Harsh Vardhan , Rampur vs Department Of Income Tax

This appeal by the Revenue is directed against the Order of the Ld. Commissioner of Income Tax (Appeals), Bareilly dated 29.1.2013 pertaining to assessment year 2009-10.

2. The grounds raised read as under:-

"1. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in ignoring the fact that the bank account was held in the name of Harsh Vardhan HUF as per information given by the bank.

2. The Ld. CIT(A) has erred in not deciding the issue on merit and ignoring the fact the deposits in bank a/c no. 0330401000080 (OBC, Civil Lines, Rampur) were unexplained by the assessee.

3. The Ld. CIT(A) has erred in law in holding that the saving back account cannot be treated as part of books of accounts of assessee (the depositor) and accordingly erred in holding that the additions could not be made u/s. 68 of the I.T. Act, 1961.

ITA No. 2183/Del/2013 4. The Ld. CIT(A) has erred in ignoring the fact that the deposits in a saving back account are the deposits of the account holder only, made from time to time, and the bank simply acts as custodian of the deposits and does not become owner of the amount."

3. The brief facts of the case are that the assessee filed its return of income for the assessment year 2009-10 in the status of Hindu Undivided Family (HUF) on 30.7.2009 declaring net taxable income of Rs. 1,38,110/- along with agricultural income of Rs. 10,000/-. This case was processed under section 143(1) of the Income Tax Act, 1961 (herein after 'the Act') on 15.01.2010. Subsequently case of assessee was selected for scrutiny under CASS and accordingly, notice under section 143(2) was issued on 25.8.2010 which was duly served upon assessee on 30.8.2010. This case was taken up for scrutiny assessment based on AIR information passed on by the bank due to huge cash deposit of Rs. 31.44 lacs in the bank account above the threshold limit during the previous year 2008-09 relevant to assessment year 2009-10 in respect of the bank account no. 03301010000780 maintained purportedly by the assessee with Oriental Bank of Commerce (OBC), Rampur in the capacity of HUF. The assessee mentioned the details of cash deposit with OBC, Rampur in respect of cash deposit of Rs. 31.44 lacs as loan taken of Rs. 3.58 lacs from friends and relatives, Rs. 2.88 lacs gift from his wife, Smt. Anuradha Gupta, and Rs. 24.98 lacs for cash withdrawal rotated making deposits in bank on different dates for getting the visa for his son to United State of America. The AO during the course of scrutiny assessment was of the opinion that it was an afterthought story which was totally fake and unbelievable as to rotate funds from one account to another, so that he could maintain its status to send his son to USA for higher studies. According to the AO, the assessee completely failed to explain the source of this deposit and documentary evidence, as the reason offered by the assessee did not appear to be reasonable. Therefore, AO completed the assessment u/s. 143(3) of the I.T. Act, 1961 on 1.11.2011 on total income of Rs. 32,82,881/- Plus Agricultural income Rs. 10,000/- as against the returned income of Rs. 1,38,110/- plus Agriculture Rs. 10,000/- in the status of HUF. The AO made an Page 2 of 7 ITA No. 2183/Del/2013

addition of Rs. 31,44,771/- u/s. 68 of the Act, 1961 ('herein after the Act') on account of unexplained cash credit.

4. Against the above Assessment order dated 1.11.2011, assessee preferred an appeal before the Ld. CIT(A), who vide impugned order dated 29.1.2013 deleted the addition of Rs. 33,44,771/- by allowing the appeal of the assessee.

5. Ld. DR relied upon the order of the AO and reiterated the contention raised in the grounds of appeal.

6. On the other hand, Ld. Counsel for the assessee stated that in the course of proceedings before the CIT(A) it was submitted that the authorised representative of the assessee could not bring the correct factual position before the AO to the effect that the aforesaid bank account pertained to individual capacity i.e. Harsh Vardhan and not that of the HUF. He also submitted that the it was explained before the CIT(A) that the entire confusion has happened because of the reason that in the account opening form of individual the 'PAN of HUF' was mentioned by mistake. He further submitted that on the aforesaid contention of the Assessee, the Ld. CIT(A) had duly sought a remand report from the AO, who could not controvert the said fact. Ld. Counsel of the assessee further submitted that following documents to show that the account no. 03304010000180 with Oriental Bank of Commerce pertained to assessee in his individual and not that of the HUF.

(a) Certificate dated 30.5.2012 (page 2PB) from Oriental Bank of Commerce confirming that Harsh Vardhan does not have any account as Karta of HUF;

(b) Certificate dated 31.5.2012 (page 3 PB) from Bank alongwith Loan Application cum Sanction Form (account opening form) to prove that the account is in the name of individual and not in the capacity of Karta of HUF;

Page 3 of 7 ITA No. 2183/Del/2013 (c) Account opening form (pages 7-14 PB) confirming that the account was opened only in the name of individual and not at all as Karta of HUF;

(d) Letter dated 12.6.12 (Page 23 PB) from Bank to the AO re-

confirming that the account is in the capacity of individual and so not in the name of assessee HUF.

6.1 The ld A.R. of the assessee further stated that Ld. CIT(A) vide his detailed order gives a clear finding to the effect that the AO totally ignored the facts of the case as well as bank certificates with regard to the account in individual name in which deposits were found. According to him the CIT(A) clearly notes that the assessee filed return in the status of HUF and that the AO also completed the assessment in the status of HUF. However, according to the ld AR, the AO brought deposits in individual bank account to tax in the hands of HUF because through inadvertence the PAN of the HUF was quoted in the loan application before the Bank. The ld AR further submitted that the CIT(A) further notes that the bank authorities have also confirmed that they maintained cash credit account in the individual name and not in the name of HUF. The ld counsel of the assessee further stated that the Ld. CIT(A) notes the settled position that entries in bank pass book cannot be considered as books of assessee for the purpose of section 68 i.e. section 68 cannot be invoked on the basis of entries in bank pass book/ bank statement. In support of his contention, he placed a reliance of the recent decision of the Coordinate Bench of ITAT in the case of ITO vs. Kamal Kumar Mishra, ITA No.398/Lkw/2012 and CO No.69/Lkw/2012 dated 25.4.2013 wherein on the same issue it has been held that section 68 cannot be invoked on the basis of entries in bank pass book/ bank statement. Ld. Counsel of the assessee relied on the decision of Bombay High Court in the case of CIT vs. Bhaichand N. Gandhi 11 Taxman 59 and in the decision of Gauhati High Court in the case of Anand Ram Ratiana vs. CIT 223 ITR 544 referred in the aforesaid decision of ITAT Coordinate Bench. Lastly, he submitted that Ld. CIT(A) in all fairness in the conclusion of its order gave a Page 4 of 7 ITA No. 2183/Del/2013

clear direction to the AO that he shall be at liberty to take appropriate action in the hands of the assessee in its individual capacity, hence, prayed that the order of the Ld. CIT(A) may be upheld.

7. We have heard both the parties and perused the records available on record. We find that assessment in this case was completed u/s. 143(3) of the I.T. Act, 1961 on 1.11.2011 on total income of Rs. 32,82,881/- + Agricultural Rs. 10,000/- as against the returned income of Rs. 1,38,110/- + Agricultural Rs. 10,000/- in the status of HUF. The AO made addition on account of unexplained cash credit u/s. 68 of Rs. 31,44,771/- I.T. Act, 1961. We find that against the order of the AO, assessee filed an appeal before the Ld. CIT(A), who vide his order dated 29.1.2013 has allowed the appeal of the assessee by deleting the aforesaid addition.

7.1 We find that in the course of proceedings before the CIT(A) it was brought to his knowledge that the authorised representative of the assessee could not bring the correct factual position before the AO to the effect that the aforesaid bank account in which the amount was deposited pertained to his account in the individual capacity i.e. Harsh Vardhan and not to the assessee HUF. It was explained before the CIT(A) that the entire confusion has happened because of the reason that in the account opening form of individual in advertantly the PAN of the HUF was mentioned by mistake. We note that a Remand Report was sought from the AO by the CIT(A). We also note of the fact that the assessee had submitted the following documents to show that the account no. 03304010000180 with Oriental Bank of Commerce pertained to assessee in his individual capacity and not to the HUF assessee who is before us. So according to the ld AR it is a clear case of mistaken identity and for the deposit in the individual account, the assessee HUF cannot be saddled with the addition.

Certificate dated 30.5.2012 from Oriental Bank of Commerce confirming that Harsh Vardhan does not have any account as Karta of HUF;

Page 5 of 7 ITA No. 2183/Del/2013 Certificate dated 31.5.2012 from Bank alongwith Loan Application cum Sanction Form (account opening form) to prove that the account is in the name of individual and not in the capacity of Karta of HUF;

Account opening form clearly confirming that the account was opened only in the name of individual and not at all as Karta of HUF;

Yet another letter dated 12.6.12 from Bank to the AO re-confirming that the account is in the capacity of individual.

7.2 We find that the ld CIT(A) has given a clear finding to the effect that the AO totally ignored the bank certificates which clearly established that the account belongs to the individual name in which the deposits were found. The CIT(A) clearly notes that the assessee filed return in the status of HUF and that the AO also completed the assessment in the status of HUF. However, the AO brought deposits in individual bank account to tax in the hands of HUF because through inadvertence the PAN of the HUF was quoted in the loan application filed before the Bank. The CIT(A) further notes that the bank authorities have also confirmed that they maintained cash credit account in the individual name and not in the name of HUF.

7.3 We find that the Ld. CIT(A) has rightly observed that the AO totally ignored the facts of the case as well as Banks certificate with regard to account in the individual name in which the deposits were found. The additional facts brought on record by the ld AR were duly conveyed to the Assessing officer by the Ld. CIT(A) u/r 46A. The AO's remand report on the same have been taken into consideration by the Ld. CIT(A) and he has observed that overwhelming evidences as adduced by the ld AR in appeal has not been controverted by the AO. We find that the Bank authorities have also confirmed vide their letter dated 5th Dec.2011 that they maintained Cash credit account no. 03304010000180 in the name of Shri Harsh Vardhan S/o Late Shri RK Das and it was being operated by him in his individual capacity. We also find that the certificate from the Bank dated Page 6 of 7 ITA No. 2183/Del/2013

30.5.2012 and 31.5.2012and letter dated12.06.2012 (Supra) establish that the assessee did not maintain the above mentioned account in the HUF category. In the light of the aforesaid facts and law we concur with the findings of the Ld. CIT(A) that the bank account considered by the AO for making addition in the hands of the HUF stands in assesee's individual name and capacity, and so, application of section 68 to fasten the liability is not sustainable in the eyes of law.

7.4 In the background of the aforesaid discussions, we find considerable cogency in the finding of the Ld. CIT(A) in deleting the addition of Rs. 33,44,771/-. Therefore, no interference is called for from our part in the impugned order passed by the Ld. CIT(A), hence, we uphold the same by dismissing the appeal filed by the Revenue.

8. In the result, the appeal of the Revenue is dismissed.

Order pronounced in the open court on 27.04.2015.

-Sd/- -Sd/- (J.S.REDDY) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:27 /04/2015 A K Keot

Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi

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