Assessee proves cash deposits belonged to third party through power of attorney evidence, only brokerage income taxable

ITAT Jaipur allowed the assessee's appeal regarding unexplained cash deposits. The assessee successfully proved through third-party evidence and registered power of attorney that he was not the real owner of cash deposits in his bank account. The deposits were received from another party and transferred to specified individuals under power of attorney arrangements. CIT(A) incorrectly rejected the explanation merely because the power of attorney document did not mention specific amounts. ITAT held that only brokerage income should be taxable for the assessee, directing Revenue to pursue other parties if necessary.

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Issues Involved:
1. Reopening of assessment under Section 148 of the Income-tax Act, 1961.
2. Addition of Rs. 27,00,000/- on account of cash deposits in the assessee's bank account.
3. Attribution of cash deposits to a third party (Shri Ravi Bansal).

Issue-wise Detailed Analysis:

1. Reopening of Assessment under Section 148:
The assessee contended that the Assessing Officer (AO) grossly erred in reopening the assessment under Section 148 of the Income-tax Act, 1961. The case was reopened based on AIR information indicating that the assessee had deposited Rs. 27,00,000/- in his bank account during the assessment year 2013-14 without filing any return of income. The Tribunal noted that the reopening was justified as the AO had valid reasons to believe that income had escaped assessment.

2. Addition of Rs. 27,00,000/- on Account of Cash Deposits:
The AO added Rs. 27,00,000/- to the assessee's income, considering the cash deposits as unexplained. The assessee argued that the cash belonged to his friend, Shri Ravi Bansal, who had deposited the money without his knowledge. The CIT(A) confirmed the addition, stating that the assessee failed to provide any conclusive evidence, such as a letter or confirmation from Shri Ravi Bansal, to support his claim. The Tribunal observed that the assessee had provided a registered Power of Attorney and bank statements showing transactions related to the deposits. However, the CIT(A) dismissed these documents, citing that the "Mukhtiyar Nama" did not mention the amount transferred.

3. Attribution of Cash Deposits to Shri Ravi Bansal:
The assessee claimed that the cash deposits were made by Shri Ravi Bansal, who also deposited Rs. 20,00,000/- via cheque in the same bank account. The Tribunal noted that the AO accepted the cheque deposits but not the cash deposits. The Tribunal found that the assessee had discharged his primary onus by providing plausible explanations and third-party evidence, including a registered Power of Attorney and bank statements. The Tribunal held that the burden shifted to the Revenue to disprove the assessee's claims. It concluded that the assessee was not the real owner of the cash deposits and that the Revenue could take necessary action against Shri Ravi Bansal if deemed fit.

Conclusion:
The Tribunal allowed the appeal partly, concluding that the assessee's income should only include brokerage income, not the entire Rs. 27,00,000/- cash deposit. Ground No. 1 regarding the reopening of assessment was dismissed as not pressed by the assessee. The order was pronounced in the open Court on 10/01/2024.

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