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2014 (8) TMI 753 - AT - Income TaxDeposits treated as unexplained income - Income from salary and interest free partnership Held that - The bank account is a joint account of the assessee with her husband in the ICICI Bank and the same has been confirmed by the bank authorities, to the effect that the transactions in the Joint Bank account during the period 01.04.2008 to 31.03.2009 belong to the assessee s husband Mr. V. Raja Reddy alone and further affidavits had been furnished in this regard by both the assessee and Mr. V. Raja Reddy - Since the assessee has not maintained books of accounts, disclosing the bank account to the department does not arise revenue should have made further enquiries which would reveal the fact that whether the receipts belong to Mr. V. Raja Reddy or not, especially when Mr. V. Raja Reddy belong to the same Ward as that of the assessee - assessee is deriving income from salary and interest from partnership firm concerned along with commission on marriage bureau, which is not a substantial amount the order of the CIT(A) is upheld that the entire addition made in the hands of the assessee cannot be sustained Decided against Revenue.
Issues:
Assessment of unexplained income based on undisclosed bank account deposits. Analysis: 1. The appeal before the Appellate Tribunal ITAT Hyderabad was against the Order of the Ld. CIT(A)-VI, Hyderabad for the assessment year 2009-2010. The assessee, an individual deriving income from salary and interest free partnership concerned, had filed a return of income admitting a total income of Rs. 2,80,340. 2. The primary issue revolved around the undisclosed bank account held by the assessee with cash and cheque deposits amounting to Rs. 77,33,902. The Assessing Officer treated these deposits as unexplained income of the assessee, leading to the initiation of the appeal process. 3. During the proceedings, the assessee contended that the bank account in question was a joint account with her husband, who was engaged in a business of commission and brokerage in granites. The assessee maintained that she did not maintain any books of accounts and the deposits were made by her husband into the joint account. The Ld. CIT(A) forwarded the submissions and bank account details to the Assessing Officer for further investigation. 4. The Assessing Officer, in a remand report, highlighted discrepancies in the business transactions of the assessee's husband and recommended a thorough scrutiny of his income tax return. The Assessing Officer suggested that the deposits in question did not belong to the assessee based on the husband's business activities and urged for a detailed examination. 5. The assessee objected to the remand report, emphasizing the need for a comprehensive scrutiny of her husband's financial affairs to ascertain the true source of the deposits. Evidence was presented to support the claim that the deposits were related to the husband's business activities and not solely owned by the assessee. 6. Subsequently, the Assessing Officer issued a further remand report stating that the additional evidence presented during the appeal did not comply with IT Rules, emphasizing the need to decide the case on its merits. 7. The Ld. CIT(A) acknowledged the joint nature of the bank account and the supporting documentation provided by the assessee and her husband. It was noted that the Assessing Officer failed to conduct a thorough inquiry into the ownership of the deposits, especially given the husband's business activities and the joint account arrangement. 8. The Ld. CIT(A) concluded that the entire amount of Rs. 77,33,902 could not be treated as unexplained income of the assessee alone, considering the joint account and lack of evidence proving the deposits belonged solely to the assessee. The Ld. CIT(A) directed further investigation into the matter and potential actions against the real owners of the credits. 9. The Appellate Tribunal upheld the decision of the Ld. CIT(A), dismissing the Revenue's appeal. It was established that the deposits were related to the husband's business activities, and insufficient evidence was presented to attribute the entire amount to the assessee. The Tribunal affirmed that the deposits did not constitute unexplained income in the hands of the assessee. 10. Consequently, the appeal of the Revenue was dismissed, affirming the decision of the Ld. CIT(A) and emphasizing the joint ownership of the bank account and the need for a more thorough investigation into the true source of the deposits.
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