Unexplained Cash Deposit of ₹12.02 Lakh in Second PAN Account: ITAT Upholds Addition for Lack of Corroborative Evidence [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the addition of unexplained cash deposits amounting to ₹12.02 lakh in a bank account linked to a second Permanent Account Number (PAN), citing lack of corroborative evidence.

Kalimuddin Mohamad Rafique,appellant-assessee,was in retail trading and filed his income tax return for AY 2011-12 on 31.08.2012 under PAN “AQAPK7595C.” He reported a loss from house property of Rs. 1,50,000 and business income of Rs. 2,71,135. The total income was Rs. 2,71,485 after claiming a deduction of Rs. 63,147.

The Assessing Officer (AO) found cash deposits of Rs. 12,02,500 in the assessee’s bank account at Standard Chartered Bank, Mumbai, under a different PAN “AIVPM1776C.” Since no return was filed under this PAN, the source of the deposits was unclear. The AO issued a notice under section 148.

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The assessee said he used only the first PAN for filing returns and that the bank mistakenly used the second PAN for his account. He claimed Rs. 6,49,340 of the deposits were business receipts and the rest came from personal funds and his spouse’s savings. However, he did not provide documents to prove this.

The AO investigated and found no proof of the spouse’s funds, no documents for cash sales or data processing fees, and noted suspicious withdrawal and deposit patterns. The AO concluded the deposits were unexplained and added them as income.

The Commissioner of Income Tax (Appeals) [CIT(A)] agreed with the AO because the appellant did not surrender the second PAN or provide evidence for the cash deposits. The addition was upheld and the appeal was dismissed. The assessee then appealed to the tribunal.

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The two member bench comprising Pawan Singh (Judicial Member) and Girish Agrawal( Accountant Member)  reviewed the submissions and records. It agreed that the assessee had two PANs but found no proof that one PAN was surrendered after he learned about it. The only document was a letter to the bank to update the PAN, submitted after the assessment order.

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Even if some cash deposits were from business sales and fees, the assessee did not provide any documents to prove this. The claim that the rest came from the appellant’s and his spouse’s savings was also unsupported.

The bank statement did not clearly explain the transactions. The assessee’s explanations were weak and evasive. The tribunal noted the law does not allow holding two PANs, but the assesee did not show he gave up one.

After considering the CIT(A)’s detailed review and the remand report, the tribunal saw no reason to change the decision. The addition for unexplained cash deposits under the second PAN was upheld.

Therefore, the appeal filed by the assessee was dismissed.

To Read the full text of the Order CLICK HERE

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