Income Tax Appellate Tribunal - Kolkata
Krishnendu Chanda,Medinipur vs Income Tax Officer, Ward- 4(3)(1) , Etah on 17 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
KOLKATA 'B' BENCH, KOLKATA
Before
SHRI GEORGE MATHAN, JUDICIAL MEMBER
&
SHRI RAKESH MISHRA, ACCOUNTANT MEMBER
ITA No.: 1422/KOL/2024
Assessment Year: 2012-13
Krishnendu Chanda ITO, Ward-27(1), Haldia
Vs.
(Appellant) (Respondent)
PAN: BEJPC8990M
Appearances:
Assessee represented by :None
Department represented by : Pradip Kumar Biswas, Sr. D.R.
Date of concluding the hearing : April 13, 2026
Date of pronouncing the order : April 17, 2026
ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for AY 2012-13 dated 18.09.2022.
2. The Registry has informed that the appeal is barred by limitation of time as there is a delay of 221 days in filing the appeal by the assessee. The assessee has filed a petition as well as an affidavit dated 22nd June, 2024 before the ITAT seeking condonation of delay of 221 days by mentioning that due to inability to download the order of the Ld. CIT(Appeals) and the inability to see the demand on the income tax portal, which led to the belief that the demand had been vacated by the the Ld. CIT(A), the appeal could not be filed in time. He had instantly raised a grievance vide acknowledgment number 14300060 dated Page | 2 ITA No.: 1422/KOL/2024 Assessment Year: 2012-13 Krishnendu Chanda 19.09.2023 and had also received a reply from the Department on this that the order had been uploaded but still was unable to see the order. He has also stated that the delay in filing the appeal was purely unintentional and occurred due to circumstances beyond his control and when he came to know about the order passed by the ld. CIT(Appeals), he approached the ld. A.R. to prefer an appeal, due to which there is a delay of 221 days in filing the appeal before the Tribunal. Therefore, he has pleaded to condone the delay. Considering the facts and circumstances of the case, we are of the view that the assessee had a sufficient cause and was prevented from filing the appeal within the stipulated time; therefore, we are inclined to condone the delay of 221 days. Hence the delay is condoned and the appeal is adjudicated.
3. The assessee is in appeal before the Tribunal raising the following grounds of appeal in Form No. 36 as under:
1. Adequacy of notice and opportunity of being heard.
2. Addition of Income: the Addition of Income has been wrongly added as we have already clarified that the account was neither opened nor operated by me or with my knowledge. The A.O. has erred on checking the trail of money to find the Ultimate Beneficiary.
3.1 besides the grounds of appeal, the assessee has also enclosed written submissions with arguments in various grounds, which are as under:
I. Ground I - That the Account was never opened and operated by the Appellant A. During the subject assessment year, the appellant was a student with no source of income. In addition to the same, the learned A.O. has just written circumstantial evidence that the appellant used to study in Etah and hence the account was opened and operated by the appellant is against principle of natural Justice.
Page | 3 ITA No.: 1422/KOL/2024 Assessment Year: 2012-13 Krishnendu Chanda B. The learned A.O. has relied upon the fact that the "photo of the assessee was affixed in the account opening form and letter from Shri Faiyaz Hussain (P.G.) College, Nidhauli, Kalan, Etah was used as KYC documents". However, it is also imperative to note that the appellants PAN card was not used as a KYC marker in the account opening Form. The appellant has since then visited the Canara Bank branch in Kolkata to get a copy of the account opening Form. The copy of the account opening form was not given to the appellant by the Bank. However, the bank has shown the account opening form, looking at which the Appellant contends that name on the account is "Krishnendra Chandra" and the address mentioned is "South Simulia, Midnapur, West Bengal" which are neither his correct name spellings and nor the address has anything to do with the him.
C. The learned A.O. states "Information of the assessee was also collected from the M/s Shri Faiyaz Hussain (P.G.) College. According the documents provided by the said college, assessee lived at Etah and he was a student in the above-mentioned college during the year under consideration. This bank account was not operated by the assessee."
To highlight facts, it is imperative to note that there is no other evidence except for the fact that period of stay coincides with period of Cash withdrawals and deposits. The Term Operation of the bank account is a wider question which should also include statement from the Bank Manager, the account opening officer along with conclusive evidence that the money was deposited and withdrawn by the appellant. The same was neither done and no conclusive evidence was found by the Officer linking the operation of bank account to the Appellant.
The expression 'reason to believe' contemplates objective determination based on intelligent care and determination involving judicial review, as distinguished from a purely subjective consideration- -Melina Fernandes v. Mohan Nair AIR 1966 Goa 23.
The reason for the formation of the belief must have a rational connection or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus between the material coming to the notice of the AO and the formation of the belief that there has been escapement of income of the assessee from the assessment as held in the case of ITO v. Lakhmani Mewal Das [1976] 103 ITR 437(SC) and Jai Gopal Mehrav. ITO [1969] 74 ITR 594 (Punj.&Har.).
It can be hereby inferred from the above case laws that if there has been an escapement of income of the appellant, it must be proven through a direct nexus involving utilization of money, operation of bank accounts and source of money.
D. The Learned A.O. mentions that the account was opened by using KYC as "letter from Shri Faiyaz Hussain (P.G.) College, Nidhauli, Kalan, Etah". However, the learned A.O. fails to establish how PAN of appellant was linked to the bank account when no such KYC was completed for the said account. In merits of the case, the officer should have illustrated on how was Page | 4 ITA No.: 1422/KOL/2024 Assessment Year: 2012-13 Krishnendu Chanda the PAN and the appellant linked to an account with no KYC and which was opened based on a letter from the college."
Ground II: KYC compliances and procedural lapses at the banks The Appellant humbly submits before you the relevant extracts of the RBI circular DBOD.AML.BC.18/14.01.001/2002-03 dated August 16, 2002 on Guidelines on "Know Your Customer" norms and "Cash transaction":
1. "Know Your Customer" (KYC) procedure should be the key principle for identification of an individual/corporate opening an account. The customer identification should entail verification through an introductory 2 reference from an existing account holder/a person known to the bank or based on documents provided by the customer.
2. The extant RBI guidelines on the subject are as under:
(i) Banks are required to issue travelers cheques, demand drafts, mail transfers, and telegraphic transfers for Rs.50,000 and above only by debit to customers' accounts or against cheques and not against cash (Circular DBOD.BP.BC.114/C.469 (81)-91 dated April 19, 1991) Further, the applicants (whether customers or not) for the above transactions for amount exceeding Rs.10,000 should affix permanent (Income tax) account number on the applications (Circular DBOD.BP.BC.92/C469-76 dated August 12, 1976). Since KYC is now expected to establish the identity of the customer and as the issue of demand draft etc. for Rs.50,000 and above is by debit to account, the requirement for furnishing PAN stands increased uniformly to Rs.50,000/-.
(ii) The banks are required to keep a close watch of cash withdrawals and deposits for Rs.10 lakhs and above in deposit, cash credit or overdraft accounts and keep record of details of these large cash transactions in a separate register. (Circular DBOD.BP.BC.57/21.01.001/95 dated May 4,1995).
(iii) Branches of banks are required to report all cash deposits and withdrawals of Rs.10 lakhs and above as well as transactions of suspicious nature with full details in fortnightly statements to their controlling offices. Besides, controlling offices are also required to apprise their Head offices regarding transactions of suspicious nature. (Circular DBOD.BP.BC.101 /21.01.001/95 dated September 20, 1995). Early computerization of branch reporting will facilitate prompt generation of such reports.
In Context of the aforesaid RBI circular, we state the following:
1. That the KYC of the customer should have been diligently conducted by the officials of Canara Bank. Since no material KYC proof was provided as per account opening form, references from existing account holder should have been obtained to avoid fraud and money laundering. In such a situation, impersonation of appellant cannot be ruled out.
Page | 5 ITA No.: 1422/KOL/2024 Assessment Year: 2012-13 Krishnendu Chanda
2. That the Cash deposit of Rs. 9,50,000 on a single day (21/05/2011) & Rs. 90,000 on a single day (05/09/2011) were deposited into bank without obtaining a Pan Card/even if PAN card was obtained (such information is not available with us) from the depositor is against the guidelines issued by the RBI on handling cash deposits. No information of any confirmation of the appellant on the above cash deposits has been made available to us by the bank or the Learned A.O.
3. It is also imperative to note that the entire bank balance of Rs. 10,68,273 was entirely withdrawn in cash on 23/06/2012. It is unbelievable that the bank didn't complete full KYC of bank account and allowed withdrawals in excess of 10 lakhs (by cash) without completing adequate KYC and Anti Money laundering compliances.
4. The appellant further contends that the whole account opening process and Cash deposit and withdrawal process is a result of coercion and fraud against unknown persons.
GROUND III - Application of section 68 of the Income Tax Act, 1961 Section 68 of the income tax act, 1961 states that "Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year."
In View of the provisions, we contend the following:
The pre-requisite for invoking the provisions of section 68 is the credit entries in the books of account of the assessee. In the case on hand, the credit is in the bank statement and not in the books of account of the appellant. As the appellant is not required to maintain books of account under section 44AA of the Act, the Assessing Officer has fallen in error in invoking the provisions of section 68 of the Act.
Reliance is placed on the decision of Bombay High Court in the case of Bhai Chand N. Gandhi reported in 141 ITR 67. Following the said decision, Mumbai Tribunal in the case of Srikant G. Sawant (ITA No 7712/M/2012) has held similarly.
It is to be noted that the unexplained cash deposit in the canara bank allegedly in the name of appellant should not be treated u/s 68 as already stated in the statement of facts that the appellant had no source of income in the AY 2012-2013 as he was a student. Without prejudice, section 68 cannot be invoked in case the assessee prima facie proves the following --
(i) Proof of identity of the creditor
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ITA No.: 1422/KOL/2024
Assessment Year: 2012-13
Krishnendu Chanda
(ii) Capacity of such creditor to advance the money
(iii) Genuineness of the transaction
Reliance is placed on the decision of Gauhati High Court in the case of Jalan Timbers --223 ITR 11 (Gau) As already stated in the grounds 1 and 2 above, none of the three points are satisfied in the appellants case as the proof of identity of the creditor is not known to the Learned A.O. as well as the appellant along with the capacity of such creditor and genuineness of the transaction is suspicious.
'SMC' bench of the ITAT, Mumbai in the case of Smt. Manshi Mahendra Pitkar Vs. ITO 1(2), Thane (2016) 73 taxmann.com 68 (Mumbai Trib.) wherein it was held as under: -
"I have carefully considered the rival submissions. In the present case the addition has been made by the income tax authorities by treating the cash deposits in the bank account as an unexplained cash credit within the meaning of section 68 of the Act. The legal point raised by the assessee is to the effect that the bank Pass book is not an account book maintained by the assessee so as to fall within the ambit of section 68 of the Act. Under section 68 of the Act, it is only when an amount is found credited in the account books of the assessee for any previous year that the deeming provisions of section 68 of the Act would apply in the circumstances mentioned therein. Notably, section 68 of the Act would come into play only in a situation Where any sum is found credited in the books of an assessee the case of Shri Bhaichand Gandhi (supra) has approved the proposition that a bank Pass Book maintained by the bank cannot be regarded as a book of the assessee for the purposes of section 68 of the Act. Factually speaking, in the present case, assessee is not maintaining any books of account and section 68 of the Act has been invoked by the Assessing Officer only based on the bank Pass Book. The invoking of section 68 of the Act must fail because as per the judgment of the Hon'ble Bombay High Court in the case of Shri Bhaichand N. Gandhi (supra), the bank Pass Book or bank statement cannot be construed to be a book maintained by the assessee for any previous year as understood for the purposes of section 68 of the Act. Therefore, on this account itself the impugned addition deserves to be deleted. I hold so."
We further find that a similar view had also been arrived at in a 'third member' decision of the Tribunal in the case of Smt. Madhu Raitani Vs. ACIT (2011) 10 taxmann.com 206 (Gauhati) (TM), as well as by the coordinate Benches of the Tribunal in the case of Mehul V. Vyas Vs. ITO (2017) 164 ITD 296 (Mum) and ITO, Barabanki Vs. Kamal Kumar Mishra (2013) 33 taxamann.com 610 (Lucknow). GROUND IV - Appellant has filed cases at various authorities
1. The Appellant had filed police complaints, acknowledgement of which from the Office of the Senior Superintendent of Police no. AST / ASASP / 23 / 2020 dt. 16.12.2020 in Hindi is enclosed as separate annexure along with speed post receipt. The appellant has also filed E-FIR number Page | 7 ITA No.: 1422/KOL/2024 Assessment Year: 2012-13 Krishnendu Chanda "202100089038" dated 08-09-2021 to the UP police online. The screenshot and FIR details have been annexed along with
2. The appellant also approached the CID Cyber Crime in Kolkata in 2022 and the matter has now come to the court of Chief Judicial Magistrate and a charge sheet has been filed by the Cyber Crime CID charge sheeting the principal of the college and the bank manager
3. The Appellant seeks criminal investigation into the matter and/or Redressal before Consumer Court / RBI against unknown fraudsters and/or Canara Bank and/or the concerned officials of Nidholi Kalan Branch, Etah for opening a bank account allegedly in Assessee's name without his knowledge on forged documents and fake signatures in violation of the RBI KYC norms thereby facilitating the illegal & disputed deposits and/or transactions to the tune of Rs.10,40,000/- (Rupees Ten lakhs Forty thousand only) in the said bank account while subjecting Appellant to liability, risk & peril of prosecution by Income Tax authorities.
The Appellant has initiated complaints with the Canara Bank dated 08.09.2021 with reference number 2122AZ5619. We are awaiting reply from the appropriate authorities on the matter.
GROUND V- Addition of Interest on savings accounts
1. The addition of interest on bank deposits not operated by the appellant is against principle of natural justice. The said income and benefit accrued out of the deposit made illegally by impersonating the appellant should not be added to the income of the appellant as the Interest along with the cash was totally withdrawn in cash from bank and no interest has accrued to the appellant on the illicit cash deposit and withdrawals and the same should not be allowed as an addition to the appellants income GROUND VI - Adequate opportunity of being Heard not provided
1. The Learned A.O. despite having records of correct address from PAN card kept on issuing notices at wrong addresses which left us with just over 15 days to find an anonymous and fraudulent account and also to submit replies accordingly.
2. It is being held in the case M/s JKD Capital & Finlease Ltd. Vs Income Tax Officer (ITAT Delhi) that "the Assessing Officer has proceeded to make the additions without getting the details from the assessee. He further pointed out that the order of the Ld. CIT(A) is also ex parte. He prayed that one opportunity may be given to the assessee, so that assessee may submit the necessary details before the revenue authorities. Ld. DR did not have any serious objection to this proposition. Accordingly, we set aside the issue to the file of the AO. The Assessing Officer shall consider the case afresh, after giving the adequate opportunity of being heard to the assessee."
3. In CCE v. ITC Ltd. [1995] 2 SCC 38 (SC), it has been held that an assessee should be asked to show cause as to why he should not be visited with higher tax before such levy. He must be given an opportunity of Page | 8 ITA No.: 1422/KOL/2024 Assessment Year: 2012-13 Krishnendu Chanda meeting those grounds. This is a requirement of the principles of natural justice.
4. As held in E. Vittal v. Appropriate Authority [1996] 221 ITR 760 (AP), where a decision is based upon a document in a proceeding, copy of the same should be provided to the affected party. Otherwise, it would violate the principles of natural justice as the opportunity of being heard should be an effective opportunity and not an empty formality. Denial of opportunity may make an order void.
Limitation of time cannot stand in the way of not giving adequate opportunity. The principle is inviolable. In the view of the above judgments, it is to be noted that the learned A.O. has erred in not providing adequate opportunity of being heard to the appellant. The A.O. has also not provided the appellant with any copies of the documents retrieved from the bank. That the appellant craves leave to add, alter, or withdraw any ground/s of appeal at the time or before the hearing of the appeal.
4. None appeared on behalf of the assessee and the appeal was heard with the assistance of the Ld. DR.
5. Brief facts of the case are that the assessee is currently a teacher at Dhanyakhal SSV High School, Uttar Dhankhal, Daspur and during the period under consideration, the assessee claims to be a student with no source of income and was studying at Etah. The assessee did not file his income tax return for the AY 2012-13 as there was no taxable income during the period and states in the written submission enclosed with the appeal memo that he did not even have a PAN. It is stated that the Ld. Assessing Officer ("the Ld. AO") has mentioned that the account was opened by using KYC as "photo of the assessee was affixed in the account opening form and letter from Shri Faiyaz Hussain (P.G.) College, Nidhauli, Kalan, Etah was used as KYC documents"; however, the Ld. AO fails to establish how the PAN of the assessee was linked to the bank account when no such KYC was completed for the said account. The cash deposit of ₹ 9,50,000/- on 21/05/2011 and ₹ 90,000/- on 05/09/2011 were made into the bank account without obtaining PAN and even if PAN was obtained from the depositor, the Page | 9 ITA No.: 1422/KOL/2024 Assessment Year: 2012-13 Krishnendu Chanda same is against the guidelines issued by the RBI for handling cash deposits. It is stated that, on verification from the college it was informed that the assessee lived in Etah during this period and he was a student in the above-mentioned college during the year under consideration and the account was not operated by the assessee. There was an aggregate cash deposit of ₹10,40,000/- in the Savings Bank Account with Canara Bank. The case was selected for scrutiny under section 147 after recording the reason that the amount of ₹10,40,000/- had escaped assessment within the meaning of section 147 of the Act. The ld. Assessing Officer issued notice under section 148 of the Act after necessary approval obtained from the ld. Pr. CCIT, Aligarh. The assessee did not respond to the notice issued and did not respond even to the show cause notice issued. The Ld. AO assessed the total income of the assessee at ₹10,68,270/- u/s 147 r.w.s. 144 of the Act .
7. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who dismissed the appeal of the assessee by observing as under:-
Decision:-
8.4 On a perusal of assessment order passed under section 144/147 of the Act, I find that various statutory notices were issued to the appellant on the address on PAN available with Department. The appellant's contention that he was not in receipt of issued notices due to change of address it is not fault of AO. The appellant should have made correction in respect of present address in PAN database. Hence, the contention of the appellant that he was not given sufficient time to present his case is baseless and not tenable in the eyes of law. Further, he has contended that for KYC his PAN was not used. The opening of account and linking it with PAN, depends on the procedure followed by the bank. For this purpose, the appellant should have approached the concerned authority, to ask how his PAN was linked with the bank account in question. The initial onus lies over the appellant to prove his contention by proper explanation supported by verifiable and reliable documents. It is an admitted fact that on the opening form of account in question there is a photo of appellant and a letter from Shri Faiyaz Hussain (PG) College, Nidhauli Kalan, Etah is available where the appellant had been studying during the year under consideration. It is also notable that as per Page | 10 ITA No.: 1422/KOL/2024 Assessment Year: 2012-13 Krishnendu Chanda the noting of the AO based on the documents provided by the said college, assessee has lived at Etah and he was a student in the above mentioned college during the year under consideration. Hence, it becomes very clear that the above account in question was opened by the appellant. Accordingly, the other contents of the appellant are not sustainable. The appellant has put his reliance upon the various judicial pronouncements. I, have gone through the case laws cited by the appellant and it is clear that they are not squarely applicable in the case of appellant. Furthermore, the appellant has submitted screen shot of FIR report filed online on 08/09/2021. In his written submission dated 14/09/2023, he has admitted that there has been no significant action by the police or the bank in the matter in the past two years. In this scenario, the FIR filed by the appellant before Police on 08/09/2021, which was lodged long time after the completion of assessment on 27/12/2019 as well as filing of this appeal on 26/01/2020, is an afterthought and is not effective for the purpose of defending his claim.
8.5. The provision of section 69A read as follows: "69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. 8.6. As per the above provisions of the Act, if appellant is found owner of such money, and it is not recorded in the books of account, the initial onus lies over the appellant to prove the source of cash credit and genuineness of transaction. In the present case, since the photo of appellant was affixed on the account opening form and the letter used for KYC purpose was issued by the PG College, Etah where he had been studying during the year under consideration, in my view, he was fully aware of said account number no. 0196101021613 maintained in Canara Bank, Etah and the said account was opened by him, and the same really belonged to him. Since the appellant has failed to explain the source of the money and also has not offered any satisfactory explanation, I have arrived at the considered decision that the money in question belongs to appellant and the AO was totally justified in adding the same i.e Rs. 10,68,270/- as unexplained money to the total income of the appellant. The addition of Rs. 10,68,270/- is confirmed and ground nos. 1 & 2 are dismissed.
9. In the result, the appeal is dismissed.
8. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
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9. None appeared on behalf of the assessee; therefore, the case was heard with the assistance of the Ld. DR. At the time of hearing, the ld. Departmental Representative pleaded before the Bench to uphold the order of ld. CIT(Appeals).
10. We have considered the submissions made and are of the view that since representation was not properly made before the ld. Assessing Officer as well as Ld. CIT(Appeals), therefore, the Ld. CIT(A) dismissed the appeal of the assessee. After considering the totality of the facts and circumstances of the case and in the interest of justice and fair play, we are inclined to set aside the order of the Ld. CIT(A) as well as the assessment order of the Ld. AO and remand the issue before the ld. Assessing Officer to decide the matter afresh after providing one more opportunity of being heard to the assessee as the assessee has denied the ownership of the bank account. The assessee shall be at liberty to raise all legal issues raised in the grounds of appeal before us and shall not seek unnecessary adjournments failing which the ld. Assessing Officer shall be at liberty to pass appropriate order in accordance with law and merits. Thus, the grounds raised by the assessee are partly allowed for statistical purposes.
11. In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 17 th April, 2026.
Sd/- Sd/-
[George Mathan] [Rakesh Mishra]
Judicial Member Accountant Member
Dated: 17.04.2026
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ITA No.: 1422/KOL/2024
Assessment Year: 2012-13
Krishnendu Chanda
Copy of the order forwarded to:
1. Krishnendu Chanda, S/o. Ardendhu Chanda, Sankarpur, Bodhra, Ramnagar, East4 Midnapore-721423, West Bengal
2. ITO, Ward-4(3)(1), Income Tax Office, Railway Road, Etah, Uttar Pradesh-207001
3. CIT(A)-NFAC, Delhi.
4. CIT-
5. CIT(DR), Kolkata Benches, Kolkata.
6. Guard File.
//True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Laha