AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 1125
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....subject to search & seizure operation under the provisions of section 132 of the Act dated 3rd January 2013. The assessee was found to be the Benamidar of three bank accounts of his employees which were being operated and managed at his instructions. There were cash deposits in these bank accounts which were subsequently transferred through the banking channel to the bank account of the assessee. The necessary details of these bank accounts and names of the Benamidar of the assessee along with the deposit of cash stand as under: Name A/C No. Cash Deposited during FY: 05-06 Sureshgiri Kailashgiri Goswami SB A/C No.2276 Rs. 58,26,050 Jagdishbhai Maharajbhai Goswani SB A/C No.2277 Rs. 50,08,000 Rameshbhai Muljibhai Solanki SB A/C No.2542 Rs. 91,57,000 Total Rs. 1,99,91,050 3.1 In view of the above, the AO issued a show cause notice under section 142(1) of the Act dated 21st March 2014 proposing to make the addition of the cash deposits to the total income of the assessee. The assessee in response to such show cause notice vide letter dated 25th of March 2014 submitted that there were few more bank accounts of which he was the Benamidar in addition to th....
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....tion of the assessee on the reasoning that there was no evidence available on record suggesting that additional 3 bank accounts bearing account numbers 855, 1227 and 909 belongs to the assessee as Benamidar. As such the assessee to justify the source of cash deposit has come up with this explanation only after receiving the notice issued under section 142(1) of the Act dated 21st March 2014. Likewise, the assessee has not explained the source of deposits in these bank accounts in the financial year 2004-05 which was very vital in order to establish the fact that the account holders were the Benamidar of the assessee. Furthermore, the deposits in these three additional bank accounts was not possible to assess under income escaping assessment under section 147 of the Act due to limitation of time provided under the Act. On the same reasoning, the assessee failed to explain the opening cash balance of Rs. 44,28,072/- shown in the cash book as on 1st April 2004. Thus the explanation of the assessee that the cash was deposited in the impugned bank account which was available with him in the financial 2004-05 fails. 3.7 The AO also did not believe on the contention of the assessee that ....
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.... Rs. 77,55,545/- only. This fact was duly explained before the settlement commission. Thus the availability of cash shown by the assessee based on the cash book and filed before the AO cannot be considered as bogus. Furthermore, there was no cash balance which was negative in the entire cash book. The assessee further submitted that the additional 3 bank accounts disclosed during the assessment proceedings in response to the notice issued under section 142(1) of the Act cannot be treated as afterthought. It is for the reason that all these bank accounts were duly disclosed before the settlement commission which were duly accepted. 5.2 The assessee further contended that the AO was never questioned during the assessment proceedings about the opening cash balance as on 1st April 2004 and therefore the earlier years cash book were not filed. As such the assessee has constructed the cash book from 1st April 1999 till 31 March 2006 after incorporating the transactions of all the bank accounts which were Benamidar. 5.3 The cash flow statement filed before the settlement commission was duly accepted by Commission as well as by the ld. PCIT wherein the opening cash balance as on 1st Apri....
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....elations/friends in the Mahila Vikas Co-operative Bank Limited, which was also subjected to search proceedings u/s 132 of the Act on 3rd January2013. The list of bank accounts which were opened in benami names and which fall during the Assessment Years under consideration is placed at Exhibit- 29. The applicant adopted the modus operandi for depositing the unaccounted/unexplained cash of the Group and thereafter transferring those funds from the banami bank accounts to the regular book accounts for the use of the funds by various group entities in their regular business. This was followed by reversal of all those transactions by group entities subsequently by issuing cheques from their regular bank accounts and depositing them in the respective benami accounts from which cash was withdrawn which was merged In the pool and, thus, the cycle was completed. It resulted in utilization of unaccounted funds in the regular business. In one accounting year, there were several cycles, of depositing the unaccounted funds from the pool account in to the benami accounts in Mahila Vikas Cooperative Bank, transfer of the funds from these accounts into the group entities, transferring back the fun....
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....,57,758/- as on 1st April, 2005 which is arising out of cash book for F.Y, 2004-05 which was also submitted during Assessment Proceedings The Appellant hascbnsidered all the cash transactions even in earlier Assessment Years from such benami accounts which are not found to be incorrect by the AO and merely because the Appellant has not explained cheque deposits in benami accounts for A.Y. 2005-06 which is not the subject matter of Assessment Proceedings before AO, does not mean that cash book prepared by Appellant should not be accepted. With regard to observation of the AO that the Appellant has claimed that cash lying with Dev Pritamnagar Co-operative Housing Society was also used by the appellant in above cash book and as the Society being independent and this explanation should not be accepted, it is observed that the Appellant has submitted confirmation of the said Society before the AO and even loan taken from such Society was ultimately repaid by the Appellant from the very same cash book. When cash payments made by the Appellant to the Society are considered to be explained out of cash balance available with the Appellant, there is no reason for not accepting utilisation ....
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.... upon under rule 9 wherein the learned ld. PCIT has also admitted the assessee as the Benamidar of these 3 bank accounts. The admission by the learned Ld. PCIT in his report leaves no scope of confusion for the AO to draw an inference against the assessee that it was afterthought. Accordingly, we hold that the assessee was the Benamidar of these 3 bank accounts. 12. At this juncture, we are inclined to mention that there were total 19 bank accounts which were used as the Benamidar. But the issue that arising from the order of the AO is limited to the extent of 6 bank accounts only. Accordingly, we are not inclined to give any finding on the remaining bank accounts which have been accepted as the Benamidar. In this regard we find support and guidance from the judgment of The Hon'ble High Court of Gauhati in the case of Assam Cooperative Apex Bank Ltd vs. CIT reported in 112 ITR 257 where it was held as under: Thus, the power of the Appellate Assistant Commissioner is not confined to the subject-matter of appeal by the assessee. It is much wider. He might examine all matters and dispose of the appeal, even to the prejudice of the assessee by himself enhancing the tax or remanding ....
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....ed, the assessee before the authorities below has not filed any supporting details to demonstrate that the cash was really available with the society. However, the assessee in the cash book prepared by him has shown receipt of cash and the payment of cash from the society. Based on that, the available cash balance as on 31 March 2006 was drawn showing closing balance at Rs. 77,55,545/- only. Indeed the entire amount of cash balance shown by the assessee as on 31st March 2006 was not shown before the settlement commission as well as before the ld. PCIT in the report prepared by him under rule 9 of Income Tax Rule. What was shown was the amount of Rs.50 Lacs only. Thus the entire amount of cash balance of 77,55,545.00 was not declared. Be that as it may be, the crucial issue arises if it is believed that there was no money received by the assessee from the society which was deposited in the bank accounts as discussed above, there would be negative balance of the cash and the same is liable to be taxed. If it is done so, then the closing cash in hand of the assessee shall automatically increase by the amount which was purported to have been received from the society. In that event, th....