2020 (6) TMI 336 - AT - Income Tax

Undisclosed income u/s 68 - Unexplained deposit of cash in Vijaya Bank Account - HELD THAT - Assessee before the revenue authorities submitted copy of service tax registration relating to Coaching Institute. The assessee also submitted that his wife is a taxpayer having source of income from Coaching Institute, rental income and bank interest and regularly files income tax return. Copy of ITR, Balance sheet and profit and loss account was also filed. The assessee also explained that rental income of the assessee and his wife is deposited in this saving account and his wife is at liberty to withdraw or deposit from her bank as per her requirement. That it is wrong to assume that the assessee is sole owner of funds in the said bank account. The evidences as narrated above clearly establish that ₹ 1,00,000/- related to her wife but the revenue authorities failed to consider the same. Direct the AO to delete the addition - Decided in favour of assessee.

Summary

Issues:
1. Whether the cash deposit in a joint bank account should be considered as undisclosed income of the assessee?
2. Whether the evidence provided by the assessee regarding the ownership of the funds in the bank account was sufficient to prove that the cash deposit belonged to the assessee's wife?

Analysis:

Issue 1:
The appeal was filed against the order of the ld. CIT(A)-1, Bhopal regarding the assessment year 2013-14. The AO treated the cash deposit in a joint bank account as undisclosed income under section 68 of the Act. The assessee contended that the bank account was jointly held with his wife, who runs a Coaching Institute, and provided documentary evidence to support this claim. The AO, however, did not accept this explanation and made an addition to the income. The CIT(A) also upheld the addition, leading to the appeal before the Tribunal.

Issue 2:
During the proceedings, the assessee's counsel argued that the cash deposited in the bank account belonged to the assessee's wife, who was a co-owner of the account and operated a Coaching Institute. The assessee had submitted various documents, including service tax registration related to the Coaching Institute, income tax returns, balance sheets, and profit and loss accounts of his wife to prove the source of funds. The Tribunal examined the evidence presented and concluded that the funds in question indeed belonged to the wife and not solely to the assessee. The Tribunal found that the revenue authorities had failed to consider the evidence provided, leading to an unjust addition to the assessee's income. Consequently, the Tribunal directed the AO to delete the addition of the cash deposit amount.

In conclusion, the Tribunal allowed the appeal filed by the assessee, emphasizing that the evidence presented clearly established that the cash deposit in the joint bank account belonged to the assessee's wife, who had a legitimate source of income from her Coaching Institute and other sources. The Tribunal's decision to delete the addition was based on the failure of the revenue authorities to consider the documented proof provided by the assessee, ultimately vindicating the assessee's position regarding the ownership of the funds in question.