Delhi HC grants second chance to produce bank statements for undisclosed foreign deposits assessment

Delhi HC remanded case involving addition of undisclosed income based on foreign bank account deposits. Assessee held debit card from Barclays Bank but failed to disclose deposits. AO made best judgment assessment without conducting directed enquiries. Court acknowledged AO's right to estimate in absence of bank statements but granted assessee another opportunity to produce authenticated bank statements for relevant period. Revenue consented to reconsideration. AO directed to re-examine quantum of addition based on produced statements, with existing additions subject to modification accordingly.

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Issues:
1. Addition of unexplained credit in foreign bank account.
2. Validity of addition made by AO without necessary inquiries.
3. Quantum of addition based on estimation by AO.
4. Assessee's failure to produce relevant bank statements.
5. Direction to re-examine quantum of addition.

Detailed Analysis:
1. The appellant (Assessee) challenged an order by the ITAT regarding unexplained credit in a foreign bank account. The AO raised a demand of Rs. 50,00,000 on the Assessee due to an unexplained credit found during a search. The CIT(A) confirmed this demand, stating that the Assessee failed to provide bank statements despite evidence of maintaining the account. The ITAT found fault with the additions made without proper inquiries and remanded the matter for further examination, similar to the Assessee's spouse's case where a similar issue arose.

2. The AO, upon remand, again made the addition of Rs. 50,00,000 as the Assessee did not provide any details. The Assessee contended that the addition was based on surmises. The CIT(A) reduced the addition to Rs. 25,00,000 and directed the AO to verify the details of the foreign account. The ITAT upheld the CIT(A)'s decision, noting the Assessee's failure to rebut factual findings.

3. The Assessee raised questions on the ITAT's decision to sustain the addition and the basis for concluding undisclosed income. The court observed that the addition was solely due to the undisclosed foreign bank account and estimated deposits. The Assessee's failure to produce relevant material allowed the AO to estimate the deposit based on income profile. The court found no grounds for interference without the Assessee's bank statement.

4. The court directed the AO to re-examine the quantum of the addition if the Assessee provides authenticated bank statements within twelve weeks. Failure to produce the statement would confirm the ITAT's order. The decision was made with the agreement of both parties' counsels, ensuring a fair opportunity for the Assessee to substantiate the deposits in the foreign bank account.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive overview of the case and the court's decision.

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