2017 (4) TMI 1477 - AT - Income Tax

Unexplained cash deposits in bank account - peak credit - HELD THAT - AO is directed to consider only the peak deposit in the S.B. Account for the purpose of assessing the income. Further since the account is in the name of three joint account holders therefore only 1/3 rd of the peak credit can be assessed in the hand of the assessee. As regards the claim of the assessee that this represents the business proceeds of the 3 HUFs it is noted that the assessee has not furnished any evidence in support of the claim except the return of income wherein the income was declared on estimate basis without mainlining the book of accounts therefore,the said contention of the assessee cannot be accepted. In view of the above, the order of the authorities below are set aside and the AO is directed to assess only 1/3 rd of the peak credit. Addition as interest income - AO found that the assessee has not offered the interest income from the deposit to tax - HELD THAT - Before the Tribunal nothing has been produced to show that the assessee has already offered this income of ₹ 39,265. However if this interest income is pertaining to the deposits in the joint Savings Bank Account, then only 1/3 rd of the same can be added to the income of the assessee. Accordingly, the AO directed to verify the same and assess the interest income as indicated above.

Summary

Issues:
1. Addition of unexplained cash deposits in a joint bank account.
2. Assessment of interest income not disclosed by the assessee.

Issue 1: Addition of Unexplained Cash Deposits in a Joint Bank Account:

The appellant challenged the addition of unexplained cash deposits in a bank account maintained with Bank of India. The Assessing Officer found a cash deposit of ?26,93,000 and asked the assessee to explain the source. The assessee claimed the deposit represented income of three co-owners in a joint account for their businesses. However, the Assessing Officer rejected the explanation and made the addition. The CIT (Appeals) upheld the addition, noting the meager income declared by the co-owners. The appellant argued that only 1/3rd of the deposit should be considered as belonging to them. The Tribunal observed that since the account was joint, the entire deposit couldn't be treated as the appellant's income. It directed assessment based on peak deposits and concluded that only 1/3rd of the peak credit could be assessed in the appellant's hands.

Issue 2: Assessment of Interest Income:

The Assessing Officer added ?39,265 as interest income not disclosed by the appellant. The CIT (Appeals) upheld this addition as the appellant did not contradict the findings. The Tribunal directed the Assessing Officer to verify if this interest income pertained to the joint account, in which case only 1/3rd should be added to the appellant's income. Consequently, the appeal was partly allowed, and the Assessing Officer was instructed to assess the interest income accordingly.

In conclusion, the Tribunal partially allowed the appeal, directing the assessment of unexplained cash deposits and interest income in a joint bank account. The judgment clarified the treatment of joint account deposits and emphasized the assessment based on peak credits for unexplained cash deposits.