2017 (10) TMI 776 - AT - Income Tax

Addition on account of cash deposited in the bank - assessee has not explained the source of the information, banks do not open & accept huge deposits without proper check on the identity of the person - CIT-A allowed the claim - Held that - The saving account neither belong to assessee nor opened by the assessee. The CIT(A) has categorically recorded a finding to the effect that the cash so deposited belonging to M/s. Gem Corporation and during the assessment of Gem Corporation, it was added in the income of Gem Corporation. As the amount so deposited had already been brought to tax in the hands of Gem Corporation, making addition of the same amount in assessee s hands amounts to double addition. The detailed finding so recorded by CIT(A) at para 4 has not been controverted by learned DR by bringing any positive material on record. Accordingly, I do not find any reason to interfere in the order of CIT(A). - Decided against revenue

Issues Involved:
1. Legitimacy of the cash deposits in the savings bank account.
2. Ownership of the bank account and cash deposits.
3. Double taxation of the same income.

Detailed Analysis:

1. Legitimacy of the Cash Deposits in the Savings Bank Account:

The revenue was aggrieved by the deletion of an addition of ?47,53,037/- on account of cash deposited in the bank. The assessee had filed a return of income declaring a total income of ?1,37,580/-. The case was reopened under Section 147 of the IT Act based on information received from the CIB that the assessee had deposited cash of ?43,51,500/- in a savings bank account. The assessment was completed under Section 143(3) read with Section 147, determining the total income at ?48,90,620/-. The AR contended that the cash deposits did not belong to the deceased assessee and suggested that the account was a benami account opened by a third person. The AO, however, did not accept these contentions and added the entire deposited amount to the income of the assessee.

2. Ownership of the Bank Account and Cash Deposits:

The CIT(A) observed that the main issue was the addition made towards the cash deposited in the savings bank account, treating it as unaccounted income of the assessee. The AO relied on information from the GIB and the bank statement showing cash deposits of ?47,51,500/- and interest payment of ?1,537/-. The legal heir of the deceased assessee contended that the account was a benami account and that the cash deposits were made by Bharat Shah, owner of M/s Gem Corporation. The AO did not accept this explanation, stating that the appellant had not explained the source of the information, and banks do not open accounts without proper identity checks. However, the CIT(A) noted that the AO failed to make proper inquiries and did not summon the partners of Gem Corporation to verify the factual position. The assessment was completed in violation of the principles of natural justice.

3. Double Taxation of the Same Income:

The CIT(A) found that the cash deposits in different bank accounts, including the appellant's account, were owned up by M/s Gem Corporation and considered in its assessment by estimating the gross profit at 16.05% on the sales, including the cash sales. The legal heir had denied that the deceased appellant opened the bank account or deposited the cash. The CIT(A) concluded that it was not possible for an 84-year-old person to open a bank account and credit such a huge amount. The amount was already assessed in the hands of M/s Gem Corporation, and the AO could not conclusively prove that the amount belonged to the deceased appellant. Therefore, the addition in the hands of the deceased appellant amounted to double taxation, which is against the fundamental principles of taxation.

Conclusion:

The CIT(A) deleted the addition, and the appellate tribunal upheld this decision, stating that the saving account neither belonged to the assessee nor was opened by the assessee. The cash deposited was already brought to tax in the hands of M/s Gem Corporation. The detailed findings of the CIT(A) were not controverted by the learned DR with any positive material. Hence, the appeal of the Revenue was dismissed, and the order pronounced in the open court on 16/10/2017.

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