TaxTMI 
TaxTMI 
2025 (6) TMI 1390
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....ncome of Rs. 13,42,700/-. The case was reopened under section 147 of the Act on the basis of information received in the case of Shri Chimanbhai Kalubhai Patel [PAN: ACTPP0989L], wherein it was revealed that the assessee had allegedly advanced an unsecured loan of Rs. 9,80,75,000/- during the financial year 2012-13, which was not reflected in the books of account of the assessee. Accordingly, a notice under section 148 of the Act was issued on 27.05.2016 and served by RPAD. During the course of reassessment proceedings, the Assessing Officer issued several notices under section 142(1) of the Act along with detailed questionnaires, but the assessee failed to respond to most of the notices. Although it was claimed that the assessee's representative, CAs Nipur Shah and later Mahesh Chhajed, had appeared on some occasions and sought time to submit documents, no detailed or substantiated explanation was filed. The AO also issued notice u/s 133(6) of the Act to the Branch Manager of the ICICI Bank Ltd. The AO proceeded to complete the reassessment ex-parte on 13.12.2017. In the reassessment order, the Assessing Officer made a substantive addition of Rs. 16,94,93,035/- under section 68 of....
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.... in dismissing the Appeal of the assessee without considering the detailed submission made before him on 25-08-2022. 3. The learned Commissioner (Appeals) has also erred on facts and in law in ignoring the legal position that when on ground on which reopening was based, no addition was made by the assessing officer, he could not make addition on some other grounds which did not form the part of reasons recorded by him. Therefore; the learned Commissioner (Appeals) has erred in confirming addition of Rs. 16,94,93,035/- on account of unexplained cash credit under section 68 of the Act. 4. In the facts and circumstances of the case and in law the learned Commissioner (Appeals) erred in confirming the action of the learned assessing officer in making an addition of Rs. 16,94,93,035/- being amount of cash deposited with the bank as unexplained cash credit under section 68 of the Act. 5. The appellant craves leave, to add, urge, alter, modify or withdraw any grounds before or at the time of hearing. 6. Ground Nos. 1 and 2 relate to the grievance of the assessee that the learned CIT(A) erred in dismissing the appeal without adjudicating the grounds raised before him, and in not....
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....re, find no infirmity in the action of the learned CIT(A) in dismissing the appeal in limine for want of prosecution and for failure to support the grounds raised. The principles of natural justice do not extend to granting endless indulgence, particularly where procedural notices remain unanswered. Accordingly, Ground Nos. 1 and 2 raised by the assessee are dismissed. 10. Ground No. 3 raises a legal issue regarding the jurisdictional validity of reassessment proceedings initiated under section 147 of the Act. The grievance of the assessee is that the Assessing Officer reopened the case for a specific reason, namely the alleged advancement of an unsecured loan of Rs. 9,80,75,000/- to Shri Chimanbhai Kalubhai Patel, which was not reflected in the assessee's books of account. However, no addition was ultimately made on that specific ground. Instead, the entire addition made in the reassessment order was on account of cash deposits of Rs. 16,94,93,035/- in various ICICI Bank accounts, treated as unexplained cash credits under section 68. It is thus contended that the Assessing Officer, having not made any addition on the ground recorded for reopening, could not legally travel beyond ....
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....o observe that since the loan was not recorded in the assessee's books, and the assessee had made large cash deposits in his bank accounts without explanation, the same should be treated as the real source of the loan advanced, and accordingly, the cash deposits were brought to tax as unexplained income under section 68. 14. In our considered view, this is not a case where the AO has made addition on an entirely unrelated ground. Rather, the AO traced the funding of the loan to unaccounted cash deposits, and treated the latter as unexplained for want of books and records. The loan transaction served as the triggering event for the reopening, and the inquiry led to a connected addition on the same line of inquiry. It is now settled law that if the AO makes an addition on a matter which was examined as a result of or connected with the reason recorded, the reassessment cannot be invalidated merely because the form of the addition differs from the reason recorded. In this regard, the Hon'ble Gujarat High Court in Mohmed Juned Dadani (supra) indeed quashed reassessment where no addition was made on the issue of reopening. However, that decision is distinguishable on facts, as there wa....
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....t even if the impugned cash deposits aggregating to Rs. 16,94,93,035/- made in the assessee's ICICI Bank accounts are held to be unexplained, the entire amount should not be treated as income in the hands of the assessee. The AR contended that the assessee was not the beneficial owner of the funds deposited and was merely facilitating transactions on behalf of third parties. Accordingly, the only income element embedded in such deposits, if any, could be in the nature of commission or facilitation charges. To support this proposition, the learned AR placed reliance on the assessment framed in the assessee's own case for the immediately preceding year, A.Y. 2012-13, wherein on similar facts, the Assessing Officer had not treated the full bank deposits as undisclosed income. Instead, the AO had accepted that the assessee was engaged in providing accommodation entries and estimated the income at 1% of the aggregate banking turnover. A copy of the assessment order under section 143(3) r.w.s. 147 dated 30.12.2019 for A.Y. 2012- 13 was placed on record. In that year, the AO found cash deposits of Rs. 13.12 crore across multiple ICICI Bank accounts and, after examining the pattern of depo....
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.... person who has consistently engaged in banking operations across multiple accounts, received contra confirmations, and has also faced similar scrutiny in A.Y. 2012-13, wherein he himself explained the cash deposits as turnover of finance/trading activity. There is also a linkage between these deposits and the unsecured loan alleged to have been given to Shri Chimanbhai Kalubhai Patel. 19. It is a settled position in law that whether or not books of account are maintained is a fact exclusively within the knowledge and control of the assessee. The deliberate omission to maintain books, or the failure to produce them despite having carried out voluminous banking transactions involving substantial cash flow, cannot be used as a shield to resist lawful inquiry. The principle that substance must prevail over form is particularly apposite to cases involving unexplained high-value transactions, where the totality of circumstances reveals concealment rather than mere technical omission. In the present case, the following undisputed facts are material: i. The assessee maintained multiple bank accounts with ICICI Bank; ii. Cash deposits to the tune of Rs. 16.94 crore were made during th....
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....sessment involving a salaried assessee who had no books of account, no business activity, and no linkage to any third-party transactions. The Tribunal, in those circumstances, held that section 68 was not attracted. However, the facts of the present case are fundamentally different. The assessee has admitted to having advanced a loan of Rs. 9.80 crore not reflected in his records, operated multiple bank accounts with structured cash deposits over the year, failed to offer even a prima facie explanation or evidence and previously offered similar transactions as part of finance business. These facts reflect a pattern of unaccounted activity, and cannot be equated with the isolated instance addressed in Mahesh Subhash Shukla (supra). Therefore, the legal ratio of that decision does not assist the assessee in the present factual scenario. Accordingly, we find no merit in the assessee's contention that the addition should be deleted on the ground that section 68 was technically inapplicable. In our considered view, the addition is sustainable in substance under the broader provisions of the Act, including section 69 or section 69A, and the mere nomenclature employed by the Assessing Off....