Employee Working Beyond Banking Hours May Be Classified As Violation Of Banking Rules, But No Basis To Assume Additional Income: Delhi ITAT
The Delhi ITAT deleted the addition made by AO in the absence of any supporting evidence, which was merely based on assumption and not on any material recovered during search and seizure.
The ITAT further clarified that assessee/ employee doing overtime beyond working hours may be classified as violation of banking rules, but could not form basis for addition, assuming that assessee has received commission from his manager for same.
The Bench of S. Rifaur Rahman (Accountant Member) and Sudhir Kumar (Judicial Member) observed that “the AO has made the addition on the basis that the assessee had helped Rajeev Singh Kushwaha in cash deposits by flouted the banking norms”. (Para 10)
Facts of the case
Search & seizure operation was carried out at the premise of one Mohit Garg and bother, which resulted in seizure of certain documents belonging to the assessee. Later, the assessee has filed his return declaring total income of Rs.6.5 lacs. The AO found that cash of Rs.5 lacs was given to assessee by the Rajeev Singh Kushwaha through Raj Kumar Sharma and cash Rs.12 lacs was given to the assessee by Rajeev Singh Kushwaha.
The assessee denied the allegation and stated that addition was made on assumption basis, and no incremating material was recovered from assessee during the search and seizure operation. However, during assessment, the AO made addition of Rs.17 lacs on account of unexplained income u/s 69 r/w/s 115-BBE and Rs.60 lacs on account of the commission earned from the Rajeev Singh Kushwaha u/s 69A r/w/s 115-BBE.
Observation of the Tribunal
From perusal of the order of CIT(A), the Bench found that no cash or gold was recovered from the house of assessee.
Further, the Bench noted that the addition was made on the assumption basis because the assessee who was working in the bank as a bank employee finished their work beyond the working hours.
“If the assessee has done the work beyond the working hours this may be the violation of the banking rules but on that basis the addition cannot be made assuming that the assessee has received the commission from the Rajeev Singh Kushwaha”, added the Bench.
However, the Bench accepted that the statement recorded u/s 132(4) has better evidentiary value but it is also settled position of law that addition cannot be sustained merely based on the statement.
In the present case, the Bench noted that addition was made merely on the statement basis and no other corroborating material was found during the search & seizure operation.
According to AO “1 kg gold bar was seized by the Enforcement Directorate from the premise of the accomplice of the assessee Shobhit Sinha sister's residence at Lucknow”, added the Bench.
The Bench observed that the AO has merely made addition on the basis that assessee had helped Rajeev Singh Kushwaha in cash deposits by flouted the banking norms.
Therefore, since AO has made addition only on mere assumption and not on any material recovered during search & seizure, the ITAT allowed the Assessee's appeal.
Counsel for Petitioner/ Assessee: C.S. Anand, Sarthak Upadhyay and Vaishnavi Yadav
Counsel for Respondent/ Revenue: B.S. Anand
Case Title: Vineet Gupta versus ACIT
Case Number: ITA No.1515/Del/2023