TaxTMI 
TaxTMI 
2013 (10) TMI 760
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....sits register along with full details of the depositors, i.e. name and addresses, etc. in order to verity the genuineness of the transactions. There are some cash deposits also. The Authorised Representative for the assessee has furnished some computerized sheets of the Fixed Deposit accounts, which contained only the account number, member's name, opening balance, debit, credit and balance amount, but not addresses of the depositors, which were not made available. Observing that in the absence of the addresses, it is not possible to verify the genuineness of the transactions, the Assessing Officer held that difference between the closing balance as on 31.3.2009 of Rs.160,24,48,937 and opening balance as on 1.4.2008 of Rs.121,70,76,143, viz. Rs.38,53,72,794 represents the income of the assessee. He accordingly treated the said difference of Rs.38,53,72,794, representing effectively the deposits received during the previous year, as the income of the assessee. He accordingly made an addition of Rs.38,53,72,794 under S.68 of the Act, while completing the assessment on a total income of Rs.42,80,89,880, vide assessment order dated 19.12.2011 passed under S.143(3) of the Act. 4. On ....
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....e membership of the Society is huge and the number of members of the Society is about 63,000. The Society has computerized its operations and all the business of the Society is available in the computer software. The Society has collected all the information from its deposits as a normal banking institution and complied the KYC norms. It is not obligatory on the part of the assessee to go in checking the address and other proof of identity given by the depositors. What is required to be done as per the normal banking system is to report the controlling authorities in case any suspicious transactions are reported. The present case the assessee has complied with all the elements as a banking institution thus discharged onus of proof of identity of the depositor. There is no single instance found out by the assessing Officer that the assessee is making deliberate attempt to accommodate tax dodgers. It is seen from the assessment order that out of 30 Depositors examined by the assessing officer all the depositors are identified and accepted the deposits made by them with the Society. The department examined them, all are disclosed the deposits in their income tax returns. There is no e....
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....ar with the cases of other persons, since the bank does not have any control in respect of the amounts credited in its accounts; that the bank is to maintain accounts of its customers, which accounts can be operated only by those customers and the bank does not have any control over the mounts in the accounts. While holding in favour of the assessee, the learned CIT(A) has duly taken into consideration the provisions under s. 68 of the Act, which are explicit. 27. As per s. 68 of the Act, where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof, or the explanation offered by him is not, in the opinion of the AO, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. The business of the assessee bank is to carry on banking transactions. The bank, for all its banking activities, is strictly governed by the Banking Regulations Act, 1949. The said Act defines a banking company as a company which transacts the business of banking. 'Banking' is described as accepting, for the purpose of lending or investment of mone....
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....ation regarding the customers of the bank, the assessee furnished to the AO whatever information it had in its possession. The addresses of the account holders, as mentioned in the bank ledgers, as also the addresses of the introducers of the accounts were furnished to the AO. Now if the addresses of the customers of the assessee bank were found to be incomplete, this cannot form the basis for making the addition in question. Undisputedly, the assessee bank did not violate any of the relevant guidelines of the RBI. In the Master Circular of the RBI, (copy at p. 75 of the assessee's paper book), introduction by an existing account holder by the bank has been held to be one of the proper methods of introduction of a customer to the bank for opening an account. The bank was not required to go for detailed verification of the addresses/whereabouts of its customers, though this position has now changed and at present the requirement in this regard calls for a much more stringent compliance. In Bapulal Premchand vs. Nath Bank Ltd. AIR 1946 Bom 483, as pointed out, it has been held, inter alia, that there is no absolute obligation on a bank to make inquiries about a proposed customer, so ....
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....t pp. 105 to 109 of the assessee's paper book), it was held that the deposits received by the assessee, which was a non-banking financial institution, recognised by the RBI, were not in the nature of taking of any loan or deposit for the purposes of its business, that rather, it was in the business of accepting deposits and that in view of the nature of such business, the scrutiny of the deposits could not be the same as in the case of an assessee making entries of deposits on account of loan etc. 33. In CIT vs. Steller Investment Ltd. (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del), it was held that even if the subscriber to capital was not genuine, the amount of share capital could not, under any circumstance, be regarded as the undisclosed income of the company. This decision was upheld by the Hon'ble Supreme Court in the case of CIT vs. Steller Investment Ltd. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC). 34. Further, even on merits, the addition was uncalled for. Concerning account Nos. 8211, 8212 and 8213, the introducer was Shri Vijay Sethi, the deceased managing director of the assessee bank itself. The original investments were made in RMRD accounts or savings ba....
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....essee had denied producing the bank account holders on the plea that this would adversely affect its banking business. Here also, we find no case made out by the Department. 43. Before the learned CIT(A), the assessee, inter alia, filed copies of accounts of various account holders and other supporting documents, as additional evidence. The AO objected to the same. The learned CIT(A), however, allowed such evidence to be produced as additional evidence. In this regard, the assessee did not produce such evidence before the AO under the bona fide belief that it was not obliged to do so, as it would adversely affect its business. The learned CIT(A) found that the documents produced as additional evidence were in regard to the additions made and could not be produced at the time of assessment proceedings, in the bona fide belief which was, as aforesaid, nurtured by the assessee. 44. We do not find any error in the order of the learned CIT(A). In this regard, it has not been made out that the plea of the assessee of not being obliged to file such documents in respect of its depositors, who had been introduced either by the bank's own staff members or by someone already having a ba....