2013 (10) TMI 704 - AT - Income Tax

Actual Owner of Bank Account - Whether the bank account in the HDFC Bank was belonging to the appellant or to his HUF Held that - The documentary evidence also clearly shows that the amounts credited in the said bank account were belonging to the HUF and the investment in bank deposits was made out of the funds of the HUF - the interest on FDs as well as the dividend income credited in the relevant bank account was belonging to the HUF and the same was duly offered to tax in the return of income filed by the HUF - As rightly held by the ld. CIT(A) on the basis of this documentary evidence, the relevant bank account thus was maintained in the individual name as karta of the said HUF and the action of the A.O. in treating the said bank account as well as investment made from the said bank account as well as income credited therein as the income of the assessee merely going by the title of the account was totally unfounded when it was satisfactorily established by the assessee that the same was belonging to HUF and was duly disclosed/declared in the returns of income and balance sheets of the HUF not only for the year under consideration but even in the earlier years there was no infirmity in the impugned order of the ld. CIT(A) deleting the addition made by the A.O. on this issue and upholding the same Decided against Revenue.

Summary

Issues:
- Addition of interest income on FD
- Addition of undisclosed dividend income
- Addition of unexplained bank deposit
- Dispute over ownership of bank account and income source

Analysis:
1. Addition of Interest Income on FD:
The Revenue appealed against the CIT(A)'s order deleting the addition of interest income on FD of Rs. 11,51,683. The AO found a bank account in the individual name of the assessee with investments and income not offered for tax. The assessee claimed the account belonged to the HUF, providing evidence of HUF's separate income sources and balance sheets. The CIT(A) accepted the explanation, ruling that the account and related income belonged to the HUF and were disclosed in its returns. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

2. Addition of Undisclosed Dividend Income:
The AO added Rs. 12,88,440 as undisclosed dividend income, treating it as the assessee's income. The assessee contended that the dividend income belonged to the HUF and was duly disclosed in its returns. The CIT(A) agreed with the assessee, considering the evidence provided, and ruled in favor of the assessee. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

3. Addition of Unexplained Bank Deposit:
The AO treated a bank deposit of Rs. 90 lakhs as unexplained investment of the assessee, adding it to the total income. The assessee argued that the deposit was made from HUF funds and duly declared by the HUF. The CIT(A) accepted the explanation, stating the deposit and related income belonged to the HUF and were disclosed in its returns. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

4. Dispute over Ownership of Bank Account and Income Source:
The main issue revolved around the ownership of the bank account and the source of income credited to it. The assessee proved through balance sheets and income computations that the account belonged to the HUF, with investments and income reflecting HUF's funds and being disclosed in its returns. Despite the bank account being in the individual name of the assessee, it was established that it was maintained as "karta" of the HUF. The Tribunal found the Revenue's presumption unfounded, supporting the CIT(A)'s decision based on the documentary evidence presented. The appeal of the Revenue was dismissed, upholding the CIT(A)'s order.