2021 (3) TMI 1297 - AT - Income Tax

Addition of interest earned from foreign bank - income estimation to be @ 4% per annum as the assessee failed to provide any details in respect of foreign bank account and interest rates thereon - HELD THAT - In the absence of any bank account statement of the said bank account and information of the status of its existence / closure, the balance as on March, 2007 was required to be worked-out as there must have been component of interest earned for the month of March, 2007 and thereafter. The A.O, therefore, presumed that assessee has earned interest @ 4% per annum and made the addition. These facts clearly show that A.O. was not having any information/material so as to prove that assessee maintained the same HSBC account for the assessment year under appeal. A.O. in the absence of bank statement and further details presumed that assessee must have earned interest on the same foreign bank account in assessment year under appeal. It was, therefore, clearly support the findings of fact recorded by the Ld. CIT(A) that there were no evidence available with the A.O. to compute the interest earned by the assessee in assessment year under appeal. In the absence of any evidence on record to the effect that assessee maintained any foreign bank account in assessment year under appeal or earned any interest thereon, the Ld. CIT(A) was justified in deleting the addition. We do not find any error in the Order of the Ld. CIT(A) in deleting the addition. The Departmental Appeal fails and is dismissed.

Summary

Issues:
Appeal against deletion of interest earned on undisclosed foreign bank account.

Analysis:
The appeal was filed by the Revenue against the deletion of the addition of interest earned on an undisclosed foreign bank account by the Ld. CIT(A). The A.O. had made an addition of a specific amount on account of interest earned on money in an HSBC Bank account in Geneva, Switzerland, which was considered undisclosed. The A.O. presumed a 4% interest rate on the deposit. The Ld. CIT(A) deleted the addition after considering the explanation provided by the assessee. The Ld. CIT(A) noted that there was no concrete evidence or information to prove that the appellant had actually earned the presumed interest. The A.O. had based the addition solely on presumptions, and in the absence of corroborative evidence, the Ld. CIT(A) found it appropriate to delete the addition.

The Revenue sought to challenge the deletion of the addition, arguing that the assessee had maintained a bank account with HSBC Bank in Switzerland and had offered additional income in a previous assessment year, forming the basis for the interest computation in the current year. However, the assessee's counsel contended that the addition was made on mere presumption and was rightly deleted by the Ld. CIT(A). The A.O. had mentioned specific details about the bank account and the balance maintained, but without concrete evidence regarding the existence or closure of the account, the A.O. presumed the interest earned. The Tribunal found that there was no substantial evidence to support the A.O.'s addition of interest on the foreign bank account for the relevant assessment year. The Ld. CIT(A)'s decision to delete the addition was upheld as there was a lack of evidence to prove the assessee's maintenance of the foreign bank account or the earning of interest thereon.

In conclusion, the Tribunal dismissed the Departmental Appeal, affirming the Ld. CIT(A)'s decision to delete the addition of interest earned on the undisclosed foreign bank account. The Tribunal found that the A.O. lacked sufficient evidence to support the addition, as it was based on presumptions without concrete proof of the assessee's foreign bank account maintenance or interest earnings. The appeal of the Revenue was therefore dismissed, upholding the deletion of the addition by the Ld. CIT(A.