2018 (4) TMI 122 - AT - Income Tax

Additions towards amount in a bank account with HSBC Bank at Geneva - peak credit - husband and wife both were the beneficiary - the amount surrendered by the husband and taxed in his account - advancing of loan by the assess to his family members - Held that - In the case under consideration the AO had alleged that there was an attempt to reduce the tax burden. The husband of the assessee had the tax at the maximum marginal rate. The AO had accepted the return filed by him and no revisionary proceedings were initiated. After assessing the disputed amount substantively in the hands of BHK, as stated earlier, there was no justification for assessing same in the hands of his wife also. Considering the above, we are of the opinion that there is no legal or factual infirmity in the order of the FAA. - Decision in the case of SP Jaiswal (1997 (3) TMI 4 - SUPREME Court) followed - Decided against the revenue.

Issues involved:
1. Deletion of addition made by the AO as deemed income for AY 2006-07.
2. Assessment of income in the right hands for AY 2006-07.
3. Deletion of addition made by the AO for AY 2007-08.

Detailed Analysis:

1. Deletion of addition made by the AO as deemed income for AY 2006-07:
The case involved a challenge to the deletion of an addition made by the Assessing Officer (AO) as deemed income for the assessment year (AY) 2006-07. The AO had issued a notice under section 147 of the Income Tax Act to assess the escaped income based on information received regarding a foreign account. The AO found that the assessee and her husband were beneficiaries of the account, leading to a peak credit of ?1.40 crores. The First Appellate Authority (FAA) upheld the AO's decision to tax the amount in the husband's hands. The Income Tax Appellate Tribunal (ITAT) emphasized the principle of avoiding double taxation and held that the income should be taxed only once and in one AY. The ITAT concluded that assessing the same income in both the husband's and wife's hands was impermissible under the law, supporting the FAA's order.

2. Assessment of income in the right hands for AY 2006-07:
The ITAT analyzed the AO's decision to assess the disputed income in the husband's hands for AY 2006-07. The Departmental Representative (DR) argued that income should be taxed in the right hands, regardless of ownership by the spouse. The Authorized Representative (AR) contended that the same income should not be taxed twice and referenced relevant case law. The ITAT agreed with the AR, emphasizing that the AO had not demonstrated any factual or legal error in assessing the income in the husband's hands. The ITAT distinguished the cited cases and upheld the FAA's decision, stating that there was no legal or factual flaw in the FAA's order.

3. Deletion of addition made by the AO for AY 2007-08:
For AY 2007-08, a similar addition by the AO was challenged, and the FAA had deleted the amount. The ITAT, following the decision for AY 2006-07, confirmed the FAA's order. The ITAT dismissed the AO's appeal for both AYs, emphasizing consistency with the principle of avoiding double taxation. The judgments for both AYs were pronounced on 28th March 2018, and the appeals by the AO were ultimately dismissed.

In summary, the ITAT Mumbai addressed the issues of deletion of additions made by the AO as deemed income for two consecutive AYs, emphasizing the importance of assessing income in the right hands to avoid double taxation. The ITAT upheld the FAA's decisions, highlighting the fundamental tax jurisprudence principles and rejecting the AO's arguments for taxing the same income in multiple hands.

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