate opportunity of being heard.

7. In the result, the appeal filed by the Assessee stands allowed for statistical purposes.

Oder pronounced in the open court on 11/5/2012.

                                                        Sd/-                             Sd/-

                                        [RAJPAL YADAV]      [SHAMIM YAHYA]

                                      JUDICIAL MEMBER ACCOUNTANT MEMBER

Date 11/5/2012

“SRBHATNAGAR”

Copy forwarded to: -

1. Appellant

2. Respondent

3. CIT

4. CIT (A)

5. DR, ITAT

TRUE COPY

By Order,

Assistant Registrar,

ITAT, Delhi Benches