Income Tax Appellate Tribunal (ITAT), Visakhapatnam: While deciding the instant appeal by the Revenue against the Order by CIT (A) deleting the additions made by the Assessing Officer vis-a-vis the assessee’s unexplained bank cash deposits; the coram of Duvvuru R.L. Reddy (Judicial Member) and S. Balakrishnan (Accountant Member), held that a mere typographical error in mentioning the bank account number does not mean that the assessee has not disclosed proper information about the bank account details.
Facts of the case: The instant appeal concerned the Assessment Year of 2017-18. The assessee is an automobile dealer who made substantial cash deposits during the demonetisation period. Consequently, a notice U/s. 142(1) of the Income Tax Act (hereinafter the Act). Since the assessee did not respond, a letter was issued calling for information. The bank concerned was also issued a notice U/s. 133(6) requesting to furnish the account(s) statement and the KYC particulars of the assessee. A final show cause notice U/s. 142(1) of the Act was issued on 19-9-2019.
Based on the cash deposits made by the assessee for Rs. 71,41,540, the Assessing Officer (hereinafter A.O.) assessed that these deposits are unexplained U/s. 69A of the Act and completed the assessment. The A.O. noted the existence of assessee’s two Permanent Account Numbers, and that the assessee has not disclosed the bank account with Axis Bank, Lakshmipuram Branch. The A.O. also perused Form-26AS available with one of the PAN accounts and added an income of Rs. 1,24,362 as amounts received from various parties. Since the assessee did not submit any details, the A.O. passed the order U/s. 144 of the Act.
The assessee appealed A.O.’s order before CIT(A), Guntur, who then deleted the additions made by the AO and allowed the appeal.
Contentions: The Revenue (appellant) contended that CIT(A) failed to appreciate the fact that certain submissions/additional evidence produced by the assessee before the CIT(A), were never produced /submitted by assessee before the A.O. during the assessment proceedings. It was contended that assessee did not substantiate its claim regarding cash deposits appearing in Axis Bank account in respect of which addition of Rs. 71,41,540 was made towards unexplained money u/s. 69A of the Act.
Per- contra, the assessee (respondent) contended that the assessee wrongly mentioned the bank account number while filing the balance sheet before the A.O. and has rightly disclosed the balance with the Axis Bank.
It was further submitted that the cash deposits of Rs. 71,41,540/- into the bank account was duly accounted in the cash book and out of which Rs. 64,63,713 was accounted for in the P & L Account under the head “Revenue from operations (gross)”. The balance amount of Rs. 6,77,827 was received from the customers towards registration charges, insurance etc. for vehicles; and to that extent it does not take the character of income; and is only a reimbursement of expenditure payable to various authorities for registration of the vehicle.
Observations and Decision: Perusing the facts and contentions presented by the parties the Tribunal pointed out certain contradictions in the A.O.’s Order. The Tribunal also found merit in the arguments made by the respondents wherein they submitted the cash deposits have been duly recorded in the books of account and reflected in the assessee’s P & L Account.
The coram also found merit in the respondent’s contentions in which they stated that the balance amount was received from the customers towards registration charges, insurance etc. for vehicles; therefore, the cash is collected from the customers as reimbursements and hence, it does not form part of the revenue of the assessee.
With the afore-stated observations, the Tribunal stated that it did not find any infirmity with Order of deletion passed by the CIT(A). It was also held that the assessee while filing ITR-V, had disclosed all the required and relevant information concerning bank account numbers and PAN numbers.
[Income Tax Officer v. Sri Siddi Vinayaka Auto Mobiles, 2022 SCC OnLine ITAT 310, decided on 28-06-2022]
Advocates who appeared in this case :
Assessee by GVN Hari, Advocate
Revenue by SPG Mudaliar, Sr. AR
*Sucheta Sarkar, Editorial Assistant has prepared this brief