2023 (1) TMI 567 - AT - Income Tax

Additions towards fixed deposit in the name of family members - Addition of interest income on such FDs - fixed deposits found during the course of search - assessee has admittedly shown higher income in its computation of income and consequently, CIT(A) has deleted the disallowance but has enhanced the assessment by directing the AO to bring to tax the income offered by the assessee in its computation of income - HELD THAT - We are live to the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. 2006 (3) TMI 75 - SUPREME COURT wherein, it has been clearly held that in the absence of a revised return being filed, only the Appellate Authority can direct the Assessing Officer to consider the assessment on the basis of the computation of income, which is filed in the course of appellate proceedings. A perusal of the order of the Ld. CIT(A) clearly shows that the Ld. CIT(A) has called for the remand report and the Assessing Officer has accepted that the assessee has the source for the fixed deposit of Rs. 5 crores. Admittedly, the amount of s. 1.5 crores of fixed deposit in the name of family members can adequately be sourced from the income offered by the assessee. Even otherwise, said addition cannot be made in the hands of the assessee as the fixed deposits are not in the name of the assessee and it is a search case and the assessment has to be done as per the evidence found during the course of search and fixed deposits are in the name of family members. Coming to the issue of interest, admittedly, the assessee has shown actual interest income in the computation of income and the CIT(A) has directed for taxing for the actual interest income. This being so, we find no error in the findings of the Ld. CIT(A), which is hereby confirmed. Appeal of the revenue and the cross objection of the assessee are dismissed.

Summary

Issues Involved:
Assessment based on fixed deposits and interest income during a search, validity of additions made by Assessing Officer, appeal against Ld. CIT(A)'s order, source of fixed deposits, treatment of interest income, applicability of Supreme Court decision on revised return filing.

Analysis:
The appeal pertains to the assessment year 2008-09, where the revenue challenged the Ld. CIT(A)'s order regarding the addition of fixed deposits and interest income based on a search conducted on the assessee's premises. The Assessing Officer had included Rs. 6.5 crores from fixed deposits and interest income in the assessment. The Ld. CIT(A) deleted the additions citing the assessee's computation of income disclosing Rs. 9,16,66,750. The revenue contended that the Ld. CIT(A) erred in deleting the additions without proper explanation for the source of fixed deposits, especially concerning Rs. 1.5 crores in family members' names.

During the hearing, the Ld. AR supported the Ld. CIT(A)'s order, arguing that the disclosed income adequately covered the fixed deposits and that the Rs. 1.5 crores in family members' names should not be attributed to the assessee. The Tribunal examined the submissions and noted the higher income disclosed by the assessee in the computation, leading the Ld. CIT(A) to enhance the assessment based on the disclosed income. Citing the Supreme Court decision in Goetze (India) Ltd. Vs. CIT, the Tribunal emphasized that without a revised return, the Appellate Authority could direct the Assessing Officer based on the computation of income filed during appellate proceedings.

The Tribunal upheld the Ld. CIT(A)'s decision, confirming the treatment of interest income and the source of fixed deposits. It concluded that the additions made by the Assessing Officer were not justified as the fixed deposits were not in the name of the assessee but family members. Therefore, the appeal of the revenue and the cross objection of the assessee were dismissed, and the order was pronounced on 29/12/2022.