Ashvin Prakash Kumar, New Delhi V. DCIT Circle-70(1), New Delhi

ITA 1116/DEL/2020

AI Insights

The case involves Ashvin Prakash Kumar, the appellant, who contested the additions made to his income by the Deputy Commissioner of Income Tax (DCIT) under section 68 of the Income-tax Act, 1961, for the assessment year 2006-07. The additions were based on undisclosed income linked to bank accounts in HSBC, Geneva, and HSBC, London, which the appellant denied owning. The CIT (A) upheld the DCIT's decision, leading to the appeal before the ITAT. The ITAT found the appellant's claims implausible, given the evidence presented, including the involvement of his parents' names in the bank records, and upheld the additions.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 114035 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 06-11-2022
• Assessment Year: misc
• Appeal Filed On: 18-07-2022
• Other Referred Cases: Sumati Dayal v. Commissioner Of Income Tax, Bangalore (1995) 214 ITR 801 (SC), CIT Vs. Nova Promoters and Finlease (P) Ltd. (2012) 342 ITR 169 (Del), CIT Vs N.R. Portfolio (P) Ltd. (2014) 264 CTR 258 (Del), Rajmandir Estate (P) Ltd. (2016) reported in 70 taxmann.com 124 (Cal), Royal Rich Developers (P) Ltd. ITA No.1835/Mum/2014 dated 24.085.2016
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 147; 68; 148; 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘SMC’ : NEW DELHI) SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA No.1116/Del./2020 (ASSESSMENT YEAR : 2006-07) Ashvin Prakash Kumar, vs. DCIT, Circle 70 (1), F-14/15, Pushpanjali Farms, New Delhi. Bijwasan, New Delhi – 110 061. (PAN : AEWPK3959L) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Aloke Periwal, CA REVENUE BY : Shri Om Prakash, Sr. DR Date of Hearing : 07.11.2022 Date of Order : 07.12.2022 ORDER This appeal by the assessee is directed against the order of the ld. CIT (A), Delhi-36 dated 12.02.2020 for the assessment year 2006-07. 2. The grounds of appeal taken by the assessee read as under :- “1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals [CIT (A)] is bad both in the eye of law and on facts. 2. Learned CIT (A) ought to have held that the action of the DCIT in making the addition u/s 68 of the I.T. Act of Rs.2,15,925/- on account of undisclosed income in respect of Suisse Bank Account with HSBC Bank Geneva to the returned income is unjust, illegal, arbitrary & against the facts & circumstances of the case. ITA No.1116/Del./2020 2 3. Learned CIT (A) ought to have held that action of the DCIT in making the addition u/s 68 of the I.T. Act of Rs.3,24,310/- on account of undisclosed income in respect of HSBC Bank London for credit entry of GBP 1,000/- and GBP 3,000/- to the returned income is unjust, illegal, arbitrary & against the facts & circumstances of the case.” 3. Brief facts of the case are that as per the assessment order the appellant filed his return of income on 31.07.2006 declaring income of Rs.41,14,692/- and the case was reopened u/s. 147 of the Income-tax Act, 1961 (for short 'the Act'). It is recorded in the assessment order that the AO had reason to believe that the income chargeable to tax more than Rs.1 lakh had escaped assessment. It is seen from the assessment order that notices u/s. 148 was issued on 01.10.2013. As per the assessment order the assessment was reopened u/s. 147 on the basis of information received from Investigation Wing that the appellant had a bank account with HSBC, Geneva and that during the course of investigation, it was also revealed that the appellant had a balance of USD 4,849/- in the said bank account as on March, 2006. In view of the above, the AO issued a notice u/s. 148 on 01.10.2013. The AO has mentioned in the order that during the course of investigation before the Investigation wing and also in assessment proceedings the appellant was requested to provide the details of the bank account that he had with HSBC, Geneva but the appellant maintained a consistent stand that he did not maintain any bank account at any point of time with HSBC, Geneva. In this connection, the ITA No.1116/Del./2020 3 AO has noted that two different statements of the appellant were recorded on 19.12.2011 and 17.02.2015 by the DDIT (Inv) unit-VI(3), New Delhi and by the AO respectively. It is seen from the assessment order that in both the statements, the appellant has altogether denied of opening or maintaining any such bank account. 4. The AO has further mentioned that during the course of recording of statements, vide question no. 14 the appellant was specifically confronted with the paper received from the Investigation Wing which contained the details of his bank account including the fact that it had a balance of USD 4,849/- in the said bank account and also the names of Sh. Kumar Suresh Chander and Ms. Kumar Reeta was maintained in the said paper as "AUTRES PERSONNES LIEES AUX PROFILES CLIENTS", which meant 'other persons linked to the client profile and the appellant confirmed that the above stated two persons were his father and mother respectively and stated that he had no idea of the paper containing his bank account details and also as to .why the names of his parents were appearing in the said paper. The AO has observed that it was difficult to comprehend that if the appellant did not have this bank account in the HSBC Bank, Geneva then how his name as well as the name of his parents were seen on the paper pertaining to his bank account. The AO held that it went against the normal human conduct and ITA No.1116/Del./2020 4 the conduct of normal business by any bank that such intimate details of the appellant shall be maintained and recorded by a bank with which the appellant apparently has no connection whatsoever. The AO has recorded that the appellant had altogether denied knowledge and existence of any such bank account and had effectively stonewalled the possibility of any further investigation in this regard and in view of the adamant and non cooperative attitude of the appellant, the AO added an amount of Rs.2,15,925/- (conversion rate taken at Rs.44.53/-) for the USD 4,849/- as undisclosed income of the appellant u/s. 68 of the Act. 5. The AO further noted in the assessment order that during the course of assessment proceedings it was seen that in the bank account no.01490761, maintained at HSBC, London by the appellant, there were credit entries of GBP 1000/- and GBP 3000/- on 04.05.2005 and 07.09.2005 respectively and in the course of recording of the statements u/s. 131 in reply to question no. 15 the appellant was asked to explain the source of above stated two credit entries reflected in his bank account. The appellant claimed that the first one was the prize money received on behalf of M/s. Alipur Films Ltd. of which he was director and the second one was the entry for return of loan which was earlier extended to M/s. Alipur Films Ltd. And vide note sheet entry dated 17.02.2015 the appellant was asked to substantiate the claim that the two credit entries ITA No.1116/Del./2020 5 were relating to M/s. Alipur Films Ltd. and the same were reflected in the books of account of the appellant. The AO has recorded that vide submission dated 20.02.2015, the appellant admitted that the he was unable to produce either the books of accounts or the bank statement of MIs. Alipur Films and in the absence of any evidence produced to substantiate the said claim, the AO added add an amount of Rs.82,510/- and Rs.2,41,8001- (conversion rate taken at Rs. 82.51 per GBP and Rs. 80.60 on 04.05.2005 and 07.09.2005 respectively) for the GBP 1000/- and 3000/- as undisclosed income of the appellant u/s. 68 of the Act. 6. Against the above order, assessee appealed before the ld. CIT (A). Upon assessee’s appeal, ld. CIT (A) confirmed the order of AO by referring to several case laws and provisions of section 68 of the Income- tax Act, 1961 (for short 'the Act'). The order of ld. CIT (A) may gainfully refer to as under :- “6.1. I have carefully considered the assessment order and the submissions filed by the AR. Section 68 of the Act is an anti- tax evasion provision and was incorporated into the act to obviate the possibility of introduction of unaccounted/undisclosed money in the books of account in the names of relations or third partied. The object behind insertion of Section 68 is to assess such income when it surfaces and assess it in the hands of the person in whose books it surfaces. Section 68 casts an onus upon an assessee to prove the identity and creditworthiness of the depositors and the genuineness of the transactions. ITA No.1116/Del./2020 6 6.2. In the light of the above, the various limbs of Section 68 of the Act and the extent to which they stand satisfied in the instant case are being discussed hereinafter:- A. IDENTITY: in order to prove the identity of the Depositor an assessee is required to prove, on the basis of a concrete documentary evidence, that the depositor exists and is uniquely of a person/entity refers to a quality that makes someone or something what they are and how they are different/unique from other people/entities. B. CREDITWORTHINESS: in common, as well as financial parlance, credit worthiness of a depositor refers to an assessment of his ability to lend money based on an analysis of his/their financial & other parameters. The said meaning when extrapolated in the context of the Act would refer to the ability of the depositor to deposit money and justification of his source. C. GENUINENESS OF THE TRANSACTION: The third limb of section 68 viz. onus to prove the genuineness of the transactions seeks "to ensure that the sub-stratum/pivot of the transaction stands on a firm edifice and is not a camouflage in any manner." 6.2. In the instant case even though identity is established the appellant is denying ownership of the bank account or explain the deposits. 6.3. The onus was on the appellant to prove genuineness of the transactions shown by them but they failed to do so. In this regard, judgments of Hon'ble Delhi High Court in the cases of CIT Vs. Nova Promoters and Finlease (P) Ltd. (2012) 342 ITR 169 (Del) and CIT Vs N.R. Portfolio (P) Ltd. (2014) 264 CTR 258 (Del) are relied upon. Further, the judgment of Hon'ble Kolkata High Court in the case of Rajmandir Estate (P) Ltd. (2016) reported in 70 taxmann.com 124 (Cal) and the judgment of ITAT, 'D' Bench, Mumbai in ITA No.1835/Mum/2014 dated 24.085.2016 in the case of Royal Rich Developers (P) Ltd. are also relied upon. In view of the facts of the case, I am of the considered view that this is not sufficient to discharge the onus case on the appellant as contemplated u/s 68 of the Act. The ITA No.1116/Del./2020 7 burden/onus is cast on the appellant and the appellant is required to explain to the satisfaction of the AO cumulatively about the identity and the genuineness of the transaction. All the constituents are required to be cumulatively satisfied. If one or more of them is absent, then the AO can make the additions u/s 68 of the Act as an income. The bank statements were found and thus, the onus shifts back to the appellant to produce the facts before the AO and if the appellant falters, the additions can be made u/s 68 of the Act. It is clear from the facts as discussed above that the appellant could not prove the same, therefore, in the light of the above facts and case laws as discussed above, I am of the considered view that the AO was justified to make addition u/s 68 of the Act. Therefore, disallowance of Rs.5,40,235/- u/s 68 of the Act made by the AO is confirmed. The Grounds of appeal are hence, dismissed.” 7. Against this order, assessee is in appeal before the ITAT. 8. I have heard both the parties and perused the records. I find that Revenue had information that the assessee was having a bank account in HSBC Geneva. The bank account had balance of Rs.USD 4849 and the account also contained the name of the father and mother of the assessee. The claim of the assessee that he does not know anything about the said bank account is totally unbelievable. It is beyond the preponderance of human probability that some unknown person will deposit USD 4849 in the name of the assessee in HSBC Geneva bank and the name of the father and mother also be given and the assessee will not have any information about it. I find this fully comes under the decision of the Hon’ble Apex Court in the case of Sumati Dayal v. Commissioner Of ITA No.1116/Del./2020 8 Income Tax, Bangalore (1995) 214 ITR 801 (SC). Hence, the addition in this regard is liable to be sustained. 9. As regards, the deposit in HSBC London, the assessee has not been able to provide any cogent evidence for the source of deposits. The submissions of the assessee have been without any reliable material. The explanation given by the assessee is only self-serving and has correctly been rejected by the lower authorities. In these circumstances, I do not find any infirmity in the orders of the authorities below and confirm the same. 10. In the result, this appeal by the assessee stands dismissed. Order pronounced in the open court on this 07 th day of December, 2022. Sd/- (SHAMIM YAHYA) ACCOUNTANT MEMBER Dated the 07 th day of December, 2022 TS Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A)-32, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.