INCOME TAX OFFICER, KOLHAPUR V. SUNIL ADGONDA PATIL, KOLHAPUR

ITA 1086/PUN/2024

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A)/NFAC, which had deleted an addition of Rs. 3,20,31,360 made under section 69 of the Income Tax Act on account of unexplained investment. The assessee, Sunil Adgonda Patil, chairman of a cooperative society, was accused of having unexplained cash deposits in his personal bank account. The CIT(A) accepted the assessee's contention that the deposits were related to the cooperative society and not his personal income. The Tribunal found that the CIT(A) had not adequately verified the existence of the society or the proper use of the PAN, leading to the decision to remand the case for further investigation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396371 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Other Referred Cases: Bamkimbhai D. Patel v ITO, ITO vs. Vinod Chadha
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARVIND DESAI
• Assessee Lawyers: PRAMOD S. SHINGTE
• Keywords: Additional evidence; Unexplained investment; Peak credit
• Section: 148; 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1086/PUN/2024 िनधाᭅरण वषᭅ / Assessment Year : 2015-16 ITO, Kolhapur. Vs. Sunil Adgonda Patil, Haroli, Shirol, Kolhapur- 416102. PAN : BHPPP9851D Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the Revenue is directed against the order dated 19.03.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2015-16. 2. The Revenue has raised the following grounds of appeal :- “1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting addition of Rs. 3,20.31,360/- made u/s 69 of the Act on account of unexplained investment. 2. The Ld.CIT(Appeals) erred in not allowing the AO to examine the additional evidence admitted by him as per the provisions u/s 46A(3) of the I.T Rules 1962. 3. The Ld.CIT(Appeals) erred in admitting the evidence filed before him in to consideration without any opportunity in rebuttal to the Revenue by : Shri Arvind Desai Assessee by : Shri Pramod S. Shingte Date of hearing : 26.03.2025 Date of pronouncement : 27.05.2025 ITA No.1086/PUN/2024 2 assessing officer which the respondent did not furnish during the assessment proceeding.” 3. Facts of the case, in brief, are that the assessee is an individual. On the basis of information available with the Department that cash of Rs.3,20,31,360/- was deposited in Bank Account No.0505610000030 with Shri Bharat Urban Co-operative Bank Ltd., Jaisinghpur on the PAN number of the assessee. The case was reopened after due procedure and statutory notices u/s 148, 142(1) and 143(2) were issued respectively. In response to notice u/s 148 of the IT Act, the assessee furnished his return of income on 07.06.2022 declaring total income of Rs.65,770/- only. The assessee also furnished written submission stating that the cash deposit of Rs.3,20,31,360/- belongs to Niyojit Shetkari Bhajipala Utpadak Sahakari Sanstha Maryadit, Haroli, Tal: Shirol, Dist: Kolhapur, and he being the chairman of the cooperative society, his PAN number was utilised to get the bank account opened in the name of the cooperative society. The assessee also submitted that the above cash deposit has already been considered in the profit and loss account of the above society. Not being satisfied with the reply of the assessee, the Assessing Officer completed the assessment by ITA No.1086/PUN/2024 3 determining income of Rs.3,20,97,130/- as against the income returned by the assessee at Rs.65,770/-. The above said income includes income from other sources of Rs.3,20,31,363/- representing cash deposit in the bank account maintained with Shri Bharat Urban Co-operative Bank Ltd., Jaisinghpur. 4. After considering the reply of the assessee, Ld. CIT(A)/NFAC accepted the contention raised by the assessee and allowed the appeal filed by the assessee by observing as under :- “3.3 I have carefully considered the facts of the case, the submission of the appellant and evidences on record. I find that the appellant was acting as chairman of an organization i.e \"Niyojit Shetkari Bhajipala Utpadak Sahakari Sanstha Maryadit, Haroli, Tal: Shirol, Dist: Kolhapur\". It is seen that the appellant's PAN was used for opening the bank account (cash deposits in which are added in appellant's hands) of the above organization with Bharat Urban Co-op Bank Ltd since it did not have PAN. It is seen that the transactions in this account No.0505610000030 with Shri. Bharat Urban Co-op Bank Ltd, have got reported under the appellant's PAN in his AIR. 3.4 From the perusal of the screen shot of the master of the software in the said Shri Bharat Urban Co-operative Bank Ltd A/c No. 0505610000030 and the Account Opening Form filled at the time of opening the bank account, I find that this account do not belong to the appellant but belong to the Association of Persons named 'Niyojit Shetkari Bhajipala Utpadak Sahakari Sanstha Maryadit, Haroli, Tal: Shirol, Dist: Kolhapur. These transactions are said to consist of the cash collection from sale of vegetables supplied in urban markets like Mumbai, Pune, Ahmedabad, and Bangalore etc. which in turn are given to the farmers, vegetable growers whose vegetables are collected and supplied to such long distance urban markets. Therefore, I find that it was only appellant's PAN, in the absence of the PAN of the said proposed Co-op society, was used for opening the bank account. I also find that The Bharat Urban Co-op Bank has certified that the transactions do not belong to the appellant. It is also seen that the said organization has also given a letter to the effect the transaction in the said account belong to them and not to the appellant. ITA No.1086/PUN/2024 4 3.5 The Profit and Loss Account of the Niyojit Shetkari Bhajipala Utpadak Sahakari Sanstha Maryadit, Haroli, Tal: Shirol, Dist: Kolhapur' as prepared from the bank transaction is as under: 3.6 The Hon'ble Ahmedabad ITAT in the case of Bamkimbhai D. Patel v ITO (2021) ITA 401/AHD/2009 has held that the assessee being a power of attorney holder cannot be treated as the rightful owner of the income which has been arisen on sale of property. He was only a representative capacity. Addition was deleted. 3.7 Further, the Hon'ble Delhi ITAT in the case of ITO vs. Vinod Chadha (2016) (73 taxmann.com 118) wherein hon'ble Delhi -tribunal concluded that cash deposited in assessee's saving bank account was sales of partnership firm in which assessee was partner and same was duly explained with help of sales receipt recorded in books of account of partnership firm, said amount could not be added In assessee's hands as unexplained money. 3.3 In view of the above facts and discussion, I am of the considered view that the account No 0505610000030 with Shri Bharat Urban Co- operative Bank Ltd does not belong to the appellant but belong to the Association of Persons named Nyojit Shetkari Bhajipala Utpadak Sahakari Sanstha Maryadit, Haroli, Tal: Shrol, Dist: Kolhapur. It was only appellant's PAN, in the absence of the PAN of the said proposed Co-op society, was used for opening the bank account. The same has been certified by the Bharat Urban Co-op Bank and the said organization that the account does not belong to the appellant, Therefore, the addition of Rs 3,20,31,360 made by the AO us 69 of the Act is not sustainable and is directed to be deleted. The appeal on this ground is thus allowed. 4. As the result, the appeal is allowed.” ITA No.1086/PUN/2024 5 5. It is the above order against which the Revenue is in appeal before the Tribunal. 6. We have heard Ld. counsels from both the sides and perused the material available on record including the paper books. In this regard, we find that it is the contention of the Ld. AR that the assessee is chairman of Niyojit Shetkari Bhajipala Utpadak Sahakari Sanstha Maryadit, Haroli, Tal: Shirol, Dist: Kolhapur. The society wanted to open its bank account but it was not registered at that point of time with any of the Department including Income Tax Department, therefore no PAN number was allotted to the society. In such kind of circumstances, the Bharat Urban Co-operative Bank Ltd., Jaisinghpur opened the bank account by recording the PAN number of the chairman Shri Suneel Adgonda Patil. After opening the bank account the society started to transact in the impugned bank account. Before the Assessing Officer, it was also contended by the assessee that the turnover recorded in the bank account maintained with Bharat Urban Co-operative Bank Ltd. belongs to Niyojit Shetkari Bhajipala Utpadak Sahakari Sanstha Maryadit, Haroli, Tal: Shirol, Dist: Kolhapur and has nothing to do with the assessee. It was also contended that a property was purchased by ITA No.1086/PUN/2024 6 the society and electricity bill also paid by the society, however the Assessing Officer did not accepted the contention and made the addition of above deposit in the hands of the assessee as income from other sources. Ld. CIT(A)/NFAC after considering the reply of the assessee and on the basis of certificate issued by Niyojit Shetkari Bhajipala Utpadak Sahakari Sanstha Maryadit, Haroli, Tal: Shirol, Dist: Kolhapur to the effect that the turnover belongs to the society and also on the basis of certificate issued by Shri Bharat Urban Co-operative Bank Ltd. allowed the appeal of the assessee and deleted the addition in the hands of the assessee. 7. It is the contention of Ld. DR that the order passed by Ld. CIT(A)/NFAC is unjustified. Ld. DR further submitted that Ld. CIT(A)/NFAC erred in accepting the certificate issued by an un- identified entity which is not registered anywhere. It was further submitted by Ld. DR that assessee failed to prove the existence of the so-called society even at the time of hearing of appeal either before Ld. CIT(A)/NFAC or before this Tribunal. It was contended that if the society really existed it must have obtained PAN number from IT Department or registration certificate under Maharashtra State Co-operative Societies Act subsequently. Apart from above, it ITA No.1086/PUN/2024 7 was also contended by Ld. DR that if such a society was in existence there must be some by-laws or Rules framed by the society but no such by-laws or Rules were made available either before Ld. CIT(A)/NFAC or before this Tribunal. To strengthen the statement Ld. DR further pointed out and referred the bank account statement produced by the assessee in his paper books wherein name of the assessee was mentioned as proprietor, Patil Suneel Adgonda, which itself proves that the assessee is simply utilising the name of the so-called society to conceal his turnover. It was further submitted that neither before Ld. CIT(A)/NFAC nor before this Tribunal the assessee produced the audited accounts of the so- called society since the turnover was more than Rs.2 crore and therefore regular books of accounts were required to be maintained and audit u/s 44AB of the IT Act was also compulsory, since no such documents were produced either before Ld. CIT(A)/NFAC or before the Tribunal the existence of the so-called society is not proved. Ld. DR submitted before the bench that even the assessee himself in the grounds of appeal raised before Ld. CIT(A)/NFAC requested to make addition on the basis of the peak credit available in the bank account and alternatively also submitted before Ld. ITA No.1086/PUN/2024 8 CIT(A)/NFAC to make addition in the hands of the assessee on the basis of profit and loss account prepared by the society, however Ld. CIT(A)/NFAC did not accepted both the pleas of the assessee and at the outset deleted the addition made by the Assessing Officer on the ground that the turnover belongs to Niyojit Shetkari Bhajipala Utpadak Sahakari Sanstha Maryadit, Haroli, Tal: Shirol, Dist: Kolhapur. However, no effort was made by Ld. CIT(A)/NFAC to find out that whether such a society is really in existence or not by calling remand report from the Assessing Officer. With regard to claim of assessee that electricity bill is paid by the society, Ld. DR pointed out that the electricity bill is also issued in the name of so-called chairman. Even the name of the society is different i.e. Shetkari Bhajipala Sahakari Sanstha instead of Niyojit Shetkari Bhajipala Utpadak Sahakari Sanstha Maryadit, Haroli, Tal: Shirol, Dist: Kolhapur as claimed by the assessee. Accordingly, Ld. DR requested before the bench to set-aside the order passed by Ld. CIT(A)/NFAC and to restore that of the order passed by the Assessing Officer. 8. Considering the totally of the facts of the case, we find some force in the arguments of Ld. DR that Ld. CIT(A)/NFAC committed ITA No.1086/PUN/2024 9 error in accepting the certificate issued by the so-called society without verifying the fact that whether such society is actually existing or is on paper only since by-laws or Rules were not furnished before Ld. CIT(A)/NFAC. We also find that Ld. CIT(A)/NFAC failed to verify the fact that even subsequently the society get itself registered with the Registrar, Co-operative Society or not and whether subsequently Shri Bharat Urban Co-operative Bank Ltd. has substituted the correct PAN of the society in its bank account in the place of assessee’s PAN number. We also find Ld. CIT(A)/NFAC failed to verify the fact that whether the so-called society has made regular books of accounts and got them audited as required u/s 44AB of the IT Act and furnished its return of income. Accordingly, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and remand the matter back to his file with a direction to decide the appeal afresh and as per fact and law in the light of above observations discussed by us in the preceding paragraphs of this order, after providing reasonable opportunity of hearing to the assessee. If Ld. CIT(A)/NFAC feels it necessary he may call fresh remand report from the Assessing Officer in this regard. The assessee is also hereby directed to respond to the ITA No.1086/PUN/2024 10 notices issued by Ld. CIT(A)/NFAC in this regard and to produce document evidence explanations in support of its contention without taking any adjournment under any pretext, otherwise Ld. CIT(A)/NFAC shall be at liberty to pass appropriate orders as per law. Thus, the grounds of appeal filed by the Revenue are partly allowed. 9. In the result, the appeal filed by the Revenue is allowed for statistical purposes. Order pronounced on this 27th day of May, 2025. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 27th May, 2025. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "