Reopening quashed as assessee was only a benamidar of alleged bank accounts

Reopening quashed as assessee was only a benamidar of alleged bank accounts and no action was taken against the real account holder

ABCAUS Case Law Citation:
ABCAUS 2514 (2018) 09 ITAT

The instant appeal has been preferred by the Assessee against the order passed by the CIT(A) whereby he affirmed the initiation of assessment proceeding u/s 147 of the Income Tax Act, 1961 (the Act).

The assessee was engaged in the large scale trading of food grains and allegedly maintained four bank accounts in which huge transactions were made. These bank accounts were not disclosed to the Department.

Based on the report of the ADIT (Inv.) a notice u/s 148 of the Act was issued and served upon the assessee on account of alleged bank accounts by recording the reasons as per provisions of section 148 of the Act.

In response to the notice, the assessee filed return of income. The assessment proceeding was challenged by the assessee before the Assessing Officer, on the ground that alleged bank accounts were not maintained by him and he is only a Benamidar account holder and some other persons may have operated these accounts without his knowledge and transactions have been done in his name, by some other persons, therefore, he is having no knowledge about the transactions,

However, the assessee did not find favour from the Assessing Officer and finally the Assessing Officer made addition for the amount credited in all the bank accounts.

The assessment order was challenged before the CIT(A), who partly allowed the relief to the assessee by considering the peak amount of all for alleged Banks accounts combined as a whole. However, he affirmed the initiation of assessment proceeding u/s 147 of the Act.

The Tribunal observed that the report of ADIT (Inv.), it was clear that the assessee was only a banamidar of those bank accounts, whereas the actual beneficiary was some other person. The report was available with the Assessing Officer and even otherwise the assessee had taken the clear stand that he was never involved in any of the transactions as he was only the benamidar account holder and some other persons operated these account without his knowledge and the transactions were done by them in the assessee’s name and therefore, the assessee had no knowledge about the transactions.

The Tribunal further observed that the AO had not taken into consideration the investigation report of ADIT(inv.) and made an addition and even the CIT(A) did not consider the paramount fact, which was observed by the ADIT(Inv.) that the assessee was only a benamidar account holder of these accounts.

It was also undisputed fact that Revenue Authorities have not taken any action against the real bank account holder whom the assessment was to be made. Hence the Tribunal opined that there was no justification for initiation of assessment proceedings.

Consequently, the reassessment was set aside.

Download Full Judgment Click Here >>

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