Nagendra Singh, Kushinagar V. ITO, Ward - 2(4), Kushinagar

ITA 185/VNS/2019

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0304 (ITAT-VARANASI)
• Duration Of Justice: 2 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-09-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Source of fund
• Section: 147; 69; 148; 133(6); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT ‘SMC’ BENCH, VARANASI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA No.185/VNS/2019 Assessment Year: 2010-11 Nagendra Singh, 257, Verma Niwas, Padrauna Road, Kasya, Kushinagar PAN-BAVPS2523N v . Income Tax Officer, Ward-2(4), Kushinagar (Appellant) (Respondent) Appellant by: Sh. Ashish Bansal, Adv Respondent by: Sh. A.K. Singh, Sr. D.R. Date of hearing: 06.07.2022 Date of pronouncement: 05.08.2022 O R D E R SHRI VIJAY PAL RAO, JUDICIAL MEMBER: This appeal by the assessee is directed against the order dated 09.05.2019 of CIT(A) for the assessment year 2010-11. The assessee has raised the following grounds:- “1. Because the CIT(A) has erred in law and on facts in upholding the proceedings that had been initiated under section 147 of the Act by the Assessing Officer, as the same had been initiated merely on the basis of deposits in his regular bank account and no ‘material’ of adverse nature having been found against the appellant. 2. Because merely deposits in bank account does not constitute the reason to belief so as to invoke jurisdiction under section 147 of the Act. 3. Because the proceedings under section 147 has neither been validly initiated nor concluded in accordance with law, accordingly the assessment order dated 27.12.2017 is erroneous and bad. 4. Because no notice at all having been served upon the appellant under section 143(2) after filing of return in compliance to the notice issued under section 148 of the Act, the assessment order dated 27.12.2017 passed by the ld. Assessing Officer as also confirmed by the CIT(A) by observing that the same had been mentioned in the assessment order, is void and addition of Rs. 16,91,450/- made on the basis of such an order is bad.” ITA No. 185/VNS/2019 Nagendra Singh 2 2. Though the assessee has also raised various other grounds as alternative plea however, those were neither pressed nor any arguments were advanced on those issues. The solitary issue which was agitated by the assessee during the course of hearing is regarding the addition made by the Assessing Officer of Rs. 16,91,450/- under section 69 of the Act on account of cash deposits made in the bank account of the assessee. 3. The assessee is an individual and earning income as commission from LIC on premium amounts. The assessee filed his return of income on 31 st March, 2012 declaring total income of Rs. 1,54,230/-. The Assessing Officer reopened the assessment while issuing notice under section 148 on 30 th March, 2017 on the basis of C.I.B. information regarding the deposit of Rs. 16,91,450/- in the bank account of the assessee. The assessee did not file any return in response to notice under section 148. Thereafter, the Assessing Officer issued a notice under section 142(1) on 20.06.2017 and in response to that one Sri. Mahtab Alam, Advocate, appeared and produced copy of the ITR filed on 31 st March, 2012. He has also filed a copy of the bank account of the assessee with a list of 22 persons who have taken policy from the assessee alongiwth the receipts from 14 persons with the thumb impressions. The Assessing Officer noted that there is no match between the cash deposited in the bank account and the list of the persons given by the assessee and consequently made the addition of Rs. 16,91,450/- to the total income of the assessee. The assessee challenged the action of the Assessing Officer before the CIT(A). The CIT(A) called for a remand report from the Assessing Officer and after considering the remand report had upheld the addition made by the Assessing Officer. 4. Before the Tribunal, the learned AR of the assessee has submitted that the assessee is a LIC agent and the amount deposited in the bank account of the assessee represents the premium paid by the persons who got insurance policy ITA No. 185/VNS/2019 Nagendra Singh 3 through the assessee. The said deposits were made at the outstation branches of the bank of the assessee which was used by the assessee for the payment of the premium of their LIC policies. The learned AR has further submitted that the assessee is also the Sarpanch of the village and some of the deposits are in the nature of remittance of the amount of the village persons working outside by using the bank account of the assessee. Thus, the cash received from the policy holders for payment of the premium is deposited in the bank account and the same was used for the payment of the LIC premium. The income of the assessee is only in the nature of commission received on the LIC policy and premium. He has thus contended that the documentary evidence produced by the assessee in the shape of the entries in the diary maintained by the assessee regarding the persons whom the LIC policy was issued though the assessee shows that the cash was deposited from the insured persons for the payment of premium of the LIC policies. He has also referred to the various receipts signed by the persons from whom the cash was received in the bank account. Thus, the learned AR has contended that the assessee has produced the relevant record to show that the cash represents the deposits made by the insured persons for the payment of LIC premium which was used by the assessee for the LIC premium on their behalf. Further, some of the cash was deposited by the labourers and persons from the village who are working outside and used the bank account of the assessee for remittance of money to their family. He has thus, pleaded that the addition made by the Assessing Officer and confirmed by the CIT(A) is not justified and liable to be deleted. 5. On the other hand, the learned DR has submitted that the Assessing Officer as well as CIT(A) has examined the evidence produced by the assessee and found that there is no co-relation between the details of the insured persons furnished by the assessee and the receipts given by the persons. Further, there is no corroborating evidence to show that the deposits were made by these persons whose names are given by the assessee in the list of insured persons and the ITA No. 185/VNS/2019 Nagendra Singh 4 assessee has used the said money for payment of their policy premium. He has relied upon the orders of the authorities below. 6. I have considered the rival submissions as well as relevant material on record. The Assessing Officer has reopened the assessment by recording the reasons as under:- “C.I.B. information received in this office that Shri-Nagendra Singh, 257, Verma Niwas, Padrauna Road, Kasia, Kushinagar has deposited Cash Rs. 16,91,450/- in the bank a/c’s during the financial year 2009-10 relevant to A.Y. 2010-11. Notice u/s 133(6) of I.T. Act, 1961 issued to assessee on 15.07.2016 and 21.02.2017 for verification his deposits in the bank. The assessee despite repeated query letters he has not filed the reply. Thus he has failed to justify the deposit of Rs. 16,91,450/- in the bank as his income. So I have reason to believe that a tune of Rs. 16,91,450/- income chargeable to tax has escaped assessment for A.Y. 2010-11 u/s 147 of I.T. Act, 1961 under explanation 2(6).” 7. The Assessing Officer after considering the details and receipts filed by the assessee came to conclusion that these receipts are in respect of the money received by them and not by the assessee. The assessee has not filed any reply before the Assessing Officer to explain the deposits in the bank account except the documents which were considered by the Assessing Officer. Accordingly, the Assessing Officer made the addition of entire deposits made in the bank account to the total income of the assessee. The assessee challenged the order of the Assessing Officer before the CIT(A) and contended that the assessee is an Insurance Agent received premium from his clients and same were deposited in the bank account and later withdrawn for making of payment of premium. The assessee pleaded that a proper representation was not made before the Assessing Officer and contended that the amount deposited in the bank account represents the premium amount directly deposited by the clients of the assessee which was used by the assessee for the payment of policy premium on their behalf. The CIT(A) called for a remand report from the Assessing Officer. The Assessing Officer in the remand report has ITA No. 185/VNS/2019 Nagendra Singh 5 discussed the details as submitted by the assessee and pointed out that the name of the persons who had deposited the money into bank account is different from the list of the policy holders submitted by the assessee. The deposits were made in outside branches of different cities and therefore, the evidence produced by the assessee has not supported the claim of the assessee. The CIT(A) after considering the remand report has upheld the addition of the Assessing Officer as under:- “The remand report of the Assessing Officer was provided to the appellant for his comments the appellant has submitted his rejoinder, the same is considered and placed on record. A perusal of the assessment order, remand report and the submissions made by the appellant shows that the appellant is a LlC agent who is in receipt of commission from LlC of India Ltd. The appellant has contended that the amount of cash deposited in the bank account was the premium amount of his customers who sometimes deposited it directly in his bank account and some times he himself collected the amount and deposited the same in his own account for withdrawing to deposit the premium of the said customers. In the remand report of the AO it was pointed out that the persons who had deposited the money in the appellants bank account were different from the list of policy holders which was submitted during the assessment proceedings. It was further submitted that "inter branch fee" was charged by the bank which shows that deposits were also made from other branches of different cities. In the rejoinder filed by the appellant the appellant has changed his submission and stated that some of the amount was deposited by persons who were residing outside and they use to remit the amount in the saving account of the appellant to be paid to their families who were residing in the nearby villages. Thus two types of payments were received in the bank account of the appellant. The appellant has failed to submit any evidence to substantiate the contention made him. It is pertinent to note here that there was no need for the appellant to collect the premium amount from his customers, in cash, then deposit the same amount in his bank account and once again withdraw the same amount in cash for making payment of the premium. The appellant could have simply collected the cash from his customers and made the payment of the premium directly. The appellant has not submitted any reason whatsoever for doing the same. Furthermore, the appellant has stated that some of the amount was from persons who wished to remit the amount to their families. The appellant has not submitted any evidence in this regard. This contention of the appellant appears to be an afterthought in response to the discrepancy pointed out by the AO in his remand report. A perusal of the bank statement submitted by the appellant shows that cash has been deposited and withdrawn and regular Interval from the said ITA No. 185/VNS/2019 Nagendra Singh 6 bank account. The deposits made in the bank account are in round figures which does not point towards the payment being made for LIC premium. In view of the above I find that the appellant has failed to substantiate the source of funds deposited in his bank account. The contention of the appellant that peek credit maybe considered for making the addition is not acceptable as the appellant has failed to fully disclose the nature and source of the deposits, The contention that the appellant did not made investment else were after withdrawing the amount is an unsubstantiated statement. Accordingly, the addition made by the AO are upheld and the grounds of appeal are rejected.” 8. I have gone through the documentary evidence produced by the assessee in the paper book containing 1 to 46 pages. From page nos. 1 to 10 of the paper book are copies of the diary maintained by the assessee having the details of the persons with their policy numbers and due date of premium for various years. From page nos. 11 to 22, the copies of the receipts issued by the various persons. It is pertinent to note that the name appearing in the list of policy holders recorded in the diary are not matching with the names of the persons who have issued the receipts. Further, the receipts are in the nature of certain amount received by those persons and not the amount given or deposited by those persons in the bank account of the assessee. The Assessing Officer reproduced one of the receipts and all the receipts are identical in language except the name and amounts and dates which are separately filled up. Therefore, neither the list of the policy holders nor the receipts are supporting the claim of the assessee that the cash in the bank account of the assessee was deposited by the policy holders for payment of the policy premium. The assessee has not produced a single document showing the payment of premium on behalf of the any of the policy holders. The assessee has not filed a single receipt issued by the insurance company to show that the assessee paid the premium of the amount which was received in the bank account. Therefore, the facts analyzed by the CIT(A) in the impugned order are found to be correct and proper. Accordingly, I do not find any infirmity or error in the order of the CIT(A), the same is upheld. ITA No. 185/VNS/2019 Nagendra Singh 7 9. In the result, the appeal of the assessee is dismissed. Order pronounced on 05.08.2022 at Allahabad, U.P. in accordance with Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- [VIJAY PAL RAO] JUDICIAL MEMBER DATED: 05/08/2022 Varanasi/Allahabad Sh Copy forwarded to: 1. Appellant- 2. Respondent- 3. CIT(A), 4. CIT 5. DR By order Sr. P.S.