ITO Vs Pankaj Batra (ITAT Delhi)
Summary: The Income Tax Appellate Tribunal, Delhi Bench “B”, considered the Revenue’s appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, which had deleted an addition of Rs.5,25,47,500/- made under section 69A of the Income-tax Act, 1961 in the hands of Pankaj Batra. The assessee had also filed Cross Objection No. 136/Del/2026. The Tribunal ultimately dismissed both the Revenue’s appeal and the assessee’s cross objection.
The order records that the assessee filed his return of income declaring total income of Rs.4,32,100/-. His case was selected for scrutiny through CASS on the basis of cash deposits during the demonetisation period. Notice under section 143(2) and subsequently notice under section 142(1) with questionnaire were issued. The assessment was completed under section 143(3).
During the assessment proceedings, the assessee stated that he was operating only one bank account with Kotak Mahindra Bank, Sector-63, Noida. He disputed ownership of another account bearing No. 2045201012033 maintained with Canara Bank, Kaithal Branch, Haryana, in which cash of Rs.5,25,47,500/- had been deposited during the demonetisation period. According to the assessee, a forged account had been opened using his documents and KYC, and he had lodged a complaint with the police alleging involvement of the Branch Manager.
The Assessing Officer did not accept the explanation and made an addition of Rs.5,25,47,500/-, assessing the assessee’s total income at Rs.5,29,79,600/-. The Assessing Officer held that the amount had been deposited in the Canara Bank account opened in the name of M/s Jai Maa Laxmi Products using the assessee’s PAN and KYC documents and that the assessee had failed to establish that the account had been opened through collusion involving the Branch Manager.
Before the NFAC, the assessee reiterated that the disputed Canara Bank account was not opened by him and that his KYC documents may have been forged and misused. The NFAC noted that the Assessing Officer had issued notice under section 133(6) to the Canara Bank Branch Manager and obtained the bank statement and KYC documents. However, the NFAC observed that the assessment order did not establish whether the signatures and PAN appearing in the account-opening documents had been verified with the assessee. It also noted that the Assessing Officer had not called for the cash deposit slips or established the branch at which the cash was deposited.
The NFAC further noted that the assessee was a resident of Noida whereas the disputed account was maintained at Kaithal, Haryana, and that the account had been opened in the name of M/s Jai Maha Lakshmi Products at an address in Moti Nagar, New Delhi. The NFAC observed that the Assessing Officer had not deputed an Inspector to verify whether such concern existed or what business activities it conducted.
The NFAC accordingly held that there was no material establishing that the disputed bank account belonged to the assessee. It also noted that the money deposited in cash was immediately transferred to ten beneficiaries and that the Assessing Officer had referred the matter to the respective Assessing Officers for possible action. On this basis, the NFAC held that the amount of Rs.5,25,47,500/- could not be taxed in the assessee’s hands, observing that the same income could not be taxed in two hands separately. The addition was therefore deleted. The NFAC also dismissed the grounds concerning interest under sections 234A and 234B as consequential and dismissed the ground concerning initiation of penalty under section 271AAC as premature. The provisions of section 271AAC concern specified income including income determined under section 69A.
Before the Tribunal, the Revenue argued that the bank account had been opened in the assessee’s name using his PAN and KYC and that the assessee had failed to explain the source of the cash deposited. The Revenue contended that the NFAC had proceeded on presumptions and surmises.
The assessee’s authorised representative submitted that the account had not been opened by the assessee and had instead been opened by another person using his KYC documents. It was submitted that an FIR had been lodged and that the police had filed a charge sheet against Vijay Goyal, Jaideep and Kamal Shorewala. The assessee also relied upon the paper book filed before the Tribunal.
The Tribunal examined the evidence on record. It noted that the assessee had lodged an FIR concerning the disputed account and that, during investigation, the investigating officer had submitted a charge sheet against three accused, with some other persons shown as suspected accused. The Tribunal also noted that the disputed and actual signatures of Pankaj Batra had been sent for comparison to the forensic science laboratory and that the forensic examination found that the person who wrote the actual signature did not write the disputed signature.
On this evidence, the Tribunal held that the assessee had proved that the disputed account had not been opened by him. It further agreed with the NFAC that the relevant enquiries concerning beneficiaries had not established that the cash belonged to the assessee.
The Tribunal therefore held that the Canara Bank, Kaithal account did not belong to the assessee and that the amount of Rs.5,25,47,500/- deposited into that account could not be taxed in his hands. The Tribunal also held that the NFAC had passed a reasoned order based on the evidence and had correctly examined the issue. Finding no reason to interfere with the NFAC’s findings, the Tribunal dismissed the Revenue’s appeal.
The assessee’s Cross Objection No. 136/Del/2026 was not pressed by the authorised representative and was accordingly dismissed as not pressed.
Thus, the ITAT Delhi dismissed both the Revenue’s appeal and the assessee’s cross objection, leaving the deletion of the Rs.5,25,47,500/- addition undisturbed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the revenue and cross objection by the assessee is directed against the order of the National Faceless Appeal Centre Delhi [hereinafter referred to as “Ld. NFAC”] vide order dated 18-08-2025 arising out the Assessment Order passed dated 28-12-2019 under section 143(3) of the Income Tax Act, 1961 (in short “the Act” Act, dated 28-06-2023.
2. The Revenue has raised the following ground in appeal as under:
1. Whether in the facts and in circumstances of the case, the Ld. CIT(A) has erred in holding that bank account in which the cash of Rs.5,25,47,500/- was deposited does not belong to the assessee ignoring the facts that the account was opened with the KYC documents of the assessee and also in the name of the assessee.
2. Whether in the facts and in circumstances of the case, the Ld. CIT(A) has erred in delivering the contradictory observations that the AO was not able to prove that the bank account belonged to the assessee and further that the assessee may have received the commission for rotating the unaccounted cash through his bank account.
3. Whether in the facts and in circumstances of the case, the Ld. CIT(A) has erred in holding that the unaccounted /explained amount deposited in the bank account of the assessee cannot be taxed in the hands of the assessee.
4. Whether in the facts and in circumstances of the case, the Ld. CIT(A) has erred in holding that in view of the information passed to the AOs of the other persons in whose account the amount was transferred from the bank account of the assessee cannot be taxed in two hands ignoring the facts that the source of the cash deposited in the bank account of the assessee was not explained?
5. Whether in the facts and in circumstances of the case, the Ld. CIT(A) has erred in holding that the amount cannot be taxed in two hands without giving any valid reasons?
6. That the appellant craves leave to add, to alter or amend any grounds of appeal raised above at the time of hearing.
3. The brief facts of the case are that the assessee filed its return of income for the year under consideration on 14-06-2019 declaring total income of Rs.4,32,100/-. The case of assessee was selected for Scrutiny through CASS on the basis of reason that cash deposit during demonetization period. In the reference of the scrutiny, notice under section 143(2) of the Act dated 24-09 2018 was issued and served upon the assessee. Again, notice under section 142(1) of the Act along with questionnaire were issued to the assessee. The assessee submitted his submissions before the Assessing officer and stated that assessee has running only one bank account in Kotak Mahindra Bank Sector -63 Noida. He also submitted that forged account was opened in the name of M/s Jai Maha Lakshmi Products A-33 Sudarshan Park Moti Nagar New Delhi the other person in the Canara Bank Kaithal by using the papers of the assessee. The assessee also made the complaint before the police Kaithal stating that the Branch Manager of the bank is involved in this fraud. The Assessing Officer did not agree of the submission furnished by assessee and made the addition of Rs.5,25,47,500/-and assessed the total income of the assessee at Rs.5,29,79,600/-. According to Assessing Officer the assessee has deposited the amount of Rs.5,25,47,500/- in the bank account at Canara Bank Kaithal Haryana during the demonization period by opening the account in the name of M/s Jai Maa Laxmi Products. The assessing Officer also observed that assessee has failed to establish that the account was opened with the collusion of the Branch Manger by some other person.
4. Aggrieved the order of the Assessing Officer the assessee preferred the appeal before the Ld. NFAC who vide his order dated 18-08-2025 partly allowed the appeal of the assessee. The Ld. NFAC has observed in his order as under:
5. Observations, findings and decision of merit:
5.1 I have carefully considered the submission filed by the appellant, the facts mentioned by the Assessing Officer (hereinafter referred to as “the AO”), and the materials available on record. The judicial precedents mentioned by the appellant have been perused by me as well. The appellant has challenged the assessment order passed by the Ld. AO under section 143(3) of the Income Tax Act 1961 (in short, the Act) by filing this appeal. For the sake of brevity, I won’t elaborate on the case facts and the appellant’s submission, which have already been discussed in the earlier part of the order.
5.2 Ground No.1 and 2 are general in nature and dose not require separate adjudication. Ground No.3 to 7 are regarding addition of Rs. 5,25,47,500/- u/s 69A on account of cash deposited during demonetization period from 8.11.2016 to 30.12.2016. The Id AO found that the appellant during demonetization period had deposited cash of Rs. 5,25,47,500/- into his bank A/c bearing No.2045201012033 maintained with Canara Bnak, Kaithhal Branch, Hariyana. The Id AO further noted from the appellant’s submission made before him that the appellant is a partner in M/s kagaz Udyog and received salary as partner from the M/s Kagaz Udyog as well as interest income on capital introduced in the partnership firm. Further, the appellant stated the Id AO that he was operating two saving bank accounts and currently he has been operating single bank account in Kotak Mahindra Bank, Sector-63, Noida bearing A/c No. 2211414430 and he has further submitted that he had deposited Rs. 20,000/- during FY 2016-17 out of cash in hand available with him. However, there is no mention of the other savings account which the appellant claimed to be operating and not currently operating, in the assessment order. Whether the said account is closed or still active and details of such account has not been mentioned either by the appellant or by the Id AO. However, it is observed from the impugned assessment order that there is another bank account in the name of the appellant bearing No.2045201012033 maintained with Canara Bank, Kaithhal Branch, Hariyana wherein cash of Rs. 5,25,47,500/- was deposited during demonetisation period from 9.11.2016 to 30.12.2016.
5.3 The appellant was called for explanation from the Id AO for the source of cash of Rs. 5,25,47,500/- was deposited during demonetisation period from 9.11.2016 to 30.12.2016. The appellant in his reply submitted before the Id AO that the said bank account was not opened with his PAN. The appellant also submitted that the alleged bank account with Canara Bank, Kaithhal Branch, Hariyana was not his but the same may be opened with the forged KYC of his by someone else. He, thus, registered complain before various authorities as detailed in the assessment order for making an enquiry to reveal the truth.
5.4 The Id AO also made an independent inquiry and issued notice u/s 133(6) of the Act to the Bank Manager Canara Bank, Kaithhal Branch, Hariyana. In reply to the said notice the Bank Manager provided bank statement and the KYC to open the account No.2045201012033 which are part of his record. However, he has not mentioned any details of such KYC documents supplied by the bank in his order. The KYCdocument should contain PAN number and account opening form from where signature of the appellant and the PAN could be verified. However, there is no such move to establish whether he verified the signature by summoning the assessee before him and the PAN card so used. If different PAN card was used whether the said card is a duplicate PAN card of the appellant or not, has been ascertained. The appellant in his submission earlier said that a different PAN card has been used which was required to be verified by the Id AO. Further, Id AO did not call for the deposit slip for cash deposit in the A/c No.2045201012033 from the Canara Bank and in which branch the cash was so deposited during demonetisation period. The appellant is a resident of Noida having address as per Income Tax record M-1101, Grand Ajnara Heritage, Sector-74, Noida, UP- 201301 and the bank account bearing No.2045201012033 maintained with Canara Bank, Kaithhal Branch, Hariyana which is around 200 km and takes more than 3 hours to reach there. The Id AO has not demonstrated at what interval cash was deposited which could also give some insight into the possibility of depositing cash by the appellant. The said account was opened in the name of M/s Jai Maha Lakshmi Products, A-33, Sudarshan Park, Moti Nagar, New Delhi. The Id AO have not deputed an Inspector to verify the address at A-33, Sudarshan Park, Moti Nagar, New Delhi to find whether any concern named M/s Jai Maha Lakshmi Products exist and what business he is running and nature of such business activities.
5.5 Thus, I do not find any material to establish that the bank account in question was indeed beföngsTo the appellant. It is also observed from the assessment order that the Id AO had obtained details of beneficiaries in whose account the money was immediately transferred on deposit of such cash. He indeed made an effort to identify them. It is observed from the list of beneficiaries that there are 10 such beneficiaries and the Id AO could collect details from the corresponding bank where these beneficiaries were maintaining account, in seven cases. In three cases no reply was received from the bank. It is not known whether the Id AO further followed up with those three bank who did not supply the information about three beneficiaries viz. Bhagwati Telecom Corporation, Venus Enterprises and Krishna Agrotech, or taken any step against the three bank Manager for not providing the information as called for by him u/s 133(6) of the Act. It is observed from the impugned assessment order that the Id AO made reference to the AOs i.r.o the persons who were the beneficiaries of the money for possible action as per Act.
5.6 Thus, it becomes ample clear that money so deposited in cash during demonetisation period was not the appellant’s money. He may have received some commission for the service provided for allowing his bank account to be used to channelised the unaccounted demonetised cash. However, no conclusive evidence could be reached by any authorities to establish that the Recount number in question was of the appellant. The observation of the Id AO that the assessee could not, during the entire assessment proceedings, produce any substantial evidence to conclude that any court/police authority or the internal enquiry of bank has concluded that the KYC documents of assessee were misused by any unknown person. There were no conclusive findings either against any specific person who could have misused the assessee’s identity and the deposits were made by said unknown person. The matter is still under investigation and in the absence of any conclusive findings against the appellant, the Id AO went on to hold that the bank account No. 2045201012033 at Canara Bank, Kaithal Branch, Haryana was opened in the name of the assessee using the assessee’s KYC and as the cash so deposited of Rs. 5,25,47,500/- remained unexplained he treated the same as income from undisclosed sources u/s 69A of the Act.
5.7 Considering the discussion, I hold that the inquiry so made by the Id AO does not prove that the money so deposited into the bank A/c No.2045201012033 maintained with Canara Bank, Kaithhal Branch, Hariyana. Further, his observation that there are ten beneficiaries in whose bank account the money was immediately transferred and he informed the concerned AOs to take necessary action as per Act, I hold that the amount of Rs. 5,25,47,500/- cannot be taxed in the appellant’s hand . It is well settled law that the same income cannot be taxed in two hands separately. Therefore, addition so made is liable to be deleted and accordingly allowed. The ground of appeal on this issue is allowed.
5.8 Ground No.8 is regarding charging of interest u/s 234A and 234B which are consequential in nature as per Act and depend on the outcome of the assessment, hence this ground is also dismissed.
5.9 Ground No.9 is regarding initiation of penalty u/s 271AAC of the Act which is a separate proceedings and it is premature to adjudicate now. Thus, the ground is dismissed.
In the result, the appeal filed by the appellant is partly allowed.”
Being aggrieved the order of the Ld. NFAC the revenue is in appeal before the Tribunal.
5. The Ld. DR submitted that the bank account was opened in the name of the assessee by using his PAN number and KYC in which cash of Rs.5,25,47,500/- was deposited during the demonetization. The findings of the Ld. NFAC are against the evidence that the Assessing Officer has not able to prove that bank account belonged to assessee. He also submitted that the findings of the Ld. NFAC is against the fact that the tax cannot be taxed in two hands. In this case the assessee has failed to explained the source of cash deposited before the Assessing Officer. He also submitted that Ld. NFAC passed the order on the conjunctions and surmises, basis.
6. The Ld. AR submitted that the bank account was not opened by the assessee. The bank account was opened with the collusion of the Bank Manager Canara Bank Kaithal by some other person by using the KYC of the assessee. In this regard the assessee also lodged the first information report in which police filed the charge sheet against the accused namely Vijay Goyal, Jaideep, and Kamal Shorewala. He further submitted that he raised the issue before the Assessing Officer that the assessee never opened the bank account in Canara Bank at Kaithal Branch. The Ld. NFAC rightly deleted the additions made by the Ld. Assessing Officer. In the support of the contention the assessee filed a paper book containing page numbers 1 to 163.
7. We have heard the parties and perused the material available on record. In the present case the Ld. NFAC deleted the additions holding that the bank account in which the cash of Rs.5,25,47,500/- was deposited does not belong to the assessee. We observed that to prove this fact that the bank account was opened by the forged person by using the Pan number of the assessee, first information report was lodged by the assessee in which the investigating officer submitted the charge sheet against the three accused and some are suspected accused as per charge sheet (P.B. page No. (136 to 163). During the investigation the disputed and actual signature of the Pankaj Batra were sent for comparison to the forensic science laboratory in which it was found that person who wrote the actual signature did not wrote the disputed signature (P.B. page No.123 to 130). The assessee has proved by his evidence that account in question was not opened by him. The Ld. NFAC has also observed in the order that the ld. Assessing Officer could not collect details from the corresponding bank where these beneficiaries in which account the amount was transferred were maintaining. The Ld. NFAC has rightly held that the bank account in question was not belonged to the assessee and the amount of Rs.5,25,47,500/- was not deposited by the assessee. The cash deposit in the bank account of Canara bank Kaithal cannot be taxed in the hands of the assessee.
8. The Ld. DR submitted that Ld. NFAC passed the order on the presumption basis. We find that the Ld. NFAC has passed the reasoned order based on the evidence and has examined the issue in the correct perspective and rightly deleted the additions towards the cash deposit. The reasoning and findings of the Ld. NFAC, while granting relief is on proper appreciation of law expounded by the judicial dicta. We do not find any reasons to interfere with the findings of the Ld. NFAC the appeal of the Revenue is liable to be dismissed.
Cross Objection 136/Del/2026
9. The Ld. AR of the assessee not pressed the cross objection. The cross objection is dismissed as not pressed.
10. In the result, the appeal of the Revenue and the Cross Objection filed by the assessee are dismissed.
Order pronounced in the open court on 19.08.2026.
