Case Law Details

Case Name : Ashok Kumar Vs ITO (ITAT Chandigarh)
Appeal Number : ITA No. 263/CHD/2020
Date of Judgement/Order : 30/04/2021
Related Assessment Year : 2011-12

Ashok Kumar Vs ITO (ITAT Chandigarh)

Before parting, it needs be highlighted that for India to achieve the status of a USD 5 trillion economy, the banking industry necessarily needs to have a very robust and transparent mechanisms of zero tolerance of abuse of power without which the Indian ambition can only remain a pipe dream. It can never be over emphasized that in the backdrop of growing NPAs as a threat to the banking sector it is the need of the hour that by practicing rigorous transparency and openness with the ability to critical self regulate their functioning, the banking industry has got the ability to separate the grain from the chaff. The need to encourage and applaud innovation and improvement in governance in the banking sector must be tempered with strict accountability and zero tolerance for abuse of trust and power. The Indian dream of becoming a 5 trillion USD economy is not a mere optimistic dream these aspirations have all the ingredients of inherent potential of an achievable aim. However, this aspiration necessarily has to ride on the shoulders of the banking and financial sectors. Their robustness cannot be compromised. The accountability of individual aberrations must be seen to be fixed to check the rampant irresponsible egos of a few black sheep giving it a bad name. The fact that the Indian growth is to be powered by the Banking and financial sector is well understood. The fact that it is still woefully dis-proportionate and very small vis-à-vis the economy needs proper appreciation. The fact that it is the most powerful engine powering this growth and thus, has a direct role alongwith the tax machinery cannot be ignored. Hence, the robustness cannot be compromised with.

Thus, similarly, the tax authorities necessarily need to have effective and meaningful protocols in place in order to ensure that they are not only trained to be citizen friendly but also seen to be so with robust powers of engaging positively with small town assessees and enabling them to be tax compliant. To expect that the U.S.D. 5 trillion aspirations can be realized with selective encouragements without the active involvement of the village economy and the small town aspirations is being very short sighted. The aspirations can only be realized if the Indian juggernaut in its entirety is put in motion. I am of the view that in order to realize this generally feasible and not highly optimistic ambition of a global economic force status. The tax authorities should be necessarily and urgently trained to enable the nurturing, fuelling and funneling of the small town aspirations of the citizens coupled with the powering provided by the banking and the financial sectors which can ensure the entry of India as a responsible economic force to be reckoned with in the global economic powerhouse of nations. Hence, I am of the view that the citizen/assessee friendly environment and workforce necessarily needs to be set in place at the earliest. Hence, it is my humble suggestion that creation of a TAX ADVISORY CELL is the urgent need of the hour.

FULL TEXT OF THE ITAT JUDGEMENT

The present appeal has been filed by the assessee wherein the correctness of the order dated 12.03.2020 of CIT(A) Karnal pertaining to 2011-12 assessment year is assailed on various grounds. These read as under :

1. Because the action is under challenge on facts & law for concluding the reassessment u/s 147/148 that an amount of Rs. 28,52,200/-.

2. Because the action for upholding the addition of Rs. 27,00,000/-as concealed income u/s 69 is under challenge on facts & law inspite of the statement of the Branch Manager and the representation to the Chairman of Punjab National Bank not finding any consideration in the conclusions.

3. Because in accordance with the section 250(4) of the Act there is misuse of the powers by the CIT(A) by not considering the material facts, containing material particulars on record for adjudicating the controversy in hand.

4. Because the remand report of the Assessing Officer substantiated with the statement of the Bank Manager being a 3rdparty itself justifies & reveals the contention of the assessee to be correct and requiring examination by the Assessing Officer/ CIT(A).

5. Because the prayer is for kindly allowing any addition, modification, deletion, amendment in the grounds of appeal along with the consequential benefit thereon before the disposal of the appeal in the interest of substantial justice for a decision in accordance with law.

2. At the time of hearing, an adjournment application was moved on behalf of the assessee. None was present in support thereof. However, considering the material available on record, it was deemed appropriate to proceed with the present appeal ex-parte qua the assessee appellant on merits after hearing the ld. Sr.DR.

3. The relevant facts of the case are that in view of cash deposits made in assessee’s Saving Bank account No.0660000100036648 maintained with Punjab National Bank, Fatehpur an addition of Rs. 27 lacs was made by the AO.

4. The assessee challenged this addition before the CIT(A) stating that the amount had not been deposited by him. The deposits were stated to be deposits unauthorized by the assessee. Considering possibly the narrations in the bank account, it was submitted that probably some Bank personnel misused the assessee’s bank account by depositing the cash amount by way of a single voucher. It was pointed out that while accepting the deposit, the Bank officials did not record the details of the specific currency denominations being deposited and also failed to record the details of the address, PAN etc. of the depositor. It was pointed out that the cash deposits were accepted without following these protocols. A perusal of the impugned order shows that it was stated that; The cash deposit slip dt. 31.12.2010. Pg.2 obtained ‘ from PNB Bank during assessment proceedings & submitted before AO clearly mentions’ that there is a single cash deposit slip of Rs. 27,00,000/- without any details of currency & without any address of depositor. Moreover, no PAN details of assessee has been mentioned on cash deposit slip which is mandatory for any cash deposit over Rs. 50,000/-. Further to submit that assessee has not issued any cheque for withdrawal of any amount on dt. 01.01.2011. It is humbly submitted that no withdrawal of huge amount can be made without issuing cheque Hence, this clearly shows that deposit & withdrawals have been made by someone else on behest of bank authority & not by assessee.

4.1 It was submitted that since the deposits were not made by the assessee and ultimately transferred vide internal bank transfer, entries in account No. 0904000210151272 the said account holder consequently was the possible beneficiary and the assessee was not answerable for the same. The account holder of the specific bank account could be answerable. It was stated, “In view of above submissions, It is prayed that enquiry be made to find out the real owner/beneficiary of said transactions.

4.2 It is further seen that the assessee relied upon the fact that the amount stood withdrawn by way of transfer entries to another account of some other person whose particulars were known to the bank itself. It was argued that the details of this account holder No. 0904000210151272 was with the Bank, as such the addition in assessee’s hand was said to be not maintainable. A perusal of the submissions extracted in page 4 of the impugned order shows that it was stated, “Further to submit that there is transfer entry of deposit amounting to Rs. 1 7,70,000/- on dr. 31.12.2010 & similarly .amount withdrawn & transferred to account no. 0904000210151272, amounting Rs- 4,50,000/- on same day dt.31. 12.2010 & balance amount withdrawn through transfer entry of Rs-13,20,000/ -on dt .01.01.201 1.the very next date. The said entries are similarly unauthorized transactions (supra). The Said entries are similarly unauthorized transaction are easily traceable as the same are transfer entries & the real beneficiary of said transactions are the account holder of transferor of amount to assessee’s account & transferee of withdrawn amount from assessee’s account.

(emphasis supplied)

4.3 It is also seen that the assessee also relied upon the letter written to PNB Chairman stating more or less the above facts. Copy of which was stated to have been made available to the CIT(A) at Paper Book page 9 requesting the said authority to also make an enquiry regarding unauthorized deposit and withdrawal of amount from his bank account.

4.4 The lack of PAN detail of the person depositing the money was also highlighted.

4.5 The assessee as per record also requested the tax authorities to make enquiry about the real owner/beneficiary of the said transactions.

5. It is seen that the First Appellate Authority instead relying

upon the remand report of the AO extracted in para 3.2 of the impugned order at pages 5 & 6 confirmed the addition in the hands of the assessee. The specific Remand report extracted in the order reads as under :

“2. In this connection, brief facts are that the case of the assesses was taken into scrutiny by issue of notice u/s 148 of the I.T. Act, 1961 to examine the source of cash deposit of Rs. 35,90,000/- made during the F.Y. 2010-11 in his bank account maintained with Punjab National Bank, Village Fatehpur, Distt. Kaithal. In response to notice u/s 148, the assessee filed return of income declaring income of Rs. 1,52,000/-

3 During the course of assessment proceedings, it was required to explain the source of cash deposits made in bank account at Rs. 35,99,000/- with documentary evidence. In response thereto the Ld. Counsel on behalf of the assessee has submitted reply on 30.10.2018 and stated that the source of cash deposits in bank of Rs. 35,99,000/- are out of agriculture income, out of gift received from Brother-in-law and out of withdrawal from the same bank account and out of family savings lying with the assessee.

4. The reply of the assessee was considered by the A.O. but reply on source of (deposit of Rs.27,00,000/- was not treated tenable and additions of Rs.27,00,000/- was made to the total income o f the assessee u/s , 69 of the I.T. Act, 1961.

5. Aggrieved with the order of the A.O. the assessee filed appeal before your goodself and submitted additional evidence on the basis of which remand report has been called for on the basis of additional evidence submitted by the assessee after verification of the same.

6. Now, in compliance to the directions issued vide letter under reference, summons were issued to the Bank Manager for recording his statement. In compliance to summons, Sh. Naresh Bhim, Manager of Punjab National Bank, Village Fatehpur Distt Kaithal attended and furnished written reply on the issue. His statement was also recorded which is placed on records. He has given his explanation in his statement on all the issues raised in additional evidences furnished by the assessee during appellate proceedings. On the issue of deposit of Rs. 27,00,000!– in the bank account of the assessee, statement of the Manager is reproduced as under :

Manager is reproduced as under

7. The Bank Manager, did not clarify in his statement who is actual beneficiary of the transaction of Rs.27,00,000/-. However, from perusal of bank account statement it revealed that amount of Rs.27.00.000!– was deposited into bank account of the assessee on 31.12.2010 but no documentary evidence of enquiries, if any. made earlier to the assessment proceedings from the Bank Authorities by the assessee regarding these cash deposits was furnished whereas assessee had been making frequent deposits and withdrawals from time to time in the said bank-account The plea taken by the assessee that he was unaware about these entries and told those entries as unauthorized transactions made by anyone else after the case was taken into scrutiny The plea of the assessee at that stage is under question mark?

Keeping in view of the above, it can be concluded that the addition was made by the A.O. on merits taking into consideration the bank account statement where it clearly reflected that the cash of Rs.27,00,000!– has been deposited during the F.Y. 2010-11 relevant to the Asstt. Year 2011-12 into the bank account of the assessee.

(emphasis supplied)

6. The assessee, in response to the AO’s remand report, as per pages 6 & 7 of the impugned order is found to have submitted that the Manager of the specific bank summoned by the AO claimed that having joined the specific branch on 04.02.2019, he had no knowledge. Thus, demonstrating that an erroneous factor has been relied upon to hang the albatross round the neck of the assessee.

6.1 The assessee is found to have also stated that the specific bank account No.0904000210151272 belonged to Shri Pawan Kumar Gupta, Bank Manager of Punjab National Bank, Pundri and the mischief was done by the said Manager.

6.2 The relevant extract of the submission is extracted in the order are reproduced hereunder for ready reference :

“……The applet had categorically mentioned in his submission that not only 2700000!– was deposited in his account on 31-12-2010 and withdraw shown on the next date in three transaction of Rs.900000!– each and also transfer entry of Rs. 1770000!– was also made in his said account on 31-12-2010 and withdraw shown of Rs. 1320000!– on 01-01-2011 by transfer entry and Rs. 450000!– in account no,090400C210151272. Which belong Sh. Pawan Kumar Gupta Bank Manager of the PNB Bank Pundri as per bank statement? All this shows that this mischief was done by the manger of the bank to meet the deposit target of the bank.”

(emphasis supplied)

6.3 The enquiry conducted by the AO was assailed as not having been conducted in a proper manner.

7. The said submissions, it is seen did not find favour with the CIT(A) who passed the order holding as under :

“However, looking at all the facts as outlined above, even though The” appellant denies making the said transaction, the statement of the Bank Manager before the A.O. (as mentioned in the report) that the ‘aaharan’ (withdrawal) slip had the signature of the appellant makes his submissions questionable.

Therefore, I am of the opinion that without any substantial evidence to support the appellant’s claims the addition has been rightly made. Moreover, the said disputed transaction of Rs. 27,00,009/- was done on 31.12.2010 and the withdrawals followed soon after. The copies of the vouchers filed do show initials and has not been disproved with evidence. Moreover, no complaint was ever filed by the appellant with the bank, if the deposit was not made by him. Therefore, the A.O. has rightly made the said addition and I confirm the same.”

(emphasis supplied)

8. The ld. Sr.DR has been heard. He was required to address as to how the tax authorities have failed to address the fact that the specific bank account No. 0904000210151272 was stated to belong to Shri Pawan Kumar Gupta, Bank Manager, Pundri and how they are relying upon some alleged signature in the deposit slip which admittedly has not been submitted to any forensic examination. The fact that the cash deposits had been made without mentioning the specific currency totaling to Rs. 27 lacs, the fact that PAN details, address etc. of the depositor are not mentioned therein, the fact that the funds were withdrawn from the assessee’s bank account and ultimately deposited in the specific bank account No. 0904000210151272 stated to belong to erstwhile Manager Shri Pawan Kumar Gupta remain unrebutted. These facts, if correct, squarely support the assessee’s claim. The ld. Sr.DR was specifically questioned on these. However, in the absence of any relevant discussion by the tax authorities thereon, he could say nothing now.

9. Accordingly, after hearing the ld. Sr.DR and considering the material available on record noting extreme dis-satisfaction and disappointment in the manner in which the tax authorities have functioned, I record my dissatisfaction on the extreme lack of responsibility exhibited in acting fairly and impartially vis-à-vis a common man completely in disregard to the constitutional mandate to bring only just and due taxes to the coffers of the State. For the reasons to be set out hereinafter, I deem it fit and appropriate to set aside the impugned order. It is my pained duty to record the abuse of the trust reposed in the fairness of the tax officials as evident from the record. The officers are expected to exercise the vast powers vested by the State impartially and fairly. In the absence of reliable and irrefutable evidence failing to call forth and making necessary enquiries, the tax officials in the facts of the present case, I hold have failed to live up to the trust reposed in them by the citizen and the State. The reluctance to address the real beneficiary of the stated abuse and misuse of assessee’s bank account may reek of possible questionable connivance at some level within the Tax Department. It is seen that the only evidence relied upon is on some ‘Aharan Slip’ where the signatures denied by the assessee are arbitrarily identified as assessee’s signatures. In the face of the consistent denial of the assessee, the legal requirement of not subjecting it to forensic examination becomes again questionable and consistently an arbitrary exercise of power. The fact that it was assessee’s bank account is not disputed wherefrom the assessee would have been withdrawing and depositing money under his signature is also not a fact in dispute. The disputed fact is the specific depositing slip of cash amounting to Rs. 27 lacs is not under assessee’s signatures. The assessee has consistently stated that his account has been misused by a Bank personnel without his authority and the sums have been utilized again by the Bank personnel evident by way of transfer entries. The beneficiary is named by the assessee as erstwhile Bank Manager Shri Pawan Kumar Gupta and there is no contradictory evidence. However, considering the fact that since the correctness of the above assertions need to be verified, it is deemed appropriate to set aside the impugned order directing the tax authorities to take into consideration the fact that there has been a continued lapse on the part of the specific PNB Branch in as much as the currency details remained unmentioned, PAN details of the depositor of the huge cash amount remains unaddressed and above all, the fact that the beneficiary account No. 0904000210151272 is claimed to belong to Shri Pawan Kumar Gupta, Bank Manager of PNB, Pundri needs to be specifically addressed.

10. It can never be over emphasized that justice should not only be done but also seen to be done. The inordinate reliance placed upon the depositing slip which to the naked eyes of the AO or the tax authorities appears to be of the assessee without caring to subject it to forensic examination is an act of gross carelessness and an irresponsible lapse of procedure and an unfortunate example of whimsical and arbitrary exercise of power. In these peculiar facts and circumstances, the order which is a prime example of gross carelessness and abuse of power reeking of multiple failures and exhibiting continued lapse of fair dispensation of justice raising many a question on the whimsical biases of the tax authorities I hope is an aberration and not a norm. It brings out the department’s helplessness in not addressing the facts and possible connivance and definite abuse of power by the beneficiary account holder who the tax authorities deem it necessary to shelter. The fact that the assessee has consistently alleged connivance of the bank authorities coupled with the fact that the currency details and lack of PAN details of the depositor evident on record remain unrebutted on record by the tax authorities cannot be allowed to remain ignored. In the facts as they stand unless these assertions are rebutted by cogent evidence, the assessee appears to have a claim which cannot be easily discarded.

11. Since there is no finding on the correctness of these assertions, the matter is remanded back with the direction to pass a speaking order in accordance with law.

12. Before parting, it needs be highlighted that for India to achieve the status of a USD 5 trillion economy, the banking industry necessarily needs to have a very robust and transparent mechanisms of zero tolerance of abuse of power without which the Indian ambition can only remain a pipe dream. It can never be over emphasized that in the backdrop of growing NPAs as a threat to the banking sector it is the need of the hour that by practicing rigorous transparency and openness with the ability to critical self regulate their functioning, the banking industry has got the ability to separate the grain from the chaff. The need to encourage and applaud innovation and improvement in governance in the banking sector must be tempered with strict accountability and zero tolerance for abuse of trust and power. The Indian dream of becoming a 5 trillion USD economy is not a mere optimistic dream these aspirations have all the ingredients of inherent potential of an achievable aim. However, this aspiration necessarily has to ride on the shoulders of the banking and financial sectors. Their robustness cannot be compromised. The accountability of individual aberrations must be seen to be fixed to check the rampant irresponsible egos of a few black sheep giving it a bad name. The fact that the Indian growth is to be powered by the Banking and financial sector is well understood. The fact that it is still woefully dis-proportionate and very small vis-à-vis the economy needs proper appreciation. The fact that it is the most powerful engine powering this growth and thus, has a direct role alongwith the tax machinery cannot be ignored. Hence, the robustness cannot be compromised with.

13. Thus, similarly, the tax authorities necessarily need to have effective and meaningful protocols in place in order to ensure that they are not only trained to be citizen friendly but also seen to be so with robust powers of engaging positively with small town assessees and enabling them to be tax compliant. To expect that the U.S.D. 5 trillion aspirations can be realized with selective encouragements without the active involvement of the village economy and the small town aspirations is being very short sighted. The aspirations can only be realized if the Indian juggernaut in its entirety is put in motion. I am of the view that in order to realize this generally feasible and not highly optimistic ambition of a global economic force status. The tax authorities should be necessarily and urgently trained to enable the nurturing, fuelling and funneling of the small town aspirations of the citizens coupled with the powering provided by the banking and the financial sectors which can ensure the entry of India as a responsible economic force to be reckoned with in the global economic powerhouse of nations. Hence, I am of the view that the citizen/assessee friendly environment and workforce necessarily needs to be set in place at the earliest. Hence, it is my humble suggestion that creation of a TAX ADVISORY CELL is the urgent need of the hour.

14. Said order was pronounced at the time of virtual hearing itself in the presence of the parties via Webex.

15. The Registry is directed to forward a copy of this order to Chairman, CBDT New Delhi (Specific para 9 to 13 of the above for information and necessary action, if deemed fit.)

16. In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced on 30th April,2021.

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