2013 (12) TMI 1201 - HC - Income Tax

Unexplained cash credits - Held that - Following CIT v. P.K. Noorjahan 1997 (1) TMI 6 - SUPREME Court - The assessee did not have any source of income, and that money was not utilised by her - The protective assessment made against her and the substantive assessment against one Shri Deepak Gupta does not call for any interference by the High Court - The provisions contained in section 69 could not be invoked in respect of the investment - Decided against Revenue.

Summary

Issues:
Assessment of unexplained cash deposits in a bank account under Section 68 of the Income Tax Act, 1961; Appeal against CIT (A) dismissal; Tribunal's decision on the source of income and utilization of funds; Application of Section 69 in determining income; High Court's review of Tribunal's decision; Dismissal of the income tax appeal.

Analysis:
The case involved the assessment of unexplained cash deposits in a bank account under Section 68 of the Income Tax Act, 1961. The Assessing Officer (A.O.) observed significant sums deposited in the respondent-assessee's account, leading to a notice under Section 148. Despite the minor assessee filing a return disclosing 'nil' income, the A.O. found substantial cash deposits unexplained. The onus to prove the source of these deposits lay with the assessee, which was not discharged. Consequently, the unexplained amount was treated as income under Section 68 in the hands of the assessee and Deepak Gupta for the assessment year 2002-03.

The Commissioner of Income Tax (CIT) (A) dismissed the appeal, prompting the department to appeal before the Income Tax Appellate Tribunal. The Tribunal, considering the circumstances and the absence of a legitimate income source for the assessee, ruled in favor of the assessee. Citing the case of CIT v. P.K. Noorjahan, the Tribunal emphasized the proper exercise of discretion under Section 69, where the investment could not be linked to the assessee's income. The Tribunal, in line with the precedent, deleted the addition, concluding that the impugned amount could not be considered the assessee's income.

Upon review, the High Court found no error in the Tribunal's decision. The authorities' findings that the assessee lacked a legitimate income source and did not utilize the funds led to the dismissal of the income tax appeal. The High Court concurred with the Tribunal's reasoning, stating that no question of law warranted consideration under Section 260A of the Act. Consequently, the income tax appeal was dismissed, upholding the Tribunal's decision in favor of the assessee.