INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "C": NEW DELHI
BEFORE SHRI J.S.REDDY, ACCOUNTANT MEMBER
AND
SHRI A.T.VARKEY, JUDICIAL MEMBER
ITA No. 2183/Del/2013
(Assessment Year: 2009-10)
ITO, Harsh Vardhan
Ward-1, Karta Harsh Vardhan HUF,
Rampur Vs. Raghunath Building,
Station Road, Civil Lines,
Rampur,
PAN:AAAHH9269L
(Appellant) (Respondent)
Appellant by : Sh.Satpal Singh, Sr. DR
Respondent by : Sh. Piyush Kaushik, Adv
Date of Hearing 23.12.2014
Date of pronouncement 27 .04.2015
ORDER
PER A. T. VARKEY, JUDICIAL MEMBER
This appeal by the Revenue is directed against the Order of the Ld.
Commissioner of Income Tax (Appeals), Bareilly dated 29.1.2013 pertaining to
assessment year 2009-10.
2. The grounds raised read as under:-
"1. The Ld. CIT(A) has erred in law and on facts and circumstances
of the case in ignoring the fact that the bank account was held
in the name of Harsh Vardhan HUF as per information given by
the bank.
2. The Ld. CIT(A) has erred in not deciding the issue on merit and
ignoring the fact the deposits in bank a/c no. 0330401000080
(OBC, Civil Lines, Rampur) were unexplained by the assessee.
3. The Ld. CIT(A) has erred in law in holding that the saving back
account cannot be treated as part of books of accounts of
assessee (the depositor) and accordingly erred in holding that
the additions could not be made u/s. 68 of the I.T. Act, 1961.
ITA No. 2183/Del/2013
4. The Ld. CIT(A) has erred in ignoring the fact that the deposits in a
saving back account are the deposits of the account holder
only, made from time to time, and the bank simply acts as
custodian of the deposits and does not become owner of the
amount."
3. The brief facts of the case are that the assessee filed its return of
income for the assessment year 2009-10 in the status of Hindu Undivided
Family (HUF) on 30.7.2009 declaring net taxable income of Rs. 1,38,110/-
along with agricultural income of Rs. 10,000/-. This case was processed under
section 143(1) of the Income Tax Act, 1961 (herein after `the Act') on
15.01.2010. Subsequently case of assessee was selected for scrutiny under
CASS and accordingly, notice under section 143(2) was issued on 25.8.2010
which was duly served upon assessee on 30.8.2010. This case was taken up
for scrutiny assessment based on AIR information passed on by the bank due
to huge cash deposit of Rs. 31.44 lacs in the bank account above the
threshold limit during the previous year 2008-09 relevant to assessment year
2009-10 in respect of the bank account no. 03301010000780 maintained
purportedly by the assessee with Oriental Bank of Commerce (OBC), Rampur
in the capacity of HUF. The assessee mentioned the details of cash deposit
with OBC, Rampur in respect of cash deposit of Rs. 31.44 lacs as loan taken of
Rs. 3.58 lacs from friends and relatives, Rs. 2.88 lacs gift from his wife, Smt.
Anuradha Gupta, and Rs. 24.98 lacs for cash withdrawal rotated making
deposits in bank on different dates for getting the visa for his son to United
State of America. The AO during the course of scrutiny assessment was of the
opinion that it was an afterthought story which was totally fake and
unbelievable as to rotate funds from one account to another, so that he
could maintain its status to send his son to USA for higher studies. According
to the AO, the assessee completely failed to explain the source of this
deposit and documentary evidence, as the reason offered by the assessee
did not appear to be reasonable. Therefore, AO completed the assessment
u/s. 143(3) of the I.T. Act, 1961 on 1.11.2011 on total income of Rs. 32,82,881/-
Plus Agricultural income Rs. 10,000/- as against the returned income of Rs.
1,38,110/- plus Agriculture Rs. 10,000/- in the status of HUF. The AO made an
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ITA No. 2183/Del/2013
addition of Rs. 31,44,771/- u/s. 68 of the Act, 1961 (`herein after the Act') on
account of unexplained cash credit.
4. Against the above Assessment order dated 1.11.2011, assessee
preferred an appeal before the Ld. CIT(A), who vide impugned order dated
29.1.2013 deleted the addition of Rs. 33,44,771/- by allowing the appeal of
the assessee.
5. Ld. DR relied upon the order of the AO and reiterated the contention
raised in the grounds of appeal.
6. On the other hand, Ld. Counsel for the assessee stated that in the
course of proceedings before the CIT(A) it was submitted that the authorised
representative of the assessee could not bring the correct factual position
before the AO to the effect that the aforesaid bank account pertained to
individual capacity i.e. Harsh Vardhan and not that of the HUF. He also
submitted that the it was explained before the CIT(A) that the entire
confusion has happened because of the reason that in the account opening
form of individual the `PAN of HUF' was mentioned by mistake. He further
submitted that on the aforesaid contention of the Assessee, the Ld. CIT(A)
had duly sought a remand report from the AO, who could not controvert the
said fact. Ld. Counsel of the assessee further submitted that following
documents to show that the account no. 03304010000180 with Oriental Bank
of Commerce pertained to assessee in his individual and not that of the HUF.
(a) Certificate dated 30.5.2012 (page 2PB) from Oriental Bank of
Commerce confirming that Harsh Vardhan does not have any
account as Karta of HUF;
(b) Certificate dated 31.5.2012 (page 3 PB) from Bank alongwith
Loan Application cum Sanction Form (account opening form) to
prove that the account is in the name of individual and not in
the capacity of Karta of HUF;
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ITA No. 2183/Del/2013
(c) Account opening form (pages 7-14 PB) confirming that the
account was opened only in the name of individual and not at
all as Karta of HUF;
(d) Letter dated 12.6.12 (Page 23 PB) from Bank to the AO re-
confirming that the account is in the capacity of individual and
so not in the name of assessee HUF.
6.1 The ld A.R. of the assessee further stated that Ld. CIT(A) vide his
detailed order gives a clear finding to the effect that the AO totally ignored
the facts of the case as well as bank certificates with regard to the account
in individual name in which deposits were found. According to him the
CIT(A) clearly notes that the assessee filed return in the status of HUF and that
the AO also completed the assessment in the status of HUF. However,
according to the ld AR, the AO brought deposits in individual bank account
to tax in the hands of HUF because through inadvertence the PAN of the HUF
was quoted in the loan application before the Bank. The ld AR further
submitted that the CIT(A) further notes that the bank authorities have also
confirmed that they maintained cash credit account in the individual name
and not in the name of HUF. The ld counsel of the assessee further stated that
the Ld. CIT(A) notes the settled position that entries in bank pass book cannot
be considered as books of assessee for the purpose of section 68 i.e. section
68 cannot be invoked on the basis of entries in bank pass book/ bank
statement. In support of his contention, he placed a reliance of the recent
decision of the Coordinate Bench of ITAT in the case of ITO vs. Kamal Kumar
Mishra, ITA No.398/Lkw/2012 and CO No.69/Lkw/2012 dated 25.4.2013
wherein on the same issue it has been held that section 68 cannot be
invoked on the basis of entries in bank pass book/ bank statement. Ld.
Counsel of the assessee relied on the decision of Bombay High Court in the
case of CIT vs. Bhaichand N. Gandhi 11 Taxman 59 and in the decision of
Gauhati High Court in the case of Anand Ram Ratiana vs. CIT 223 ITR 544
referred in the aforesaid decision of ITAT Coordinate Bench. Lastly, he
submitted that Ld. CIT(A) in all fairness in the conclusion of its order gave a
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ITA No. 2183/Del/2013
clear direction to the AO that he shall be at liberty to take appropriate
action in the hands of the assessee in its individual capacity, hence, prayed
that the order of the Ld. CIT(A) may be upheld.
7. We have heard both the parties and perused the records available on
record. We find that assessment in this case was completed u/s. 143(3) of the
I.T. Act, 1961 on 1.11.2011 on total income of Rs. 32,82,881/- + Agricultural Rs.
10,000/- as against the returned income of Rs. 1,38,110/- + Agricultural Rs.
10,000/- in the status of HUF. The AO made addition on account of
unexplained cash credit u/s. 68 of Rs. 31,44,771/- I.T. Act, 1961. We find that
against the order of the AO, assessee filed an appeal before the Ld. CIT(A),
who vide his order dated 29.1.2013 has allowed the appeal of the assessee
by deleting the aforesaid addition.
7.1 We find that in the course of proceedings before the CIT(A) it was
brought to his knowledge that the authorised representative of the assessee
could not bring the correct factual position before the AO to the effect that
the aforesaid bank account in which the amount was deposited pertained
to his account in the individual capacity i.e. Harsh Vardhan and not to the
assessee HUF. It was explained before the CIT(A) that the entire confusion
has happened because of the reason that in the account opening form of
individual in advertantly the PAN of the HUF was mentioned by mistake. We
note that a Remand Report was sought from the AO by the CIT(A). We also
note of the fact that the assessee had submitted the following documents to
show that the account no. 03304010000180 with Oriental Bank of Commerce
pertained to assessee in his individual capacity and not to the HUF assessee
who is before us. So according to the ld AR it is a clear case of mistaken
identity and for the deposit in the individual account, the assessee HUF
cannot be saddled with the addition.
Certificate dated 30.5.2012 from Oriental Bank of Commerce
confirming that Harsh Vardhan does not have any account as Karta
of HUF;
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ITA No. 2183/Del/2013
Certificate dated 31.5.2012 from Bank alongwith Loan Application
cum Sanction Form (account opening form) to prove that the
account is in the name of individual and not in the capacity of Karta of
HUF;
Account opening form clearly confirming that the account was
opened only in the name of individual and not at all as Karta of HUF;
Yet another letter dated 12.6.12 from Bank to the AO re-confirming
that the account is in the capacity of individual.
7.2 We find that the ld CIT(A) has given a clear finding to the effect that
the AO totally ignored the bank certificates which clearly established that the
account belongs to the individual name in which the deposits were found.
The CIT(A) clearly notes that the assessee filed return in the status of HUF and
that the AO also completed the assessment in the status of HUF. However,
the AO brought deposits in individual bank account to tax in the hands of
HUF because through inadvertence the PAN of the HUF was quoted in the
loan application filed before the Bank. The CIT(A) further notes that the bank
authorities have also confirmed that they maintained cash credit account in
the individual name and not in the name of HUF.
7.3 We find that the Ld. CIT(A) has rightly observed that the AO totally
ignored the facts of the case as well as Banks certificate with regard to
account in the individual name in which the deposits were found. The
additional facts brought on record by the ld AR were duly conveyed to the
Assessing officer by the Ld. CIT(A) u/r 46A. The AO's remand report on the
same have been taken into consideration by the Ld. CIT(A) and he has
observed that overwhelming evidences as adduced by the ld AR in appeal
has not been controverted by the AO. We find that the Bank authorities
have also confirmed vide their letter dated 5th Dec.2011 that they
maintained Cash credit account no. 03304010000180 in the name of Shri
Harsh Vardhan S/o Late Shri RK Das and it was being operated by him in his
individual capacity. We also find that the certificate from the Bank dated
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ITA No. 2183/Del/2013
30.5.2012 and 31.5.2012and letter dated12.06.2012 (Supra) establish that the
assessee did not maintain the above mentioned account in the HUF
category. In the light of the aforesaid facts and law we concur with the
findings of the Ld. CIT(A) that the bank account considered by the AO for
making addition in the hands of the HUF stands in assesee's individual name
and capacity, and so, application of section 68 to fasten the liability is not
sustainable in the eyes of law.
7.4 In the background of the aforesaid discussions, we find considerable
cogency in the finding of the Ld. CIT(A) in deleting the addition of Rs.
33,44,771/-. Therefore, no interference is called for from our part in the
impugned order passed by the Ld. CIT(A), hence, we uphold the same by
dismissing the appeal filed by the Revenue.
8. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 27.04.2015.
-Sd/- -Sd/-
(J.S.REDDY) (A. T. VARKEY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated:27 /04/2015
A K Keot
Copy forwarded to
1. Applicant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi
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