2022 (7) TMI 695 - AT - Income Tax

Unexplained bank deposits - dispute between the parties that the bank account herein belongs to assessee s son - this bank account had seen cash deposits of Rs.28 lacs which have been assessed in assessee s hands - HELD THAT - The assessee appears to have opened the foregoing bank account in the name of his erstwhile minor son Mr. Virendra Mahadik long back. He had also furnished his PAN number at the time of his minor son s bank account opening. Mr. Jasnani vehemently argued that the learned lower authorities have rightly gone by assessee s PAN for taxing the impugned cash deposits in his hands. He could hardly have rebut the clinching fact that the assessee s son; who was a minor at the time of account opening, has become a major on 23.05.2011 who is assessable in his independent capacity. We also wish to quote section 64(1A) of the Act wherein clubbing of income is provided in case of a minor child only which is not the case before us. Faced with the situation, we conclude that both the learned lower authorities have erred in law and on facts in adding the impugned cash deposits in assessee s hands. - Decided in favour of assessee.

Summary

Issues:
Assessment of unexplained bank deposits under Section 143(3) of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Assessment of unexplained bank deposits
The case involved an appeal against the order of the CIT(A)-7, Pune, regarding the assessment of bank deposits of Rs.13.73 lacs as unexplained for the assessment year 2014-15 under Section 143(3) of the Income Tax Act, 1961. The appellant, an Advocate with income from real estate transactions, had filed a return of income declaring total income of Rs.2,15,94,190/-. The AO found that an amount of Rs.28,00,000/- was deposited in a bank account belonging to the appellant's son, for which the appellant was also a joint signatory. The AO added the balance amount of Rs.13,73,000/- as unexplained credit in the appellant's hands under Section 68 of the Act as there was no explanation provided. The CIT(A) upheld the AO's decision, stating that since the account was operated by both the son and the appellant, the appellant was liable for the deposits and withdrawals. However, the appellant argued that the account belonged to his son, who was a regular taxpayer, and that the deposits should be assessed in his son's hands. The Tribunal noted that the appellant's son had become a major and was assessable independently, and therefore, the cash deposits could not be added to the appellant's income. The Tribunal referred to section 64(1A) of the Act, which deals with clubbing of income in the case of a minor child, which was not applicable in this situation. Consequently, the Tribunal concluded that the lower authorities erred in adding the cash deposits to the appellant's income and deleted the same, allowing the appeal in favor of the assessee.

Conclusion:
The Tribunal ruled in favor of the assessee, holding that the unexplained bank deposits of Rs.13.73 lacs should not be added to the appellant's income as the account belonged to his son, who was assessable independently. The decision was based on the fact that the son had become a major and was not covered under the provisions for clubbing of income in the case of a minor child.