2022 (7) TMI 941 - AT - Income Tax

Addition u/s 68 - amounts found deposited in the bank accounts through NEFT amount unexplained - HELD THAT - We have perused the contents of the Bank account of the assessee as noted that the transactions reflected therein relate majorly to NEFT deposits narrated to be from Prakash Kumar Parmar and withdrawals by way of cheques issued in the name of Canon Capital and Finance stated to be a Share Broking Firm. Statement of the assessee in Canon Capital and Finance placed before us at P.B22-29 as evidence corroborates the fact of cheques issued from her bank account to the firm. These facts have not been controverted by the Revenue. Therefore the contention of the assessee that her bank account reflected transactions on account of share trading only stands established. For deposits in assessee bank account as stated above are narrated in the bank statement as NEFT Prakash Kumar Parmar.Clearly all these deposits have come from transfers made by Mr.Parmar. Thus the facts on record demonstrate the transactions in the bank account as relating to share trading conducted through broker Canon Capital and money for the said purpose when falling short being transferred by one Mr.Prakash Parmar. Coupled with the fact that the assessee was a lady advanced in age being 78 years old with meager means having returned income of only Rs.99, 740/-and stated to have no knowledge of shares which considering her age and background is highly probable the assesses explanation rings true that her bank account was being operated by others for conducting share trading transactions. The assessee we find had stated so on oath also. We completely agree with assessee that the assessee had discharged her onus of explaining the source of deposits in her account. Revenue we hold wrongly rejected the explanation as not tenable and made addition of the deposits in the hands of the assessee when rightfully the onus had shifted to the Revenue to inquire further into the matter having been given all relevant details of the persons allegedly operating the assesses bank account including their names addresses, PAN details. Both the lower authorities having failed to do this exercise the addition on account of credits in the bank account of the assessee for which reasonably satisfactory explanation had been given by the assessee duly corroborated with evidences and her own affidavit could not have been made. Thus we hold the addition made under section 68 on account credits in her bank account is not sustainable and the same is directed to be deleted. The grounds of the appeal of the assessee are allowed.

Summary

Issues involved:
Appeal against addition made under section 68 of the Income Tax Act, 1961 pertaining to Assessment Year 2015-16.

Detailed Analysis:

1. Addition under section 68:
The solitary issue in the present appeal pertains to the addition made in the hands of the assessee on account of amounts found deposited in her bank accounts through NEFT amounting to Rs.20,50,422 under section 68 of the Act. The assessee contended that the amounts were transferred through banking channels by specific payers, whose details were provided during assessment proceedings. The assessee argued that the onus under section 68 was fully discharged by providing complete details, and the addition should not have been made. Additionally, reference was made to a decision of the Hon'ble Supreme Court to support the argument that the deposits could not have been assessed in the assessee's hands.

2. Explanation and Evidence by the Assessee:
The assessee, an elderly woman, explained that the transactions in her bank account were conducted by other persons without her knowledge, primarily related to share transactions. The assessee provided detailed explanations supported by affidavits, bank statements, and ledger accounts to demonstrate that the deposits were related to share trading transactions carried out by specific individuals. The assessee argued that the onus of proving the source and genuineness of the transactions had been discharged, and the deposits were made through NEFT, not in cash.

3. Tribunal's Decision:
After considering the contentions of both parties and reviewing the evidence, the Tribunal found that the explanation provided by the assessee regarding the deposits in her bank account was reasonably established. The Tribunal noted that the transactions primarily related to share trading and were supported by documentary evidence. The Tribunal agreed with the assessee that she had discharged her onus of explaining the deposits, and the Revenue wrongly rejected the explanation. The Tribunal held that the addition under section 68 was not sustainable, directing the deletion of the Rs.20,50,422 addition made in the assessee's bank account.

Conclusion:
The Tribunal allowed the appeal of the assessee, holding that the addition under section 68 was not justified based on the evidence and explanations provided. The Tribunal emphasized that the assessee had fulfilled her obligation to explain the source of the deposits, and the Revenue authorities had failed to conduct further inquiries despite receiving relevant details. Consequently, the Rs.20,50,422 addition was directed to be deleted.