2024 (6) TMI 1347 - AT - Income Tax

Unexplained cash credits u/s. 68 - Deposits in bank accounts jointly held by the assessee and his father Shri Devidas Keshwani i.e. primary account holder - HELD THAT - We find substance in the claim of the Ld. AR that as the aforesaid bank account and interest income accruing on the same had been accounted for/offered for tax in the hands of Father i.e. primary account holder, therefore, in absence of any material proving to the contrary there was no justification for the A.O to have made addition of the cash deposits made during the year in the said bank account; or the interest income accruing therefrom in the hands of the assessee. At the same time, we cannot remain oblivion of the fact that the assessee had adopted a lackadaisical approach and failed to participate in the course of the assessment proceedings, which, thus, had led to framing of the assessment by the A.O u/s. 144 r.w.s. 147 dated 20.10.2018. Accordingly, as the aforesaid documents which had been pressed into service by the assessee before us were not there before the A.O in the course of the assessment proceedings, therefore, we are of the view that the matter in all fairness requires to be restored to the file of the A.O for the limited purpose of verifying the correctness of the aforesaid claim of the assessee. In case, the claim of the assessee is found to be in order and also, to the satisfaction of the A.O, the addition made in his hands to the said extent shall stand vacated.

Summary

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act.
2. Addition of Rs.13,45,800 as unexplained cash credit under Section 68.
3. Addition of Rs.1,389 as bank interest already shown in the Return of Income (ROI).
4. Procedural adherence to Rule 46A of the Income Tax Rules, 1962.

Detailed Analysis:

1. Validity of the notice issued under Section 148 of the Income Tax Act:
The assessee raised an additional ground contending that the notice issued under Section 148 dated 26-03-2018 by ITO-1(1), Raipur was invalid as he did not have jurisdiction over the assessee. Consequently, the assessment made by ITO-3(1), Raipur under Section 147 read with Section 144 dated 20-10-2018 would be invalid and liable to be quashed. However, the assessee's representative did not advance any contention regarding this additional ground. Therefore, the Tribunal dismissed this ground as not pressed.

2. Addition of Rs.13,45,800 as unexplained cash credit under Section 68:
The main issue revolved around whether the lower authorities were correct in treating the cash deposit of Rs.13,45,800 in the savings bank accounts as unexplained cash credits under Section 68. The Assessing Officer (A.O) initiated proceedings under Section 147 as the assessee had made a cash deposit of Rs.13.05 lakhs in his savings bank account but had not filed any return of income. The A.O made an addition of the entire cash deposits in both bank accounts, aggregating Rs.13,45,800, along with corresponding interest income of Rs.1,389.

On appeal, the Commissioner of Income-Tax (Appeals) [CIT(A)] upheld the A.O's additions, stating that the assessee did not submit any documents or explanations during the assessment proceedings, compelling the A.O to pass an order under Section 144 read with Section 147. The CIT(A) also highlighted that Rule 46A of the Income Tax Rules, 1962, barred the appellant from furnishing additional evidence unless specific conditions were met, which the assessee failed to demonstrate.

The Tribunal found substance in the assessee's claim that the bank account in question was jointly held with his father, who had disclosed the account and corresponding interest income in his return of income. The Tribunal directed the A.O to verify the correctness of the assessee's claim. If found in order, the addition made in the assessee's hands would be vacated. However, since the assessee did not place any contention regarding the cash deposit of Rs.40,800 in another savings bank account, the addition to that extent was upheld.

3. Addition of Rs.1,389 as bank interest already shown in the ROI:
The assessee contended that the A.O erred in adding Rs.1,389 as bank interest, which was already shown in the ROI. However, the assessee's representative did not advance any contention regarding this ground. Therefore, the Tribunal dismissed this ground as not pressed.

4. Procedural adherence to Rule 46A of the Income Tax Rules, 1962:
The CIT(A) noted that the assessee did not submit any documents or explanations during the assessment proceedings, which led to the A.O passing an order under Section 144 read with Section 147. The CIT(A) emphasized that Rule 46A barred the appellant from furnishing additional evidence unless specific conditions were met, which the assessee failed to demonstrate. The Tribunal concurred with the CIT(A)'s observations and upheld the procedural adherence to Rule 46A.

Conclusion:
The appeal was partly allowed for statistical purposes. The Tribunal directed the A.O to verify the correctness of the assessee's claim regarding the jointly held bank account and corresponding interest income. If the claim was found in order, the addition made in the assessee's hands would be vacated. The addition of Rs.40,800 in another savings bank account was upheld, and the grounds regarding the validity of the notice under Section 148 and the addition of Rs.1,389 as bank interest were dismissed as not pressed.