Bank Account Opened Fraudulently in Assessee’s Company, AO adds Rs. 15 cr as Protective Addition: ITAT Deletes Addition [Read Order]
The tribunal found the assessee’s explanation credible, citing the FIR filed, legal action taken, and the limited scale of the liquor retail business, which made it improbable for the assessee to handle ₹15 crore in 14 days
The Amritsar Bench of Income Tax Appellate Tribunal ( ITAT ) deletes ₹15 crore protective addition after finding that a bank account was fraudulently opened in the name of the assessee, who has no knowledge about the account.
Mandeep Singh,appellant-assessee, was engaged in retail trading of foreign liquor under a State Excise license. Based on information that ₹15 crore in cash was deposited between 13.03.2012 and 26.03.2012 in a current account with Oriental Bank of Commerce (OBC) under the name “Mandeep Singh and Sons,” the Assessing Officer (AO) initiated reassessment proceedings under Section 147.
Since no return was found on record and the assessee did not respond to initial inquiries, a notice was issued on 27.03.2019. The assessee later filed a return declaring income of ₹1,65,519 on a turnover of ₹83.36 lakhs.
The entire cash deposit was immediately transferred by cheque to two entities,M/s Gagan Wine Trade and Financers Ltd. and M/s New Gagan Wines (proprietor Amit Doda). In a statement recorded under Section 131, the assessee denied having any connection with the OBC account and claimed that it was fraudulently opened and operated by Mr. Amit Doda using forged documents.
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He further stated that he neither handled nor benefited from the account, and the transactions were carried out by others without his knowledge.
Though the bank account reflected purchases in Form 26AS and TCS was collected, the assessee did not claim credit for the same. It was also noted that the ₹15 crore had already been taxed in the hands of M/s Gagan Wines and M/s New Gagan Wines as unexplained money under Section 69A. However, the AO also made a protective addition of the same amount in the assessee’s hands while accepting the returned income.
On appeal, Commissioner of Income Tax(Appeals)[CIT(A)] dismissed the assessee’s claim, stating that no supporting documents were filed and upheld the addition. The assessee has now challenged this order before the Tribunal.
The two member bench comprising Udayan Dasgupta (Judicial Member) and Krinwant Sahay (Accountant Member) heard both sides and examined the records. It noted that the assessee was a licensed liquor retailer and had declared a turnover of ₹83.36 lakhs, which matched the genuine purchases shown in Form 26AS and routed through his HDFC Bank account.
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A net profit of ₹1,65,519 was disclosed and accepted by the AO. The assessee had claimed TCS credit only for actual purchases from authorised distributors.
The appellate tribunal found it unlikely that a retail trader could have handled ₹15 crore in transactions within just 14 days, given the limited scope of his licence.
It also observed that the assessee had filed an FIR after discovering the fraud, and legal proceedings were underway. The AO had already initiated action against the two actual beneficiaries,M/s Gagan Wine Trade and Financers Ltd. and M/s New Gagan Wines.
Based on these facts, the tribunal held that the protective addition of ₹15 crore was not justified and directed its deletion.
Since the appeal was allowed on merits, the legal grounds raised were not discussed further.
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