Addition for mere typographical error in Bank A/c number not unsustainable

ITO Vs Siddi Vinayaka Auto Mobiles (ITAT Visakhapatnam)

Mere typographical error of the account number of the bank account does not mean that the assessee has not disclosed proper information about the bank account details. Addition u/s 69A unsustainable

Facts- The assessee is a dealer in automobiles. The assessee made substantial cash deposits during the demonetization period and subsequently a notice u/s. 142(1) was issued. Assessee didn’t responded. Accordingly, AO based on cash deposits assessed that the cash deposits are unexplained u/s. 69A of the and completed the assessment. AO also scrutinized Form 26AS and added an income of Rs. 1,24,362/- being amounts received from various parties. Since the assessee did not submit any details, AO passed the order U/s. 144 of the Act. CIT (A) deleted the additions. Being aggrieved, revenue preferred the present appeal.

Conclusion – We find merit in the arguments of the Ld. AR that the cash deposits are made out of the cash sales of the assessee and have been duly recorded in the books of account and reflected in the P & L Account of the assessee submitted before the Ld. Revenue Authorities. We also find merit in the arguments of the Ld. AR that considering the peculiar circumstances to this business cash being received by the dealer in automobiles for making payments to various authorities such as registration charges, insurance, life tax etc., The cash is collected from the customers as reimbursements and hence it does not form part of the revenue of the assessee.

We also note that from the paper book submitted by the Ld. AR that the Account Number has been typographically wrongly mentioned in the Note-9 in Schedule to Balance Sheet as on 31/3/2017 appended to financial statements, but the balances are properly disclosed in the books of accounts thus, mere a typographical error of the account number of the bank account does not mean that the assessee has not disclosed proper information about the bank account details. In view of the above facts, we find no infirmity in the order of the Ld. CIT(A) and hence no interference is required.

FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM

The captioned appeal is filed by the Revenue against the order of the Ld. CIT(A)-1, Guntur in appeal No. 10282/GNT/CIT(A)- 1/2019-20, dated 17/02/2020 passed U/s. 144 r.w.s 250(6) of the Act for the AY 2017-18. The assessee has raised the Cross Objection.

2. Brief facts of the case are that the assessee is a dealer in automobiles. The assessee has made substantial cash deposits during the demonetization period and subsequently a notice U/s. 142(1) was issued on the assessee on 23/11/2007. Since the assessee did not respond, a letter dated 29/04/2019 was issued u/s. 142(1) of the Act calling for information which was served on the assessee on 7/5/2019. Consequently, notice U/s. 133(6) was also issued to the concerned bank requesting to furnish the bank account(s) statement and the KYC particulars of the assessee. A final show cause notice U/s. 142(1) of the Act was issued on 19/9/2019. The AO based on the cash deposits made by the assessee for Rs. 71,41,540/- assessed that the cash deposits are unexplained U/s. 69A of the Act and completed the assessment. The AO also noted that the assessee has two (2) PANs such as ACVFS5183P (Old PAN) and another PAN: ACTFS5317B (New PAN). The AO also observed in his assessment order that the assessee has not disclosed the bank account with Axis Bank, Lakshmipuram Branch, Guntur bearing A/c No. 915020038538301 (in short 38301). The AO also scrutinized the Form-26AS available with the PAN: ACVFS5183P and added an income of Rs. 1,24,362/- being amounts received from various parties as detailed in the order of the AO. Since the assessee did not submit any details, AO passed the order U/s. 144 of the Act. Aggrieved by the order of the Ld. AO, the assessee is in appeal before the Ld. CIT(A)-1, Guntur.

3. The Ld. CIT(A) deleted the additions made by the Ld. AO and allowed the appeal. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us.

4. The Revenue has raised the following grounds of appeal:

“1. The order of the Ld. CIT(A) is erroneous both in law and on facts of the case.

2. The Ld. CIT(A) failed to appreciate the fact that certain submissions/additional evidences produced by the assessee before the Ld. CIT(A), were never produced /submitted by assessee before the Ld. AO during the assessment proceedings.

3. The Ld.CIT(A) erred in accepting and taking into consideration the additional evidences produced by the assessee in deciding the appeal, without giving an opportunity to the AO to examine the same as mandated under Rule 46A of the IT Rules, 1962.

4. The Ld. CIT(A) ought to have appreciated the fact that the assessee has not substantiated its claim regarding cash deposits appearing in Axis Bank account in respect of which addition of Rs. 71,41,540/- was made towards unexplained money u/s. 69A of the Act.

5. The Ld. CIT(A) ought to have appreciated the fact that assessee had not substantiated its claim regarding receipts appearing in Form 26AS appearing with PAN: ACVFS 5183 P in respect of which addition was made towards ^„income from other sources‟.

6. Any other ground(s) that may be urged at the time of hearing.”

5. Against the grounds raised by the Revenue, the assessee has raised the Cross Objections.

6. The Ld. DR argued that the assessee did not appear before the Ld. AO and hence the order was passed U/s. 144 of the Act. The assessee has produced additional evidence before the Ld. CIT(A) but the Ld. CIT(A) has not called for the remand report from the AO thereby violating the provisions of section 46A of the IT Rules, 1962. Ld. DR also stated that the assessee is having two (2) PANs violating the provisions of Income Tax Act, 1961. The Ld. DR vehemently supported the order of the Ld. AO.

Per contra, the Ld. AR argued that the assessee has wrongly mentioned the bank account number while filing the balance sheet before the Ld. AO. The Ld. AR further submitted that the assessee does not have any bank account ending with No. 13882. The Ld. AR submitted that the assessee has rightly disclosed the balance with the Axis Bank, Guntur bearing No. 38301 in the balance sheet before the Income Tax Authorities. The Ld. AR further submitted that the reconciliation statement of the Axis bank account bearing No. 38301 was also submitted before the Ld. Revenue Authorities. The Ld. AR further submitted that the cash deposits of Rs. 71,41,540/- into the bank account bearing No. 38301 was duly accounted in the cash book and out of which Rs. 64,63,713/- has been duly accounted for in the P & L Account under the head ^„Revenue from operations (gross)‟. The balance amount of Rs. 6,77,827/- has been received from the customers towards registration charges, insurance etc for vehicles and to that extent it does not take the character of income and it is only a reimbursement of expenditure payable to various authorities for registration of the vehicle. The Ld. AR also submitted that the other income of Rs. 1,24,362/- has been tagged with PAN: ACVFS5183P has been duly disclosed in the P & L Account under the head “other income”. Therefore, the Ld. AR pleaded that there is no misrepresentation in the income and hence the order of the Ld. CIT(A) to be upheld.

7. We have heard the rival submissions and carefully perused the material available on record and the orders of the authorities below. Firstly, we noticed from the order of the Ld. AO in para 2 it was stated that the assessee has not submitted any reply to the show cause notice letters. Relevant portion of the AO order is extracted below:

“2. Subsequently a show cause notice letter along with a notice u/s. 142(1) dated 19/9/2019 was issued. Vide the said show cause notice the assessee was again requested to furnish a note on source(s) of cash deposit(s) made during the demonetization period, during the year under consideration and also deposits/amounts received through bank by way of transfer, etc. it was also requested vide the said show cause letter to furnish assessee‟s objection(s), if any, for completion of assessment proceedings pending ex-parte under the best judgment assessment u/s. 142(1) r.w.s 144(1)(b) of the IT Act, 1961 by treating the entire cash deposits and deposits/amounts received through bank during the year under consideration as unexplained money under section 69A of the IT Act. However, the said show cause letter also remained unreplied by the assessee again. The relevant extract of show cause letter is as under:

8. It is also seen from para 3 of the AO’s order that the AO has contradicted his own statement that the assessee has not furnished any reply in response to the show cause notice. Para 3 of the AO’s order is reproduced below:

“3. In reply, the assessee furnished information from time to time. Assessee furnished SBI Ac No. 62438963123. It furnished a copy of letter dated 14/11/2019 issued by SBI, Autonagar stating that the A/c No. 62386774417 belongs to the PAN: ACVFS5183P which is said to be maintained by assessee and the same was closed on 16/12/2015. Further it is stated by the banker that the said account is also linked to PAN: ACTFS531 7B. It is also stated that presently Ac No. 62438963123 is linked to ACTFS531 7B (running account) which was opened on 7/10/2015. As seen from balance sheet submitted by assessee Ac No. 62438963123 is appearing in the list of bank accounts maintained by assessee with PAN: ACTFS531 7B.”

9. We also find merit in the arguments of the Ld. AR that the cash deposits are made out of the cash sales of the assessee and have been duly recorded in the books of account and reflected in the P & L Account of the assessee submitted before the Ld. Revenue Authorities. We also find merit in the arguments of the Ld. AR that considering the peculiar circumstances to this business cash being received by the dealer in automobiles for making payments to various authorities such as registration charges, insurance, life tax etc., The cash is collected from the customers as reimbursements and hence it does not form part of the revenue of the assessee. We also note that from the paper book submitted by the Ld. AR that the Account Number has been typographically wrongly mentioned in the Note-9 in Schedule to Balance Sheet as on 31/3/2017 appended to financial statements, but the balances are properly disclosed in the books of accounts thus, mere a typographical error of the account number of the bank account does not mean that the assessee has not disclosed proper information about the bank account details. The assessee while filing ITR-V has disclosed the bank account ending with No. 38301 in the list of bank accounts which was demonstrated by the Ld. AR before us. We also note from the records available before us that the income appearing in Form 26AS with PAN: ACVFS5183P was also shown under the head “other income” by the assessee while filing the return of income. In view of the above facts, we find no infirmity in the order of the Ld. CIT(A) and hence no interference is required.

10. The Cross Objection raised by the assessee is supportive in nature and therefore, the grounds raised thereof need no adjudication.

11. In the result, appeal of the Revenue is dismissed and the assessee‟s Cross Objection is disposed off.

Pronounced in the open Court on the 28th June, 2022.