ITAT Deletes Rs.1.89-Crore Section 69A Addition from Wife’s Bank Account

ITO Vs Ram Niwas Gupta (ITAT Agra Bench)

Wrong PAN Cannot Make Wife’s Bank Deposits Husband’s Income-Rs.1.89-Crore Addition u/s 69A Deleted

Summary:

A reassessment triggered by a misplaced PAN

The assessee, Ram Niwas Gupta, had not filed a return of income for AY 2018-19. His case was reopened through notice u/s 148 dated 31.03.2022 on the basis of information that cash aggregating to Rs.1,89,87,500 had been deposited in Bank of Baroda Account No. 27510200000244.

The account was linked in the bank’s reporting system with the assessee’s PAN, ALDPG3241K. Proceeding on this information, the AO treated the cash deposits as belonging to the assessee & made an addition u/s 69A r.w.s. 115BBE.

The assessee, however, maintained that the account did not belong to him at all. It was a current account of M/s Satguru Agency, a proprietary concern of his wife, Smt. Arti Gupta. His name appeared in the account merely because he had been appointed as its authorised signatory.

A clerical error at the account-opening stage

The account had been opened with Bank of Baroda, Sirsaganj Branch, on 10.05.2013 in the name of M/s Satguru Agency. Smt. Arti Gupta was its sole proprietor & held a separate PAN, ANGPA1523K.

The assessee explained that, while opening the account, bank officials had inadvertently recorded his PAN instead of the proprietor’s PAN. Since he was the authorised signatory, his PAN was wrongly carried into the bank’s Statement of Financial Transactions reporting, thereby creating the impression that the account & its cash deposits belonged to him.

To substantiate the claim, the assessee furnished the bank account-opening form and KYC documents showing Smt. Arti Gupta as proprietor & sole owner of the account. He argued that erroneous reporting of an authorised signatory’s PAN could not transfer legal ownership of either the account or the money deposited in it.

AO demands more than account-opening documents

The AO was not satisfied with the explanation. He noted that Smt. Arti Gupta had also not filed her return of income for the relevant year. The assessee had requested a video-conference hearing in response to the show-cause notice but did not attend the scheduled conference on 22.03.2023.

The AO further asked the assessee to obtain a specific letter from the bank confirming that the cash deposits belonged to Smt. Arti Gupta, that the assessee was not a joint holder & that he had no connection with the account beyond his authorised role. The assessee did not furnish such a letter.

No books of account, computation of income or supporting business records of M/s Satguru Agency were produced. Based on these deficiencies & the PAN reflected in the bank information, the AO concluded that the original intelligence was correct & added the entire cash deposit in the assessee’s hands.

CIT(A) separates authority from ownership

The CIT(A) examined the KYC & account-opening records and found that the current account stood solely in the name of Smt. Arti Gupta as proprietor of M/s Satguru Agency. The assessee was shown only as an authorised signatory—not as a joint holder or beneficial owner.

The CIT(A) held that an authorised signatory does not become taxable in respect of every receipt passing through the account merely because he is permitted to operate it. The assessee & his wife were separate persons assessed under different PANs.

The wife’s failure to file her return could not justify shifting her bank transactions into the husband’s assessment. If the Department considered the deposits unexplained, the legally proper course was to initiate proceedings against Smt. Arti Gupta, after following the applicable procedure.

Accordingly, the addition u/s 69A was deleted.

Revenue relies on PAN-linkage & control

In appeal, the Revenue argued that the account was linked to the assessee’s PAN as confirmed by the bank in response to notice u/s 133(6). It emphasised that the assessee had not filed his own return, had not satisfactorily explained the deposits & had not produced business records showing that the cash belonged to his wife’s proprietorship.

The Revenue also contended that, as the person operating or controlling the account, the assessee carried the burden u/s 69A to explain the source of the money. Smt. Arti Gupta’s failure to file her return was cited as making the explanation unverified.

PAN reporting is evidence, not ownership

The ITAT upheld the CIT(A)’s factual findings. The documentary records established that the account was solely owned by Smt. Arti Gupta, while the assessee was only an authorised signatory. The fact that his PAN had been wrongly linked with the account could not override the account-opening documents & KYC records identifying the true proprietor.

Most importantly, the Revenue produced no contrary evidence before the Tribunal to rebut the finding that the account belonged to the wife. It did not show that the assessee was a joint holder, beneficial owner or recipient of the deposited money.

Section 69A permits an addition in the hands of a person found to be the owner of unexplained money. Operational authority over another person’s bank account is not synonymous with ownership of every deposit appearing therein.

The wife’s non-filing of return might justify examination of her tax affairs, but it could not supply the missing ownership link required to tax the husband. The Revenue cannot cure one person’s non-compliance by assessing another person merely because the latter’s PAN was mistakenly reported.

The ITAT consequently upheld deletion of the Rs.1,89,87,500 addition u/s 69A & dismissed the Revenue’s appeal. The ruling’s message is delightfully simple: an authorised signature can operate a bank account, but it cannot sign away the account-holder’s tax identity.

FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, AGRA BENCH

This appeal is directed against the impugned order dated 13.02.2026 passed in appeal No NFAC/2017-18/10438014 by the NFAC (hereinafter referred to as the ld. Commissioner of Income Tax) u/s. 250 of the Income Tax Act, 1961 (‘the Act’) for the A.Y. 2018-19, wherein ld. CIT (A) has allowed the assessee’s appeal.

2. Brief facts of the case: This case was a reopened vide notice u/s 148 of the Act dated 31.03.2022 on the basis of information that the assessee had deposited cash of Rs. 1,89,87,500/- in the Bank of Baroda having account number 27510200000244. The AO also noted that during the year the assessee has not filed his return of income. The assessee submitted before the AO that the aforesaid current Bank A/c Number 27510200000244 at Bank of Baroda Sirsaganj Branch was opened on 10.05.2013 under the name of style of M/s Satguru Agency under the proprietorship of Smt. Arti w/o Shri Ram Niwas Gupta the assessee himself and the assessee was introduced as authorized signatory on the instructions of proprietor of M/s Satguru Agency Smt. Arti w/o Shri Ram Niwas Gupta. It was further submitted that a clerical error had taken place at the time of opening of the said bank A/c where the PAN of the authorized signatory had been placed instead of proprietor’s PAN of the firm Mrs. Arti by the bank officials. The assessee also submitted the necessary details including the bank a/c opening form to support his contention. The assessee also submitted that on filing the wrong PAN in the SFT of the bank does not establish the transactions to the PAN holder/authorized signatory i.e. the assessee himself.

2.1 However, the AO took note of the fact that no return was also filed by Smt. Arti w/o the assessee for the relevant assessment year. Further, the AO also took note of the fact that the assessee did not avail the video conference on 22.03.2023 which the assessee had sought in response to show cause notice issued to the assessee. The AO had also asked the assessee to furnish a letter from the Bank that the cash deposited in the aforesaid bank belonged to Smt. Arti Gupta and not the assessee Shri Ram Niwas Gupta and that the assessee was not joint holder of the said account nor connected with the said bank account. The AO further noted that the assessee did not provide any books of accounts or computation of income of M/s Satguru Agency. On the basis of above findings, the AO concluded that the information before him was correct and that the assessee had deposited the cash of Rs. 1,89,87,500/- in the aforesaid bank and accordingly added the same u/s 69A r.w.s 115 BBE of the Act.

3. Aggrieved with the said order the assessee filed an appeal before the Ld. CIT (A). The Ld. CIT(A) deleted the said addition by holding that appellant is assessed to tax with a different PAN i.e. ALDPG3241K, the bank account under reference was solely owned by Smt. Arti Gupta having PAN ANGPA1523K and the appellant was only an authorised signatory. The Ld. CIT (A) further held that the appellant is not under any obligation to be taxed in respect of the deposits made in the account of his wife despite the fact that Smt. Arti Gupta did not file her return of income for the AY 2018-19. The Ld. CIT (A) further observed that proper course of action for the revenue was to initiate proceedings against Smt. Arti Gupta to consider the amount of Rs. 1,89,87,500/- for taxation. Accordingly, the Ld. CIT (A) held that the addition u/s 69A cannot be sustained in the hands of the appellant and directed the AO to delete the same.

4. Aggrieved with the said order the revenue is in appeal before us on the following grounds of appeal:

“1. That the learned CIT(A), NFAC has erred in law and on facts in deleting the addition of Rs. 1,89,88,170/- made by the Assessing Officer under Section 69A of the Income-tax Act, 1961, without properly appreciating the facts and material available on record.

2. That the learned CIT(A) erred in holding that the bank account bearing No. 27510200000244 maintained with Bank of Baroda belonged solely to Smt. Arti Gupta and that the assessee was merely an authorized signatory, ignoring the fact that the account was linked with the assessee’s PAN (ALDPG3241 K) as per information received from the bank in response to notice under Section 133(6) of the Act.

3. That the learned CIT(A) failed to appreciate that the assessee did not file his return of income for A.Y. 2018-19 and failed to satisfactorily explain the nature and source of cash deposits amounting to Rs. 1,89,87,500/, thereby justifying the addition under Section 69A of the Act.

4. That the learned CIT(A) erred in accepting the assessee’s contention that the deposits pertained to his wife, Smt. Arti Gupta, without any supporting documentary evidence demonstrating that the said cash deposits were duly recorded in her books of account or offered to tax in her hands.

5. That the learned CIT(A) failed to consider that Smt. Arti Gupta, alleged proprietor of M/s Satguru Agency, had not filed her return of income for the relevant assessment year and therefore the claim that the deposits belonged to her remained unsubstantiated and unverifiable.

6. That the learned CIT(A) overlooked the contradictory statements made by the assessee during assessment and appellate proceedings, wherein the assessee initially denied having any business income, but subsequently claimed to be operating the bank account as a power of attorney holder, without furnishing any  documentary evidence of such authority.

7. That the learned CIT(A) erred in holding that proceedings ought to have been initiated against Smt. Arti Gupta, without appreciating that the onus under Section 69A lies upon the person found to be in possession or control of the money to satisfactorily explain its nature and source.

8. That the order of the learned CIT(A) is contrary to the facts on record, unsustainable in law, and liable to be set aside.

9. That the appellant craves leave to add, amend, alter or withdraw any ground of appeal at or before the time of hearing.”

5. At the time of hearing the Ld. AR supported the order of the Ld. CIT (A) whereas the Sr. DR supported the order of the AO and the grounds of appeal filed by the revenue.

6. We have heard both the parties and perused the material available on record. As noted above the Ld. CIT (A) deleted the addition on the ground that appellant is assessed to tax with a different PAN i.e. ALDPG3241K and the bank account under reference was solely owned by Smt. Arti Gupta having PAN ANGPA1523K and the appellant was only an authorised signatory. The Ld. CIT (A) further held that the appellant is not under any obligation to be taxed in respect of the deposits made in the account of his wife despite the fact that Smt. Arti Gupta did not file her return of income for the AY 2018-19. The relevant extracts of the said order are reproduced as under:

“7. Decision I have gone through the facts of the case. I find that the bank A/c no. 27510200000244 with Bank of Baroda stood in the name of Smt Arti Gupta as the sole proprietor of the M/s Sadguru Agency. The name of the appellant features as an authorized signatory and not as a joint account holder. The KYC document furnished before the AO is as follows:

………

Since the appellant is assessed to tax with a different PAN i.e. ALDPG3241K, the bank account under reference was solely owned by Smt. Arti Gupta having PAN ANGPA1523K and the appellant was only an authorised signatory, in my considered view, the appellant is not under any obligation to be taxed in respect of the deposits made in the account of his wife despite the fact that Smt. Arti Gupta did not file a return of income for the AY 2018-19. The proper course of action was to initiate proceedings against Smt. Arti Gupta to consider the amount of Rs. 1,89,87,500/- for taxation. In the circumstances, the addition u/s 69A cannot sustain in the hands of the appellant. The AO is directed to delete the same. The ground raised by the appellant, is allowed. In the result, the appeal is allowed.”

6.1 At the time of hearing before us, no controverting evidence has been brought on record by the revenue to rebut the above findings of the Ld. CIT (A). Further, we are of the considered view that in the given facts of the case the Ld. CIT (A) was justified in deleting the said addition on the ground that the impugned bank A/c did not belong to the assessee and the assessee was assessed with a different PAN being ALDPG3241K even though Smt. Arti Gupta who solely owned the bank account under reference did not file her return of income for the AY 2018-19. Accordingly, we uphold the order of the Ld. CIT (A) and dismiss the appeal of the revenue.

7. In the result, the appeal of the revenue is dismissed.

Order pronounced in the Open Court on- 09.07.2026