Bank Employee Working Beyond Banking Hours may be classified as Violation of Banking Rules

In a recent decision, the Delhi Income Tax Appellate Tribunal (ITAT) removed an addition made by the Income Tax Department’s Assessing Officer (AO). The AO had added extra income to a bank employee’s account, but the ITAT ruled that there was no solid evidence to support this claim, and it was based only on assumptions, not facts found during a search and seizure operation.

The ITAT also pointed out that even if the bank employee worked overtime beyond normal banking hours, this might violate banking rules, but it could not be used as proof to assume the employee received any commission or extra payment for doing so.

The case was heard by a bench of two judges, Accountant Member S. Rifaur Rahman and Judicial Member Sudhir Kumar. They noted that “the AO made the addition based on the belief that the employee helped another person, Rajeev Singh Kushwaha, deposit cash in the bank by breaking banking rules” (Para 10).

Background of the Case

The issue began when the Income Tax Department carried out a search and seizure at the premises of two individuals, Mohit Garg and his brother. During this search, they found some documents that were linked to a bank employee named Vineet Gupta. Gupta later filed his income tax return, showing a total income of ₹6.5 lakhs.

During the assessment, the AO claimed that Gupta had received ₹5 lakhs through Raj Kumar Sharma on behalf of Rajeev Singh Kushwaha and another ₹12 lakhs directly from Kushwaha. Based on this, the AO made an addition of ₹17 lakhs as unexplained income under Section 69 of the Income Tax Act, along with another ₹60 lakhs as alleged commission income from Kushwaha under Section 69A.

However, Gupta denied all these allegations. He argued that the addition was made only on assumptions and that no actual evidence was found against him during the search and seizure operation.

What the Tribunal Found

The ITAT carefully reviewed the case and noted some key facts:

• No evidence of cash or gold at Gupta’s house: The ITAT looked at the order from the Commissioner of Income Tax (Appeals) [CIT(A)] and found that no cash or gold was recovered from Gupta’s house during the search.
• Overtime work was not enough to prove commission: The AO had based the addition on the idea that Gupta had worked beyond normal banking hours and broken banking rules, which could suggest he was doing something improper. But the ITAT clarified that even if Gupta worked overtime, it does not automatically mean he was being paid extra in secret by Rajeev Singh Kushwaha.

The bench said, “If the employee worked after hours, this could be a violation of banking rules, but that doesn’t mean you can assume he was paid a commission.”

• Statements alone aren’t enough for addition: The ITAT also pointed out that although a statement made under Section 132(4) (a statement during a search) holds some legal weight, it is not enough to add income without other supporting evidence. In this case, the AO relied mainly on a statement, but no other concrete proof was found to back it up.

The AO had mentioned that a 1 kg gold bar was seized by the Enforcement Directorate from the house of one of Gupta’s alleged associates, Shobhit Sinha. However, the ITAT found no connection between this gold bar and Gupta’s case.

Conclusion

The ITAT ruled in favor of Vineet Gupta and removed the additions made by the AO. Since the entire case was built on assumptions and lacked real evidence from the search and seizure operation, the tribunal decided that the additions could not be sustained.

This ruling is a reminder that income cannot be added based on guesswork or unsupported statements. There needs to be clear evidence, especially when dealing with claims of unexplained income.