2019 (5) TMI 887 - AT - Income Tax

Assessment u/s 153A - non issuance of notice u/s 143 (2) - Addition u/s 68 - cash deposited the savings bank account maintained with the state bank of India - HELD THAT - The words 'so far as may be' in clause ( a ) of sub-section (1) of section 153A cannot be interpreted that the issue of notice u/s 143(2) is mandatory in case of assessment u/s 153A. The use of the words 'so far as may be' cannot be stretched to the extent of mandatory issue of notice u/s 143(2). A specific notice is required to be issued under clause ( a ) of sub-section (1) of section 153A calling upon the persons searched or requisitioned to file return. That being so, no further notices u/s 143(2) can be contemplated for assessment u/s 153A. In view of this, we do not find any infirmity in the order of the learned assessing officer in issuing notice u/s 143 (2), on 6/12/2007, as there is no requirement prescribed under the law for issue of notice under that section where the assessment is taken u/s 153A - Decided against assessee. Addition u/s 68 - assessee has also taken care that none of the alleged loans exceeds the amount of INR 20,000. There is no documentary evidences produced before the lower authorities with respect to creditworthiness and genuineness of transactions of loan. Assessee had various opportunities to adduce evidence at the time of assessment. The assessee did not the used them and during the course of remand proceedings could produce only six persons who also lacks credibility. None of the persons produced also submitted their bank passbook to show the source of the funds. AO further noted an interesting fact that all the persons who are the lender to the assessee are also employed with the same company in which the assessee is a managing director. This it shows the genuineness of the transaction in serious doubt as the managing director of the company is taking loan of INR 18,000 from the various employees from his company. In view of this, we do not find any infirmity in the order of the learned CIT A, in confirming the addition u/s 68 of the amount deposited in the bank account of the assessee. Unexplained bank deposit u/s 68 - bank passbook is books or books of accounts - no requirement that the books of account should be maintained by the assessee himself - HELD THAT - Even if the assessee does not maintain any books of accounts but the amount is deposited in the bank account of the assessee, which remains unexplained the addition could be correctly made u/s 68. Further looking at the definition of the books or books of accounts‟ it is apparent that passbook is a daybook which is kept in the return form or as a printout of data stored in a floppy. After the introduction of the definition of the books or books of account u/s 2 (12A) of the act, the passbook can also be considered as books or books of account. There is no distinction who writes it, but it is record of the transactions entered into by the assessee with the bank. The provisions of section 68 also does not make any distinction about who maintains the books of account, the only requirement is that the books should be of an assessee. There is no requirement that the books of account should be maintained by the assessee himself. In view of this, we do not find any infirmity in the order of the learned CIT A, in confirming an addition on account of unexplained bank deposits u/s 68 of the income tax act. Accordingly, the additional ground raised by the assessee for assessment year 2004 05 is also dismissed.

Issues Involved:
1. Validity of notice under Section 143(2) of the Income Tax Act.
2. Justification of additions made under Section 68 of the Income Tax Act for unexplained cash deposits.
3. Consideration of new grounds and additional evidence by the Commissioner of Income Tax (Appeals).

Detailed Analysis:

1. Validity of Notice under Section 143(2) of the Income Tax Act:
The first issue concerns whether the notice under Section 143(2) was validly issued. The assessee argued that the notice was issued prior to the filing of the return and therefore was invalid. The Tribunal noted that the assessee filed the return on 7/12/2007, while the notice under Section 143(2) was issued on 6/12/2007. However, the Tribunal upheld the validity of the notice, referencing the Delhi High Court decision in CIT vs Ashok Chaddha, which held that in cases of search assessments under Section 153A, there is no mandatory requirement for issuing a notice under Section 143(2). The Tribunal concluded that the assessment was valid despite the procedural irregularity claimed by the assessee.

2. Justification of Additions under Section 68 of the Income Tax Act:
The second issue pertained to the addition of unexplained cash deposits under Section 68. The assessee failed to provide satisfactory explanations and evidence for the cash deposits totaling INR 636,000 in the bank account. The Tribunal observed that the affidavits provided by the assessee were self-serving and lacked credibility, as no concrete evidence of the source of funds or repayment was submitted. The Tribunal upheld the addition of INR 512,000 confirmed by the CIT (A), emphasizing that the assessee did not produce credible evidence to substantiate the loans claimed to be the source of the deposits.

3. Consideration of New Grounds and Additional Evidence:
The assessee raised additional grounds and argued that the CIT (A) did not consider new evidence. The Tribunal admitted the additional ground but found that the lower authorities had provided ample opportunities for the assessee to present evidence, which were not utilized effectively. The Tribunal noted that the assessee's failure to produce credible evidence or witnesses during the assessment and remand proceedings justified the additions made.

Separate Judgments:
The Tribunal delivered a consistent judgment for both assessment years 2004-05 and 2005-06. For the assessment year 2005-06, the Tribunal dealt with similar issues of unexplained cash deposits amounting to INR 451,000, which were partly confirmed by the CIT (A) to INR 343,000. The Tribunal upheld the CIT (A)'s decision, reiterating the lack of credible evidence provided by the assessee.

Conclusion:
The appeals for both assessment years 2004-05 and 2005-06 were dismissed. The Tribunal confirmed the validity of the notice under Section 143(2) in the context of search assessments under Section 153A and upheld the additions made under Section 68 due to the assessee's failure to provide satisfactory evidence for the cash deposits in the bank account.

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