Assessee cannot be asked to prove source of cash deposit made in bank account opened by forgery – ITAT
In a recent judgment, ITAT, Delhi has held that assessee cannot be asked to prove source of cash deposit made in bank account being opened by someone else by forgery.
ABCAUS Case Law Citation:
ABCAUS 4032 (2024) (05) ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) ational Faceless Appeal Centre (NFAC) in sustaining addition of cash deposited in bank account during demonetization period in specified bank notes.
The assessee was an individual and had filed return of income for the relevant AY declaring income after set off of loss from house property and after claiming deduction under Chapter VI-A of the Income Tax Act, 1961 (the Act).
The case of the assessee was selected for limited scrutiny under Computer Assisted Selection of Cases for Scrutiny (CASS) to examine the cash deposit made in the bank account during the demonetization period. The AO observed that the assessee had deposited large amount of in cash in his bank account during the demonetization period and since no satisfactory reply was furnished by explaining the source for the same, the same was added as unexplained income of the assessee in the assessment. completed u/s 144 of the Act.
Before the CIT(A), the assessee filed written submissions stating that there was no such bank account maintained by him and his PAN had been misused by somebody for opening bank account.
Further, it was also pointed out that the information available with the AO clearly stated that cash had been deposited during the demonetization period by a Proprietorship of a person with a different name but by mentioning PAN of the assessee.
The assessee claimed that he had got absolutely no communication with said proprietor. Accordingly, it was categorically denied by the assessee of having the subject mentioned bank account and cash deposit in the same.
The assessee also stated that First Information Report (FIR) has been filed before Police about misuse of his PAN for opening certain bank account.
The CIT(A) did not heed to the contentions of the assessee and upheld the action of the by confirming the addition.
The Tribunal opined that the assessee could be asked to explain the source of cash deposit made in his bank account by the revenue. When the assessee had categorically denied having any such bank account as stated by the revenue, then the assessee cannot be accepted to prove the source of cash deposit made in the bank account which was not even belonging to him which was only expecting the assessee to prove the impossibility and prove the negative.
The Tribunal observed that this was a classic case of application of legal maxim Lex non cogit ad impossibilia which means that the law cannot compel one person to perform an act which he could not possibly perform.
The Tribunal opined that when the information available in the records of the AO that bank account was in the name of some other proprietor, then the CIT(A) should have resorted to make minimum enquiries with the said bank by calling for Know Your Customer (KYC) norms and its connected documents in the form such as the name of the person who introduced the account holder, name of the account holder, PAN of the Account holder and whether the name mentioned in the PAN matches with the names of the account holder etc.
The Tribunal opined that these preliminary enquiries could have proved the fact beyond doubt. The assessee from its side had categorically denied having such subject mentioned bank account. Further, the assessee had also filed FIR with Police to prove his bona fide stand. These facts should have been taken into account by the lower authorities while deciding the issue before drawing any adverse inference against the assessee. Which was admittedly not done by the lower authorities.
The Tribunal deleted the impugned addition made in the hands of the assessee by holding that the said cash deposit in the bank account did not belong to the assessee.
Accordingly, grounds raised by the assessee were allowed.
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