2020 (10) TMI 1238 - AT - Income Tax

Undisclosed income on account of interest income earned on undisclosed foreign bank account deposits u/s 69 - CIT-A deleted the addition - HELD THAT - As decided in own case 2018 (2) TMI 1363 - ITAT DELHI addition on account of investment in the bank account itself was deleted. As the quantum addition itself has been deleted by the coordinate bench with respect to balance in the foreign bank account, there is no question of making an addition on account of the notional interest on that balance. When the assessee is not found to be owner of any bank account, till now, there is no reason to uphold the interest on such bank balances. If the assessee is not owner of the amount lying in the bank account, naturally the interest income cannot be added in the hands of the assessee. Even otherwise if the revenue gets any information with respect to the ownership of the money lying in the bank account with HSBC bank Geneva, then the provisions of explanation 2 (d) of Section 148 applies and the interest income can be added in the hands of the assessee. The time limit available with the revenue according to the provisions of Section 149 (1) (C) is up to 16 years. Therefore, we do not find any infirmity in the order of the learned CIT A, at present, in deleting the addition on account of interest in the hands of the assessee for this year with respect to the alleged the holding of bank balance in the HSBC bank Geneva account, as the addition on the quantum itself has been deleted. 0n reading of the grounds of appeal of the learned assessing officer the only prayer is that when the addition has not reached finality the learned CIT A should have upheld the addition protectively in the hands of the assessee. We could not find any provision in the act wherein the learned CIT A could have done so. Even otherwise now there is an extended time limit available to the revenue, it may take recourse to the Section if the conditions permit. Accordingly the solitary ground of appeal of revenue dismissed.

Summary

Issues:
Appeal against deletion of addition made on undisclosed interest income earned on foreign bank account deposits under section 69 of the Income Tax Act for Assessment Year 2014-15.

Analysis:
1. The appeal was filed by the Assistant Commissioner of Income Tax against the order of the ld CIT(A)-29, New Delhi for the Assessment Year 2014-15. The addition of undisclosed interest income on foreign bank account deposits made by the assessing officer was deleted, leading to the revenue's grievance.

2. The revenue raised grounds of appeal questioning the correctness of the CIT(A)'s decision to render the addition infructuous based on similar additions in earlier years without finality, emphasizing the need for protective measures in the assessee's hands.

3. The case involved an individual assessee deriving income from various sources. The assessing officer added undisclosed interest income earned on foreign bank accounts, leading to the total assessed income being significantly higher than the income declared by the assessee.

4. The CIT(A) deleted the addition, citing national interest and referring to previous orders related to the same offshore bank account. The assessing officer, aggrieved by this decision, appealed to the tribunal.

5. The tribunal carefully reviewed the submissions and orders of both parties. It considered previous decisions related to the same assessee and bank account balances, noting that the addition of notional interest had been consistently deleted. The tribunal emphasized that if the assessee was not the owner of the bank account, interest income could not be added. The tribunal found no fault in the CIT(A)'s decision to delete the addition for the year in question.

6. The assessing officer's argument for protective addition in the absence of finality was dismissed by the tribunal, as no provision allowed for such action. The tribunal highlighted the extended time limit available to the revenue for further actions if necessary.

7. Consequently, the tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to delete the addition of undisclosed interest income on foreign bank account deposits for the Assessment Year 2014-15.