Smt. Dharipalli Rangamma Vs ACIT (ITAT Visakhapatnam)
Addition on account of Unexplained deposits in bank account found during search under Section 153C justified
Conclusion: Since the bank account in which assessee made huge cash deposits found during the course of search was not declared by assessee and assessee had not filed return for the year under consideration, therefore, the same constituted seized material so as to invoke section 153C in assessee’s case.
Held: Assessee had a bank account and made huge cash deposits in the said bank account. This fact had come to the notice of the department during the course of search and seizure operations conducted in the premises of searched person. Accordingly, AO issued notice under section 153C to assessee and made addition. Assessee contended that assessment was made on the basis of deposits made in bank accounts without having the seized material. It was found that assessee had not filed the regular return of income and no assessments were made u/s 143(3) / 143(1) for the impugned assessment year. Thus, the bank account found during the course of search was not declared by assessee. Therefore, the bank accounts found during the course of search constituted the seized material capable of initiating proceedings u/s 132. Accordingly, the action of the AO for initiating the proceedings u/s 153C and the legal validity of consequent additions made by the AO was upheld.
FULL TEXT OF THE ITAT JUDGEMENT
These appeals are filed by the assessee against the order of the Commissioner of Income Tax(Appeals) [CIT(A)]-3, Visakhapatnam vide ITA No.305/2015-16/CIT(A)-3/VSP/2016-17 dated 10.03.2017 for the Assessment Year (A.Y) 2007-08 to 2011-12. Since the grounds raised in the appeals are common, these appeals are clubbed, heard together and a common order is being disposed of for the sake of convenience as under.
2. The assessee raised the following grounds of appeal for the A.Y.2007-08. These grounds are common for all the A.Ys 2007-08 to 2011-12.
1. The CIT(A) as well as the Assessing Officer ought to have appreciated the fact that your Appellant was provided with the copies of the seized material without sufficient time to analyse and file return under section 153C, therefore, assessment u/s 144 is bad in law.
2. The CIT(A) erred in law and facts of the ease in confirming the addition of Rs 2,94,500/- made in assessment.
3. The CIT(A) and the Assessing Officer have erred in law and facts of the case adding Rs. 2,73,000/- being cash deposited in Bank on mere suspicion and presumption that it belongs Your Appellant ignoring the deposition of Smt. U. Rajyalakshmi.
4. The CIT(A) having called for the records and assessment orders of Smt. U Rajyalakshiui ought to have given an opportunity to verify the same and explain the facts, after considering the same ought to have deleted the addition.
5. Your Appellant submits that the cash deposit of Rs. 21,500/- is out of the income of her late husband Sri. D. Krishnamachary, which is below the taxable income, therefore the addition may be deleted.
6. Your Appellant submits that the addition is not based on any seized material but based on cash deposited in bank account, the addition is bad in law and may be deleted.
3. Ground No.1 is related to the issue of not providing the seized material to the assessee well in advance to analyze and file the return of income. This ground is common for all the appeals for the Assessment Years of 2007-08 to 2011-12. A search u/s 132 was conducted in the case of D.Sampath on 13.07.2011 in connection with the cases of Smt. U Rajya Lakshmi and others. During the course of search, certain incriminating material relating to the assessee was found and seized indicating undisclosed income of the assessee from the premises of searched person. Consequently, the Assessing Officer (AO) had issued the notice u/s 153C on 13.08.2013 calling for the returns of income for the A.Y.2007-08 to 2011-12, but there was no response from the assessee. Subsequently, the AO issued a letter calling for information and there was no response from the assessee for the letter also. The assessee has requested for copies of the seized material on 11.03.2014 and the AO supplied the copies of the seized material on 13.03.2014 within two days of time, thus we do not find any lapse from the AO. During the appeal hearing before the Ld.CIT(A) also, the assessee did not analyze the seized material taken by her and presented the case. This ground was not raised by the assessee before the Ld.CIT(A) and during the appeal hearing, the Ld.AR did not make any argument to support this ground. Therefore, we do not find any merit in the ground raised by the assessee and this ground is dismissed. This ground is involved for the A.Ys 2007-08 to 2011-12 and the assessee’s appeals on this ground for all the assessment years are dismissed.
4. Ground No.2 and 3 are related to the cash deposits made in the bank account of Late Shri D.Krishnamachary father of D.Sampath. During the search and seizure operations in the premises of D.Sampath, the AO found the bank accounts relating to Late Sri D. Krishnamachary father of D.Sampath. The assessee found to have made huge cash deposits in the bank accounts for the A.Ys. 2008-09 to 2011-12 as under :
