2021 (5) TMI 249 - AT - Income Tax

Reopening of assessment u/s 147 - addition as concealed income u/s. 69 - specific depositing slip of cash is not under assessee's signatures - HELD THAT - The assessee has consistently stated that his account has been misused by a Bank personnel without his authority and the sums have been utilized again by the Bank personnel evident by way of transfer entries. The beneficiary is named by the assessee as erstwhile Bank Manager Shri Pawan Kumar Gupta and there is no contradictory evidence. Since the correctness of the above assertions need to be verified, it is deemed appropriate to set aside the impugned order directing the tax authorities to take into consideration the fact that there has been a continued lapse on the part of the specific PNB Branch in as much as the currency details remained unmentioned, PAN details of the depositor of the huge cash amount remains unaddressed and above all, the fact that the beneficiary account No. 0904000210151272 is claimed to belong to Shri Pawan Kumar Gupta, Bank Manager of PNB, Pundri needs to be specifically addressed. It can never be over emphasized that justice should not only be done but also seen to be done. The inordinate reliance placed upon the depositing slip which to the naked eyes of the AO or the tax authorities appears to be of the assessee without caring to subject it to forensic examination is an act of gross carelessness and an irresponsible lapse of procedure and an unfortunate example of whimsical and arbitrary exercise of power. In these peculiar facts and circumstances, the order which is a prime example of gross carelessness and abuse of power reeking of multiple failures and exhibiting continued lapse of fair dispensation of justice raising many a question on the whimsical biases of the tax authorities I hope is an aberration and not a norm. It brings out the department's helplessness in not addressing the facts and possible connivance and definite abuse of power by the beneficiary account holder who the tax authorities deem it necessary to shelter. The fact that the assessee has consistently alleged connivance of the bank authorities coupled with the fact that the currency details and lack of PAN details of the depositor evident on record remain unrebutted on record by the tax authorities cannot be allowed to remain ignored. In the facts as they stand unless these assertions are rebutted by cogent evidence, the assessee appears to have a claim which cannot be easily discarded. Since there is no finding on the correctness of these assertions, the matter is remanded back with the direction to pass a speaking order in accordance with law.

Issues Involved:
1. Legitimacy of reassessment under sections 147/148.
2. Justification of addition of ?27,00,000 as concealed income under section 69.
3. Alleged misuse of powers by CIT(A) under section 250(4).
4. Validity of the remand report by the Assessing Officer.
5. Request for amendments in the grounds of appeal.

Detailed Analysis:

1. Legitimacy of Reassessment under Sections 147/148:
The appellant challenged the reassessment action under sections 147/148, questioning the addition of ?28,52,200. The reassessment was based on cash deposits made in the assessee's bank account. However, the appellant contended that these deposits were unauthorized and possibly misused by bank personnel.

2. Justification of Addition of ?27,00,000 as Concealed Income under Section 69:
The Assessing Officer (AO) added ?27,00,000 to the assessee's income, treating it as concealed income under section 69. The assessee argued that the deposits were unauthorized and possibly made by bank personnel without following proper protocols, such as recording PAN details and currency denominations. The assessee provided evidence, including a letter to the PNB Chairman and statements from the bank manager, to support the claim that the deposits were not made by him. Despite this, the CIT(A) upheld the AO's addition, citing the presence of the assessee's signature on withdrawal slips and the lack of a formal complaint to the bank.

3. Alleged Misuse of Powers by CIT(A) under Section 250(4):
The appellant claimed that the CIT(A) misused powers under section 250(4) by not considering material facts and particulars on record. The CIT(A) relied on the remand report, which did not conclusively identify the actual beneficiary of the ?27,00,000 deposit. The remand report mentioned that the bank manager could not clarify the beneficiary and noted frequent deposits and withdrawals by the assessee, questioning the assessee's claim of unauthorized transactions.

4. Validity of the Remand Report by the Assessing Officer:
The remand report by the AO was challenged by the assessee, who argued that the enquiry was not conducted properly. The assessee pointed out that the bank manager, who joined the branch after the transactions, had no knowledge of the events. The assessee also identified the account holder of the beneficiary account as Shri Pawan Kumar Gupta, a bank manager, suggesting that the mischief was done by him to meet deposit targets. The CIT(A) dismissed these claims, relying on the bank manager's statement and the lack of substantial evidence from the assessee.

5. Request for Amendments in the Grounds of Appeal:
The assessee requested the allowance of any addition, modification, deletion, or amendment in the grounds of appeal before the disposal of the appeal, in the interest of substantial justice.

Conclusion:
The Tribunal found significant lapses in the tax authorities' handling of the case, including failure to conduct a proper enquiry and reliance on unverified evidence. The Tribunal emphasized the need for fairness and impartiality from tax officials and criticized the arbitrary exercise of power. The matter was remanded back to the tax authorities for a fresh assessment, directing them to address the specific issues raised by the assessee, including the identification of the real beneficiary of the transactions. The Tribunal also highlighted the importance of robust and transparent mechanisms in the banking sector to prevent such issues and suggested the creation of a TAX ADVISORY CELL to foster a citizen-friendly tax environment.

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