Can't Fault AO's Estimation Of Undisclosed Deposits In Foreign Bank When Assessee Fails To Produce Account Statement: Delhi HC

“Counsel for the Assessee also concedes that in the absence of the Assessee producing the relevant material, the AO was well within his right to make an estimate bearing in mind the income profile of the Assessee. We find it difficult to accept that any interference with the estimation of the deposit made in the bank account, are called for in the absence of Assessee producing his own bank account statement,” a division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma held in the 'peculiar' facts of the case.

The Appellant-assessee was aggrieved by a demand of ₹50,00,000/- on account of unexplained credit in his undisclosed account at Barclays Bank in London.

Assessee had also sent communication to the said bank to obtain the statement of bank account, but the same was not produced.

The Commissioner of Income Tax (Appeals) though held that there was no basis for presuming that the deposit was equivalent to ₹50,00,000/-, it only reduced the addition to ₹25,00,000/- (plus ₹2,80,000/- as admitted by the Assessee).

The ITAT noted that the Assessee had not produced any material to contradict the factual findings of the CIT(A). Hence, this appeal was preferred by the Assessee.

Assessee's counsel claimed that the addition was made on surmises and without any material to substantiate the same.

However, the High Court noted that the addition was made solely on the basis that the Assessee had maintained an overseas bank account and the deposits made in the said account were not disclosed.

“The AO thus, in his best judgment estimated the quantum of deposit,” it remarked.

Nevertheless, keeping in view the request of assessee's counsel to provide one more opportunity to produce the relevant bank statements to establish the quantum of deposits, the High Court directed the AO to re-examine the matter.

It ordered,

“if the Assessee fails to produce the bank account within the period of twelve weeks from date, no such exercise is required to be undertaken by the AO and the impugned order passed by the learned ITAT shall stand confirmed.”

Appearance: Advocates Ruchesh Sinha and Monalisa Maity for Appellant; SSC Abhishek Maratha, JSCs Apoorv Agarwal, Parth Samwal and Advocates Nupur Sharma, Gaurav Singh, Muskaan Goel, Himanshu Gaur and Paridhi Kohli for Revenue

Case title: Shri Pawan Kumar Jaggi v. ACIT Central Circle-25 New Delhi

Case no.: ITA 2/2023