2015 (12) TMI 508 - AT - Income Tax

Unexplained deposits in bank a/c of assessee - CIT(A) deleted the addition - Held that - As per section 68 of the Income Tax Act 1961 if source of receipts was not established then it could have been taxed under the said provision. Per contra there is no provision in the Act to tax an amount or proceed of receipt the source of which has been explained or stands established. In the present case the source of impugned receipts by the assessee are proceeds of NRNR deposit and interest on RBI Bonds received by father of the assessee Shri Suresh Nanda and if these proceeds have been found to be taxable in the hands of Shri Suresh Nanda then the question of taxing the same u/s 68 of the Act would not arise. Ld. DR could not controvert these findings of the ld. CIT(A) thus we are unable to see any infirmity perversity or any other valid reason to interfere with the order of the CIT(A) and we uphold the same. - Decided against revenue.

Summary

Issues Involved:
1. Unexplained deposits in the bank account for A.Y. 2001-02.
2. Unexplained deposits in the bank account for A.Y. 2004-05.
3. Unexplained investment for A.Y. 2006-07.

Issue-wise Detailed Analysis:

1. Unexplained deposits in the bank account for A.Y. 2001-02:

The revenue challenged the deletion of Rs. 50,00,000/- added by the Assessing Officer (AO) on account of unexplained deposits in the assessee's bank account. The CIT(A) observed that the amount was received by the assessee from his father through account payee cheques, sourced from NRNR deposits and interest on RBI Bonds. The CIT(A) concluded that since the source of the funds was established and taxed in the hands of the assessee's father, it could not be taxed again under section 68 of the Income Tax Act, 1961. The ITAT upheld the CIT(A)'s decision, noting that there was no provision to tax an amount whose source has been explained, thus dismissing the revenue's appeal for A.Y. 2001-02.

2. Unexplained deposits in the bank account for A.Y. 2004-05:

The revenue contested the deletion of Rs. 12,00,000/- added by the AO for unexplained deposits. The CIT(A) found that the amount was received from the assessee's father via an account payee cheque, with the source being a remittance from abroad credited to the father's NRE account. The CIT(A) reiterated that the source of the funds was clear and undisputed, and since it was taxed in the father's hands, it could not be taxed again under section 68. The ITAT agreed with the CIT(A), noting that the amount was properly explained and could not be treated as an unexplained receipt, dismissing the revenue's appeal for A.Y. 2004-05.

3. Unexplained investment for A.Y. 2006-07:

The revenue objected to the deletion of Rs. 23,57,038/- added by the AO for unexplained investment. The CIT(A) noted that the payments made to Craig Roberts Associates Inc. were from the father's Singapore account, to which the assessee was a co-signatory. The CIT(A) emphasized that the source of the payments was clear and had been taxed in the father's hands. The CIT(A) also considered the applicability of section 56 and concluded that the amount could not be taxed as a gift or unexplained investment. The ITAT upheld the CIT(A)'s decision, agreeing that the source was established and the amount could not be taxed in the hands of the assessee, thus dismissing the revenue's appeal for A.Y. 2006-07.

Conclusion:

The ITAT dismissed all three appeals of the revenue, upholding the CIT(A)'s orders for A.Y. 2001-02, 2004-05, and 2006-07. The tribunal agreed that the amounts in question were properly explained, sourced from the assessee's father's accounts, and could not be taxed again in the hands of the assessee. The judgments emphasized that there is no provision to tax an amount whose source has been established and already taxed in another's hands.