Addition for cash deposited in joint bank account upheld. A professional like Advocate CA or Accountant would not open a joint bank account with his client
The instant appeal was filed by the appellant assessee against the order of the CIT(A) upholding the action of the Assessing Officer (AO) in making addition on account of unexplained money deposited in the joint bank account with his accountant.
ABCAUS Case Law Citation:
ABCAUS 2330 (2018) (05) ITAT
The AO passed an ex-parte assessment order after making addition for unexplained cash deposits in the joint bank account of the assessee. The assessment was however set aside by the Tribunal and the matter was restored to the AO to pass assessment order afresh.
During the remanded proceedings, the assessee explained to the AO that the said Bank Account belonged to his advocate and not him, therefore, it cannot be taxed in the hands of the assessee. The AO summoned the assessee as well as the said advocate. The statement of assessee was recorded. However, the other account holder did not attend the proceedings. The AO, therefore, concluded that the assessee failed to prove that transactions entered into in this bank account were not related to him. The assessee did not produce any supporting evidence to substantiate his claim that these transactions were not entered into by him. In the absence of source of the cash deposited in the said joint bank account, AO made the addition for cash deposited therein.
The assessee challenged the addition before CIT(A). However, CIT(A) confirmed the addition and dismissed the appeal of assessee. The CIT(A) observed that generally the joint accounts are opened between blood relations, or close friends, who have an utmost faith on each other and who normally pool their resources for common use. However, the said joint account had been opened by the assessee with his authorized representative, an advocate. It could not be stated that these two were pooling their resources for their common use. There was no reason that the said advocate would pool his money in the account which the assessee was authorized to operate.
The CIT(A) opined that once the assessee was holding a joint account with someone else and he alleges that the money was not deposited-iv the bank by him, then the onus is on him to produce the other person and to prove that the money was deposited by the other person. The assessee was depositing the money in the bank account to facilitate his advocate/Authorised Representative to withdraw the money for various necessities like investments, payment of taxes, etc. without bothering the assessee from time to time.
The CIT(A) thus opined that this was a client account being maintained by the authorized representative to manage the clients’ affairs as and when required. The AO was, therefore, correct in treating the deposits made in the bank account as the unexplained money of the assessee.
Before the Tribunal, assessee denied doing any transaction in the joint bank account. The assessee admitted that he knew the joint holder for the last 4 to 5 years and he was filing his return of income. It was also clarified that the joint holder was not an Advocate but an Accountant of the assessee and he used to file I.T. return on behalf of the assessee.
The Tribunal observed that the assessee admitted that bank account in question was opened with the accountant. However, no reasons were explained as to under what circumstances joint bank account was opened.
The ITAT opined that it is unbelievable that a professional like Advocate, Chartered Accountant (CA) or an Accountant, would open a bank account with his client. The Tribunal expressed agreement with the Revenue that any professional would open a bank account for an assessee if unaccounted transactions are conducted on behalf of the assessee. Since, the said joint holder was acting as accountant on behalf of the assessee and was providing professional advice to the assessee and filing his income tax return, there was no reason to believe that he would open a joint bank account with the assessee for his personal affairs.
The Tribunal opined that it was probable that assessee would have opened this bank account with the professional for conducting unaccounted transactions on his behalf. The onus was upon the assessee to explain the circumstances under which this bank account was opened with his Accountant. However, no explanation had been filed in this behalf. The CIT(A) rightly noted that normally joint bank account are opened between the relatives or close friends. If the cash deposited belonged to the accountant, he could have given confirmation or would have appear before AO for recording his statement. However, he did not support the case of the assessee and did not appear. The explanation of assessee is clearly an afterthought.
The Tribunal concluded that considering the totality of the facts and circumstances of the case in the light of finding of fact recorded by the authorities below, particularly when first account holder was authorised representative of the assessee, it clearly support the findings that it was an unaccounted bank account maintained by the assessee with his Authorised Representative and in the absence of any explanation of source of the cash deposited in the bank account, no interference is called for in the matter.
The appeal was dismissed.
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