AO Relied on Bank Account Not Admitted by Taxpayer: ITAT Quashes Rs. 4 Crore Addition [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) quashed an addition of over Rs. 4 crore after observing that the Assessing Officer (AO) had relied on a bank account which was not owned by the assessee.

Amitsingh Vrajrajsingh Bhadoriya (assessee) engaged in the business of mattress trading. The AO made an addition of Rs. 4,00,82,154 under Section 69A of the Income Tax Act, 1961. This addition was based on the cash deposits made by the assessee.

The assessee clarified that he had only one bank account, A/c No. 915020054131377, into which deposits totaling around Rs. 1 crore were made.

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The AO received information about large cash deposits for Bank A/c No. 916010042512876 and treated the same as unexplained income. The assessee during assessment proceedings submitted that the said account did not belong to him.

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Aggrieved by the AO’s order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) dismissed the appeal and upheld the addition of Rs. 4 crore made by the AO.

Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT. The counsel for the assessee argued that no evidence had been brought on record by the AO to link the disputed bank account to the assessee.

On the other hand, the counsel for the revenue argued that the both bank accounts belonged to the assessee and relied on the orders of lower authorities.

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The two-member bench comprising Dr. B.R.R. Kumar (Vice President) and T.R. Senthil Kumar (Judicial Member), observed that the AO had not brought on record to prove the bank account belonged to the assessee. 

The tribunal remanded the matter to the AO to obtain statements from the bank regarding the ownership of bank accounts. The tribunal directed the AO to pass an fresh assessment order after obtaining information from the bank.

The tribunal quashed the addition of Rs. 4 crore and the penalty imposed under Section 271(1)(c) was also deleted. The appeal of the assessee was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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