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2022 (10) TMI 104 - AT - Income Tax


Issues Involved:
1. Deletion of addition on account of balance in foreign bank account.
2. Timing of the taxation of the bank balance.
3. Validity of reassessment proceedings.

Issue-wise Detailed Analysis:

1. Deletion of Addition on Account of Balance in Foreign Bank Account:
The revenue challenged the deletion of an addition of Rs. 51,19,959/- by the Commissioner of Income Tax (Appeals) [CIT(A)], Mumbai. The Assessing Officer (AO) had received information from the French Government under the Double Taxation Avoidance Agreement (DTAA) that the assessee held an undisclosed foreign bank account in HSBC Bank, Geneva. The AO argued that the balance in this account constituted undisclosed income, which had escaped assessment. The AO's investigation revealed that the assessee had a peak balance of $1,13,776.87 (equivalent to Rs. 51,19,959/-) in the financial year 2005-06. Despite the assessee denying ownership of the account, the AO concluded that the details matched the assessee's personal information, and thus, the addition was justified under section 69A of the Income Tax Act, 1961. However, the CIT(A) found that the income had already been assessed in the assessment year (A.Y.) 2007-08 and thus granted relief to the assessee. The Tribunal upheld the CIT(A)'s decision, noting that the revenue could not provide new evidence to refute the CIT(A)'s findings.

2. Timing of the Taxation of the Bank Balance:
The revenue contended that the CIT(A) erred in allowing the assessee's claim, thereby causing the bank balance to be taxed in subsequent assessment years rather than in the present assessment year. The CIT(A) had considered the overall facts and determined that the amount in question was already included in the peak balance for A.Y. 2007-08, thus preventing double taxation. The Tribunal agreed with the CIT(A)'s reasoning, emphasizing that the addition of Rs. 27,50,000/- as the initial deposit for opening the bank account was not justified, as it was already accounted for in the subsequent year's balance. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the revenue's appeal on this ground.

3. Validity of Reassessment Proceedings:
The assessee raised cross objections regarding the validity of the reassessment proceedings initiated under section 148 of the Income Tax Act. However, during the hearing, the assessee did not press this issue. Since the revenue's appeal was dismissed, the cross objections on the validity of reassessment became academic and were left open by the Tribunal.

Conclusion:
The Tribunal dismissed both the revenue's appeal and the assessee's cross objections. The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 51,19,959/- and confirmed that the income was rightly assessed in A.Y. 2007-08 to avoid double taxation. The reassessment proceedings' validity was not addressed as the issue was not pressed by the assessee.

 

 

 

 

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