Brief of the Case
ITAT Delhi held In the case of Kapoor Singh vs. ACIT that the assessee has not disputed the bank pass book of Shri Sube Singh which was found at his residence during search and seizure operation, neither has he controverted the AO’s finding to the statement of the Bank Manager given in writing that most of the payments have been made by Shri Kapoor Singh and his sons. The assessee has also not disputed the AO’s noting that the account was closed on 5/3/2005 that is immediately after the search on 4/3/2005. This shows that the account was fully operated by the assessee. Thus Section 132 (4A) is very much attracted in the present case as the pass book was in the custody of the assessee. Thus, additions in hands of assessee are justified.
Facts of the Case
The assessee was employed as Supervisor in irrigation department. There was search and seizure operation conducted on 4/3/2005 at the residential premises of the assessee. During the search and seizure, Passbook of Shri Sube Singh (A/c No. 16860) was found. Statement of the assessee was recorded during the search. The assessee has one bank account in OBC, Ch. Dadri pertaining to his salary deposits. The assessee at the time of search stated that neither he nor his family members have any connection with the said bank account No. 16860. The assessee also stated that he or his sons has never taken any gift or loan from the said Mr. Sube Singh. The assessee was confronted during the search that there were withdrawals in his and his sons’ names from the said account but he stated that he could not explain the same and only his advocate will be able to tell about it. After looking up to the evidence on record and the statement of the assessee, the Assessing Officer added Rs. 10,15,200/- for A.Y. 2000-2001 and Rs. 10,40,265/- for A.Y. 2002-2003 in respect of deposits in Shri Sube Singh’s Account as well as Rs. 2,97,000/- for A.Y. 2003-2004 and Rs. 1,18,000/- in respect of amounts mentioned in code .
Contention of the Assessee
The ld counsel of the assessee submitted that the assessee has clearly stated that there was no gift given by Shri Sube Singh to him. The pass book which was found in his residence was kept by Shri Sube Singh. The assessee admitted that he knows Shri Sube Singh and for particular land transaction he has taken certain money along with his sons who were also assessed separately but was not taxed. The assessee further stated that he has never operated Shri Sube Singh account at any point of time. For the said purpose he has made the reliance on the bank information that all the withdrawals and cheques were signed by the account holder/photo copy of account statement attached.
Further In Shri Sube Singh’s letter dated 26/12/2007 it was mentioned that the amount deposited in bank was his personal amount. There was assessment order in case of Shri Sube Singh which was dropped because the same was time barred. The AR further submitted that there was no record before the Assessing Officer that the account belongs to the assessee and therefore, the amount shown in that account cannot be held as income of the assessee. There are only two withdrawals in the name of the assessee one is on 9/3/2000 which amounts to 15,000/- and the second one is on 29/1/2004 amounting to Rs. 2,00,000/-. The rest withdrawals are in the name of assessee’s sons. There is no specific information given by the bank as relates to who has made the deposits in the said account from time to time.
The AR further submitted that Shri Sube Singh was very old person and was living far away from Bank as well as assessee’s residence, therefore kept the Pass Book with the assessee. The AR submitted that there is nothing shown in the bank information that the amount pertains to the assessee and thus the cause of action should have been taken against Shri Sube Singh and not against assesses. The cheques were withdrawn by the said Shri Sube Singh and not by the assessee. The assessing officer should have been vigilant to start assessment proceedings against Shri Sube Singh and not that of the assessee. Section 132(4A) is not applicable in assessee’s case as no supportive information was found by the Assessing Officer.
The AR also submitted compilation of the Judgments on the issue that Bank Pass Book when not maintained by the assessee or under his instruction, such pass book cannot be regarded as books of the assessee. (CIT vs. Bhai Chand H Gandhi, Bombay (1983) 141 ITR 67). The second case referred was on the issue of peak credit in the bank account cannot be treated as undisclosed income of the assessee (CIT vs. Ranjeet Kumar Sethia (2005) 198 CTR 550 (Raj.)). The third case law submitted was ACIT vs. Ashok Kumar Chhugani (2006) 104 TTJ (Jod.) 134 wherein it was stated that deposit in the bank account of the assessee’s relative could not be treated as undisclosed income of the assessee merely because pass book of those accounts were found in the assessee’s bed room. The fourth case law was on the issue of bank account standing in the name of a third party cannot be treated as assessee’s account merely because similarity is noticed in the signature of the assessee and that of the said person.(Dr. G.G. Dhir vs. ACIT (2010) 129 TTJ 1 (Agra)).
Contention of Revenue
The ld counsel of the revenue relied upon the Assessment Order and the order passed by the CIT (A). He submitted that the Assessment order and the CIT (A)’s order are just and proper. He also relied upon the Bank information given at the time of the hearing before the ITAT wherein it was stated that account statement shows that most of the payments were made/take by Kapoor Singh and his sons.
He further submitted that there were deposits in bank account which were withdrawn in the name of assessee and his two sons. The assessee has not revealed at any stage that these are loans taken by him for purchase of land. In fact this version came during the assessment proceedings. As relates to the loan on 8/12/2006 there was no explanation given by the assessee. He further submitted that there is no confirmation of repayment of the alleged loan by the assessee and there is no evidence put up by the assessee in that respect. Therefore, the amount was rightly added by the Assessing Officer in the income of the assessee.
Held by CIT (A)
The stand of the assessee before the CIT (A) was that the funds in the bank account belong to Shri. Sube Singh from which the assessee and his two sons have taken some amounts as loan for investment in properties which were subsequently repaid to Sh. Sube Singh on demand by disposing the properties so acquired. The CIT (A) dismissed the appeal of the assessee. It was held that the assessee could not produce evidence regarding the repayment of alleged loans to Shri Sube Singh. The statement of Shri Sube Singh taken after the search proceedings stated that he knew Shri Kapoor Singh i.e. the assessee and his sons but no gift or loan has ever been made by him to them.
The CIT (A) further held that the bank account of Shri Sube Singh contains huge cash deposits withdrawals, more particularly for the A.Y 2000-01 is Rs.10,15,200 on 31/1/2000 and that for A.Y 2002-03 Rs.20,55,465 on 6/3/2004 in the name of Kapoor Singh. The contention of the assessee that the funds belonged to Shri Sube Singh was rejected by the CIT (A). During the assessment proceedings the assessee changed the version that he and his sons have taken loans from Shri Sube Singh.
Held by ITAT
ITAT held that it is clear that the bank pass book was found in the custody of assessee. The assessee at no point of time stated that he has not received the amounts from Shri Sube Singh. It can be seen from the entries in the bank account that Shri Sube Singh has issued various cheques to the assessee as well to the assessee’s sons and this fact has not been denied by the assessee at any stage. Only the version of his explanation changed during the search and during the assessment proceedings. The assessee could not establish that the loan was repaid at particular time from any records.
The fact that the pass book was found in the custody of the assessee and from the above discussion it can be found that the bank a/c of Sh. Sube Singh was operated by assessee and on regular basis as Shri Sube Singh was not staying nearby either to the Bank or to the residence of the assessee which shows that the assessee was operating the Bank Account of Shri Sube Singh and the amounts were received by the assessee and his sons on regular basis for dealing in purchase and sale of properties. The assessee has also failed to give any evidence as to which properties he purchased and which properties were sold and also about repayment of loan to Shri Sube Singh.
The assessee has not disputed the bank pass book of Shri Sube Singh which was found at his residence during search and seizure operation, neither has he challenged/controverted the AO’s finding to the statement of the Bank Manager given in writing that most of the payments have been made/taken by Shri Kapoor Singh and his sons. The assessee has also not disputed the AO’s noting that the account was closed on 5/3/2005 that is immediately after the search on 4/3/2005. This shows that the account was fully operated by the assessee. Thus Section 132 (4A) is very much attracted in the present case as the pass book was in the custody of the assessee and not that of in the custody of assessee’s sons. Thus, it is clearly established that the account of Shri Sube Singh was operated by the assessee and not by assessee’s sons. Therefore, the Assessing Officer has rightly added the said amounts in the hands of the assessee and the CIT (A) has also confirmed it with proper reasoning. Also, the compilation of the Judgments submitted by the assessee will not be applicable in the present case as the factual aspects in those cases and in the present case are different. In these cases, it was disputed that whether bank account related to pass book operated by the assessee or not, while in current case, it is clear that bank account is fully operated by the assessee.
On the matter of paper found during the search containing some figures, ITAT held that the assessee stated before the Investigation Officer that these entries pertain to some “Kanyadan” given by him. But during the statement at the time of search the assessee clearly stated that the expenses incurred for the marriage of his daughter was Rs. 1.25 lakhs. As relates to the case law cited by the AR that of Malabar Oil Marketing Co., the same is relevant as in the said case, it was held that mere notings on the loose paper without any corroborative evidence, cannot be assessed as “income” in the hands of the assessee. It further held that there being no material on record to suggest that the assessee has received any amount apart from the amounts received by it per account payee cheques. The Assessing Officer as well as the CIT (A) has not given any reasons or justification as to how the figures mentioned in the loose paper pertains to denomination of thousand. Thus, no case for addition on this account is made out by the Revenue
Accordingly appeals of the assessee disposed of.