2003 (12) TMI 315 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition of Rs. 8,50,000 on account of unexplained deposit in United Western Bank Ltd., Chandrapur.
2. Ownership of Rs. 8.50 lakhs deposited in the joint account held by the assessee with Smt. Yojana Wattamwar (NRI).
3. Appreciation of the fact that Smt. Yojana Wattamwar (NRI) is a housewife and her visit to India.
4. Nature of the bank account (savings vs. NRI) and the source of funds.
5. Deletion of addition of Rs. 11,111 on account of interest credited by United Western Bank, Chandrapur.

Detailed Analysis:

1. Deletion of Addition of Rs. 8,50,000:
The Revenue appealed against the deletion of Rs. 8,50,000 added by the AO as unexplained deposit in the joint account with United Western Bank. The AO argued that the deposits were unexplained and thus should be treated as the assessee's income. The CIT(A) deleted the addition, accepting the explanation that the funds belonged to Mrs. Yojana Wattamwar, supported by confirmations and affidavits.

2. Ownership of Rs. 8.50 Lakhs:
The AO's investigation revealed that the joint account was operated by the assessee and deposits were made by him. The AO concluded that the funds belonged to the assessee due to the lack of satisfactory explanation. However, the CIT(A) accepted the assessee's explanation that the funds belonged to Mrs. Yojana, supported by her affidavit and confirmations from third parties, including Mr. V.G. Raghaji and Mr. Hiteshkumar Patel.

3. Appreciation of Smt. Yojana Wattamwar's Status:
The AO noted that Smt. Yojana was a housewife and visited India briefly, questioning her ability to generate such funds. However, the CIT(A) accepted her affidavit and the explanation that she had sufficient means through various investments and loans, which were repaid and deposited in the joint account.

4. Nature of the Bank Account and Source of Funds:
The AO pointed out that the account was a savings account and not an NRI account, and that the funds were utilized by the assessee. The CIT(A) considered the detailed breakdown of the deposits, including Rs. 2,00,000 from Mr. Raghaji and Rs. 6,50,000 from Mr. Patel, concluding that the funds belonged to Mrs. Yojana and not the assessee.

5. Deletion of Addition of Rs. 11,111 (Interest):
The AO added Rs. 11,111 as interest income from the joint account, treating it as the assessee's income. The CIT(A) deleted this addition, ruling that since the principal amount did not belong to the assessee, the interest accrued also could not be treated as his income.

Conclusion:
The Tribunal upheld the CIT(A)'s decision, affirming that the funds in the joint account belonged to Mrs. Yojana, supported by credible evidence and affidavits. The Tribunal dismissed the Revenue's appeal, confirming the deletion of Rs. 8,50,000 and Rs. 11,111 from the assessee's income. The Tribunal emphasized that any further enquiry should be directed towards Mrs. Yojana, not the assessee, given the evidence provided.