2015 (5) TMI 588 - HC - Income Tax

Unaccounted bank account - addition to income - AO held that it had not been clarified by the assessee as to why he chose to open an account with Axis Bank, Kapurthala alongwith one Lakhbir Singh by giving his own PAN number. Lakhbir Singh was a joint account holder - Tribunal did not accept the assessee s case regarding the source of sum of ₹ 8.75 lacs - Held that - This is a pure question of fact. It was a question of appreciation of evidence to be decided on a balance of probabilities. We are unable to hold that findings of the Tribunal are perverse or absurd. It is important to note that the HDFC Bank account was in the joint names of the assessee/appellant and his wife. There is no explanation as to why that amount was deposited in the joint account of Lakhbir Singh. This assumes even greater significance in view of the fact that there is no business relationship even claimed between Lakhbir Singh and appellant/assessee. The appellant claims to have added his name only to accommodate Lakhbir Singh because he did not have PAN card number. Even according to the appellant, Lakhbir Singh was entitled to operate the account. There is no explanation as to why Lakhbir Singh would have been entitled/permitted to operate the account although the amount of ₹ 10 lacs withdrawn from HDFC Bank and alleged to have been deposited with Axis Bank belonged only to the appellant and his wife and in respect whereof Lakhbir Singh had no interest whatsoever. - Decided against assessee.

Summary

Issues:
Appeal against Income Tax Appellate Tribunal's order, substantial questions of law regarding deletion of addition of Rs. 8.75 lacs, clarification on source of funds, joint account holder's involvement, tribunal's decision justification, legality of ITAT's order.

Analysis:
The High Court addressed the appeal challenging the ITAT's order regarding the deletion of an addition of Rs. 8.75 lacs made by the Commissioner of Income Tax. The appellant contended that substantial questions of law arose for determination, including the justification of denying the assessee's claim without proper evidence, the onus on the assessee to establish fund availability, ignoring previous decisions, and the legality of the ITAT's order. However, the court found no substantial question of law, emphasizing that it was a matter of fact appreciation related to the addition of Rs. 8.75 lacs. Both parties had filed appeals before the ITAT concerning other additions as well.

Regarding the addition of Rs. 8.75 lacs, the Assessing Officer questioned the source of funds deposited in Axis Bank, Kapurthala jointly with another individual. The appellant claimed the amount came from a withdrawal of Rs. 10 lacs from an HDFC Bank account jointly held with his wife. However, the Tribunal did not accept this explanation, leading to the dispute. The court noted the lack of business connection between the appellant and the joint account holder, raising doubts about the source of the funds and the reason for depositing them in the joint account.

The court emphasized that the case revolved around facts and evidence, requiring a balance of probabilities in decision-making. It highlighted discrepancies in the appellant's explanation, such as depositing funds in a joint account with an individual having no business relationship. The court found the Tribunal's decision reasonable and not perverse, considering the lack of clarity on why the funds were deposited in the joint account. The appellant's arguments failed to provide a convincing explanation for the source of the funds, leading to the dismissal of the appeal.

In conclusion, the High Court dismissed the appeal, emphasizing the importance of factual assessment and the lack of substantial legal questions in the case. The decision focused on the source of funds, joint account holder's involvement, and the reasonableness of the Tribunal's findings, highlighting the need for a clear and coherent explanation supported by evidence in such matters.