2013 (5) TMI 531 - AT - Income Tax

Assessment of fixed deposits in the name of the assessee - CIT(A) deleted the addition - Held that - CIT(A) has given a clear finding that the society has accounted for these deposits in its books of account the explanation of the assessee, from the very beginning, was that these deposits belong to the society and the said explanation stands vindicated by the assessing officer by assessing these deposits in the hands of the society. Under these set of facts, CIT(A) was justified in deleting the assessment of these deposits in the hands of the assessee. Assessment of bank deposit - whether the deposit belongs to the assessee or to the society - Held that - This issue requires fresh examination at the end of the assessing officer, as the facts relating to the ownership of the deposit have not been properly brought out. Accordingly, we set aside the order of Learned. CIT(A) on this issue and restore this matter to the file of the assessing officer with a direction to examine it afresh and take appropriate decision in accordance with the law. Gift receipt - Held that - The claim of the assessee that he has received the gift amountfrom his father in law, and the said fact has also been confirmed by his brother in law. The source for giving the said gift was explained to be the sale proceeds of a property & as has already submitted a copy of conveyance deed to the assessing officer during the course of assessment proceedings CIT(A) was justified in accepting the claim of receipt of gift. Assessment of investments found in the name of Sri Karunanidhi - Held that - CIT(A) has given a finding that the investments in the name of Sri Karunanidhi have been made from 1995 onwards and further Sri Karunanidhi would have had income to make these investments. Since the present assessment is a block assessment and further since no other material was brought on record to show that the assessee herein has actually provided money to make investments in the name of Shri Karunanidhi, therefore no infirmity in the decision taken by CIT(A) on this issue. Assessment of cash seized during the course of search - Held that - As submitted by D.R., CIT (A) has rendered his decision by following the decision of his predecessor & did carry out any verification on this issue. The submissions put forth by both the counsel would show that the claim of the assessee requires verification at the end of the assessing officer, thus restore the matter to the file of AO to reexamine the issue afresh.

Issues Involved:
1. Assessment of fixed deposits in the name of the assessee.
2. Assessment of a bank deposit of Rs.45,000/-.
3. Assessment of gift receipt of Rs.1,40,000/-.
4. Assessment of investments found in the name of Sri Karunanidhi.
5. Assessment of cash seized during the course of the search.

Issue-wise Detailed Analysis:

1. Assessment of Fixed Deposits in the Name of the Assessee:
The first issue pertains to the assessment of fixed deposits found in the name of the assessee. The assessee claimed that these deposits belonged to a society and were reflected in the society's accounts. The assessing officer did not agree, arguing there was no need for the society to keep its funds in the name of the assessee. However, the Learned CIT(A) verified the financial statements of the society and found that the deposits were indeed accounted for by the society. It was noted that it is not uncommon for societies to keep deposits in the name of committee members. The Tribunal agreed with the CIT(A), noting that the deposits were also assessed in the hands of the society, thus justifying the deletion of the assessment in the hands of the assessee.

2. Assessment of a Bank Deposit of Rs.45,000/-:
The next issue involves a bank deposit of Rs.45,000/-. The assessee claimed this deposit was made from the society's funds and was later reinvested. The assessing officer questioned the time gap and the necessity for the society to make deposits in the assessee's name, leading to the assessment of the amount in the assessee's hands. The Learned CIT(A) accepted the explanation that the deposit was encashed and re-deposited. However, the Tribunal found contradictions in the assessee's explanations and noted that the ownership of the deposit was unclear. Therefore, the Tribunal set aside the CIT(A)'s order and directed the assessing officer to re-examine the issue.

3. Assessment of Gift Receipt of Rs.1,40,000/-:
This issue concerns the assessment of a gift receipt of Rs.1,40,000/- claimed to be received from the assessee's father-in-law. The assessee provided a confirmation letter from his brother-in-law, explaining that the gift was from the sale proceeds of a property. The assessing officer initially did not accept the claim due to the lack of confirmation during the first round of proceedings. However, the Learned CIT(A) accepted the claim, and the Tribunal upheld this decision, noting that the confirmation and source of the gift were satisfactorily explained.

4. Assessment of Investments Found in the Name of Sri Karunanidhi:
The fourth issue involves the assessment of investments found in the name of Sri Karunanidhi. The assessee explained that Karunanidhi, a musician, made these investments from his savings. The Learned CIT(A) found that the investments were made from 1995 onwards and that Karunanidhi had income below the taxable limit. The Tribunal agreed that the proper course of action would have been to issue a notice under section 158BD to Karunanidhi and examine the assessability of the investments in his hands. The Tribunal found no infirmity in the CIT(A)'s decision to delete the addition in the assessee's hands.

5. Assessment of Cash Seized During the Course of the Search:
The final issue pertains to the assessment of cash seized during the search. The assessee initially could not explain the cash but later claimed it belonged to the society. The assessing officer assessed the cash on a protective basis in the assessee's hands, noting the assessee's earlier request to adjust the cash against his tax dues. The Learned CIT(A) followed the decision of his predecessor, who held that the cash belonged to the society. The Tribunal noted that the CIT(A) did not verify this claim and directed the assessing officer to re-examine the issue.

Conclusion:
The appeal filed by the revenue is treated as partly allowed for statistical purposes, with specific issues remanded for fresh examination by the assessing officer. The Tribunal's decision emphasizes the need for thorough verification and appropriate assessment in accordance with the law.

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