2016 (7) TMI 808 - AT - Income Tax

Addition on protective basis - Held that - From the orders of the authorities below we find that the assessee was a joint account holder along with his mother in the bank account maintained at branch of Axis Bank at Kolkata. The assessee as well as his mother has accepted the bank account as pertaining to the business activity of the mother of the assessee. This fact has not been disputed by the Assessing Officer also. He has made addition on protective basis only to protect the interest of the Revenue in case the addition was not considered in the hand of mother of the assessee . But we find from the order of the learned Commissioner of Income-tax (Appeals), that the amount of cash deposit was duly considered in the assessment of mother of the assessee. We find that issue in dispute has already been considered in the hand of mother of the assessee, therefore, the addition in the hand of assessee is not justified. - Decided in favour of assessee.

Summary

Issues:
1. Addition of ?3,20,000 on account of unexplained cash deposit in bank.
2. Deletion of ?88,77,900 made by AO on protective basis due to cash deposited in joint SB A/c with mother.

Issue 1: Addition of ?3,20,000 on account of unexplained cash deposit in bank:

The appellant declared income of ?2,38,953 and explained cash deposits of ?3,20,000 as gifts received from relatives and friends during engagement and marriage ceremonies. However, the Assessing Officer was not satisfied as some deposits were made before marriage and others after, without proper confirmations. The AO assessed income at ?94,37,390, including the disputed amount. The CIT(A) restored the issue back to the AO for further consideration, which the Revenue challenged.

The Revenue argued that the CIT(A) exceeded authority by remanding the issue, while the assessee contended that the source of cash deposits was adequately explained. The ITAT found that the CIT(A) did not address the assessee's submission and remanded the issue improperly. The ITAT directed the issue to be reconsidered by the CIT(A) after providing a fair hearing to both parties. Thus, the ground of appeal was allowed for statistical purposes.

Issue 2: Deletion of ?88,77,900 made by AO on protective basis due to cash deposited in joint SB A/c with mother:

The AO added ?88,77,900 to the assessee's income on a protective basis due to cash deposits in a joint account with the mother, assuming it belonged to the assessee. The CIT(A) accepted the assessee's argument that this amount was already assessed in the mother's hands and deleted the addition.

The Revenue contended that the addition was deleted without examining the source of deposits in the mother's hands, while the assessee argued against reassessing the same amount in his hands. The ITAT noted that both the assessee and his mother acknowledged the account as related to the mother's business, a fact undisputed by the AO. The ITAT upheld the CIT(A)'s decision, stating that since the amount was already considered in the mother's assessment, adding it to the assessee's income was unwarranted. Consequently, the ground of appeal was dismissed.

In conclusion, the ITAT partially allowed the appeal for statistical purposes, directing a reevaluation of the first issue by the CIT(A) and upholding the deletion of the addition in the second issue, as the amount was already assessed in the mother's hands.