2023 (6) TMI 1479 - AT - Income Tax

Unexplained money u/s 69A - invocation of the provisions of section 115BBE - HELD THAT - Bank account is assessee s joint account with his wife Mrs. Savita Jayaram and the opening balance as on 1.4.2016 was at US 9255.96. When this amount of US 2700 has been transferred to account bearing No. 000144812786 which is also assessee s joint account with assessee s wife Mrs. Savita Jayaram it cannot be considered as an unexplained money u/s 69A of the Act. Being so in our opinion assessee explained the sources as the opening balance standing in the assessee s own account No. 000144808401 at US 9255.96. Accordingly we find merit in the argument of ld. A.R. and the addition made u/s 69A of the Act is deleted.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

1. Whether the addition of Rs. 1,82,952/- as unexplained money under Section 69A of the Income-tax Act, 1961, was justified.

2. Whether the invocation of Section 115BBE of the Act was appropriate in the circumstances of the case.

3. Whether the appellant was liable to pay interest under Sections 234A, 234B, and 234C of the Act.

ISSUE-WISE DETAILED ANALYSIS

1. Addition of Rs. 1,82,952/- as Unexplained Money under Section 69A

Relevant Legal Framework and Precedents:

Section 69A of the Income-tax Act, 1961, pertains to unexplained money, where the assessee is found to be the owner of any money, bullion, jewelry, or other valuable article, and such items are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewelry, or other valuable article may be deemed to be the income of the assessee for such financial year.

Court's Interpretation and Reasoning:

The Tribunal examined the evidence provided by the assessee, which included bank statements demonstrating that the amount in question was transferred from one of the assessee's own bank accounts to another. The Tribunal noted that both accounts were joint accounts held by the assessee and his wife.

Key Evidence and Findings:

The assessee provided a copy of the bank account statement for account No. 000144808401, showing an opening balance of US $ 9255.96 as of April 1, 2016. The amount of US $ 2700 was transferred from this account to account No. 000144812786, another joint account with the assessee's wife, on October 27, 2016.

Application of Law to Facts:

The Tribunal found that since the transfer was between the assessee's own accounts, the amount could not be considered unexplained money under Section 69A. The source of the funds was adequately explained as an opening balance in the assessee's account.

Treatment of Competing Arguments:

The Tribunal considered the arguments presented by the Revenue, which maintained that the addition was justified. However, the Tribunal found merit in the assessee's argument that the funds were transferred between accounts held by the same individual and therefore did not constitute unexplained money.

Conclusions:

The Tribunal concluded that the addition under Section 69A was not justified, and the amount of Rs. 1,82,952/- should not be treated as unexplained money. The addition was deleted.

2. Invocation of Section 115BBE

Relevant Legal Framework and Precedents:

Section 115BBE of the Income-tax Act deals with the tax rate applicable to income referred to in Sections 68, 69, 69A, 69B, 69C, or 69D, where such income is deemed to be the income of the assessee.

Court's Interpretation and Reasoning:

Given the Tribunal's finding that the amount in question was not unexplained money under Section 69A, the invocation of Section 115BBE was deemed inappropriate.

Conclusions:

The Tribunal implicitly concluded that since the addition under Section 69A was deleted, the application of Section 115BBE was also not applicable in this case.

3. Liability to Pay Interest under Sections 234A, 234B, and 234C

Relevant Legal Framework and Precedents:

Sections 234A, 234B, and 234C of the Income-tax Act pertain to interest for defaults in furnishing return of income, payment of advance tax, and deferment of advance tax, respectively.

Court's Interpretation and Reasoning:

The Tribunal did not provide a detailed analysis of these sections as the primary issue of unexplained money was resolved in favor of the assessee. The liability to pay interest under these sections was contingent upon the additional tax liability, which was negated by the Tribunal's decision.

Conclusions:

The Tribunal's decision to delete the addition under Section 69A effectively nullified any additional tax liability, thereby negating the interest liability under Sections 234A, 234B, and 234C.

SIGNIFICANT HOLDINGS

The Tribunal held that the addition of Rs. 1,82,952/- as unexplained money under Section 69A was not justified, as the funds were transferred between the assessee's own bank accounts, and the source was adequately explained.

"...it cannot be considered as an unexplained money u/s 69A of the Act. Being so, in our opinion, assessee explained the sources as the opening balance standing in the assessee's own account..."

The Tribunal's decision established the principle that transfers between an individual's own accounts, with a clear source of funds, do not constitute unexplained money under Section 69A.

In conclusion, the appeal was allowed, and the addition made under Section 69A was deleted, with no additional tax or interest liabilities imposed on the assessee.