2022 (5) TMI 219 - AT - Income Tax

Unexplained cash deposit u/s. 68 - HELD THAT - We note that the assessee was working as staff member with Bharat Shah and is now retired. The assessee has submitted that he never held any account with ICICI Bank and even address mentioned in the passbook of ICICI Bank is incorrect. He further submitted that the said ICICI Bank is being operated by his formed employer by misusing his PAN as may be evident from the fact that Mr. Bharat Shah, his former employer withdrew substantial sums from the said bank account. The assessee has alleged that the assessment was framed on the basis of reply given by Deputy Branch Manager of ICICI Bank, Usmanpura Branch, Ahmedabad where according to the assessee, he never maintained any bank account. The ld. D.R. has not been able to point out any reason why the reply of Deputy Branch Manager of ICICI Bank was never furnished to the assessee and why no opportunity was granted to the assessee to rebut the same. Further, from the records of ICICI Bank, it is seen that cheques for substantial amount of money were issued to Mr. Bharat Shah and apparently there is no reasonable explanation why the assessee would issue this amount to Mr. Bharat Shah. Also, there seems to be no reasonable explanation why the passbook of ICICI Bank has mentioned incorrect address of assessee. Assessee s appeal is allowed for statistical purposes.

Issues involved:
Appeal against order of National Faceless Appeal Centre upholding addition of unexplained cash deposits, Failure to comply with notices, Violation of principles of natural justice, Alleged ownership of bank account, Cross-examination opportunity not provided, Excessive addition without proper inquiry.

Analysis:

1. Addition of Unexplained Cash Deposits:
The appeal was filed against the order of the National Faceless Appeal Centre upholding the addition of Rs. 16,40,500 as unexplained cash deposits in a bank account. The Assessing Officer concluded that the cash was deposited by the assessee based on information from ICICI Bank. The assessee denied ownership of the account, alleging misuse by a former employer. The CIT(A) confirmed the addition without independent inquiry. The Tribunal noted discrepancies in the address and highlighted the misuse of the account by the former employer. It set aside the matter for fresh assessment, emphasizing the need to provide the assessee with an opportunity to rebut the evidence.

2. Failure to Comply with Notices:
The assessee raised grounds regarding the failure to comply with notices issued by the NFAC. The Tribunal observed that the assessee's explanation regarding the ownership of the bank account was not adequately considered. It emphasized the importance of providing a fair opportunity to present additional evidence before passing orders.

3. Violation of Principles of Natural Justice:
The Tribunal noted the grievance of the assessee regarding the violation of principles of natural justice in the proceedings. It highlighted the need for a detailed inquiry and proper investigation before confirming additions to the income. The failure to provide an opportunity for cross-examination and rebuttal was considered a breach of natural justice.

4. Alleged Ownership of Bank Account:
The dispute revolved around the ownership of the bank account where the cash deposits were made. The assessee contended that the account did not belong to him and was misused by a former employer. The Tribunal found merit in the assessee's arguments, pointing out discrepancies in the address and the withdrawal patterns from the account by the former employer.

5. Cross-Examination Opportunity Not Provided:
The Tribunal highlighted the failure to provide the assessee with an opportunity to cross-examine the Deputy Branch Manager of ICICI Bank, whose reply formed the basis of the assessment. The absence of this crucial cross-examination deprived the assessee of a fair chance to challenge the evidence against him.

6. Excessive Addition Without Proper Inquiry:
The Tribunal considered the possibility of the addition being excessive and emphasized the need for a thorough investigation before confirming such additions to the income. It directed the matter to be remanded for fresh assessment, stressing the importance of providing the assessee with a fair opportunity to contest the evidence against him.

In conclusion, the Tribunal allowed the appeal for statistical purposes, setting aside the order and directing a fresh assessment to be conducted with due regard to the principles of natural justice and fair opportunity for the assessee to present his case.

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