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2024 (6) TMI 1132 - AT - Income TaxIssues Involved 1. Validity of assessment under Section 144. 2. Addition of Rs. 1,69,01,000/- as unexplained cash credit under Section 69. 3. Disallowance of Rs. 1,00,000/- deduction claimed under Section 80C. Summary of Judgment 1. Validity of Assessment under Section 144: The assessee contended that the assessment under Section 144 was completed without providing proper opportunity and without considering the full facts and circumstances of the case. The Tribunal noted that the assessee was non-cooperative during the assessment proceedings and did not furnish the necessary details despite multiple opportunities. However, the Tribunal also considered the argument that the KYC documents of the assessee were misused by a third party (Bharat Bomb) to open bank accounts and conduct transactions without the assessee's knowledge. The Tribunal found that the lower authorities did not adequately verify the claims regarding the misuse of KYC documents and the involvement of Bharat Bomb in the fraudulent activities. 2. Addition of Rs. 1,69,01,000/- as Unexplained Cash Credit under Section 69: The assessee argued that the cash deposits in the bank accounts were not made by him but by Bharat Bomb, who misused his KYC documents. The Tribunal found substantial evidence, including statements recorded by the Enforcement Directorate and CBI, indicating that Bharat Bomb was the mastermind behind the fraudulent activities and had used the assessee's documents to open bank accounts and deposit cash. The Tribunal also referred to similar cases where additions were deleted based on the misuse of KYC documents by Bharat Bomb. Consequently, the Tribunal held that the addition of Rs. 1,69,01,000/- as unexplained cash credit could not be sustained in the hands of the assessee. 3. Disallowance of Rs. 1,00,000/- Deduction Claimed under Section 80C: The assessee claimed a deduction of Rs. 1,00,000/- under Section 80C, which was disallowed by the AO on the grounds of insufficient evidence. The Tribunal noted that the assessee failed to provide the necessary details and documentary evidence to substantiate the claim. However, considering the overall circumstances and the fraudulent activities conducted by Bharat Bomb using the assessee's documents, the Tribunal directed the lower authorities to verify the claim afresh. Conclusion: The Tribunal allowed the appeals of the assessee, quashing the assessment order under Section 144 and deleting the addition of Rs. 1,69,01,000/- as unexplained cash credit. The Tribunal also directed the lower authorities to reconsider the disallowance of the Rs. 1,00,000/- deduction claimed under Section 80C after proper verification.
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