2011 (8) TMI 781 - HC - Income Tax

Income from purchase and sale of properties - Agreement for purchase & sale of properties in Individual name- Bank account in Individual name - Income to be assessed in hands of Individual or HUF - Held that - Mere non-mentioning of the status in the Agreement of purchase or sale does not alter the character of the property especially when the source of funds and that the status of HUF is governed by the investments which were made out of HUF funds and the HUF can purchase property in the name of any member of family. Further, if assessee has produced books of account, copies of return filed showing such income then it should be assessed in hands of HUF. Decided against the Revenue.

Summary

Issues:
1. Whether the deposits made in the bank account are the individual income of the assessee or income of the Hindu Undivided Family (HUF)?
2. Whether the CIT (A) and the Tribunal were justified in holding that the income declared by the assessee was income of HUF and not his individual income?

Analysis:
1. The appeal was filed by the revenue under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal, Chandigarh Bench, regarding the addition of Rs. 37,25,491 made by the Assessing Officer in the returned income of the assessee for the assessment year 2006-07. The Assessing Officer questioned the source of deposits made by the assessee in the Punjab State Cooperative Bank Ltd. The assessee claimed that the deposits were related to the Hindu Undivided Family (HUF) and not his individual income. The CIT (A) and the Tribunal both held that the deposits were related to the HUF of the assessee and not his individual income. The CIT (A) noted that the transactions in the bank account with the cooperative bank related to the HUF of the appellant, supported by the evidence of sale/purchase agreements and the books of account of the HUF.

2. The CIT (A) reversed the findings of the Assessing Officer and concluded that the deposits made in the bank account were related to the HUF of the assessee, not his individual income. The Tribunal affirmed this finding, stating that the entries in the bank account related to the business of sale/purchase of properties carried on by the HUF. The Tribunal noted that the assessee had produced books of account of the HUF, and no fault was found by the Assessing Officer in the entries. The revenue failed to provide contrary findings to those of the CIT (A). The Tribunal upheld the order of the CIT (A) in deleting the addition of Rs. 37,25,491, confirming that the transactions in the bank account related to the HUF of the assessee, whose income had been declared in the status of the HUF.

3. The High Court dismissed the appeal, stating that no illegality or perversity was found in the findings of the CIT (A) and the Tribunal. The Court emphasized that re-appreciating the evidence and recording a different conclusion was not permissible under Section 260A of the Act due to the concurrent findings of the CIT (A) and the Tribunal. Therefore, no substantial question of law arose for consideration, leading to the dismissal of the appeal.