2017 (7) TMI 362 - AT - Income Tax

Un-explained deposit into bank - proof of fund available with the HUF - Held that - HUF has shown the availability of fund of ₹ 62,67,451/- in the cash flow statement along with the application of fund was also explained which includes the deposits made in the bank in the name of Smt. B. Jayashree of ₹ 23 lakhs and further a sum of ₹ 25 lakhs in the name of the assessee then in the absence of any contrary record or fact to dispute the details pointed out in the cash flow statement, the addition made by the AO is not sustainable. The cash flow statement of the affairs of the HUF was accepted in the case of the wife for the purpose of source of deposit and the AO has clearly stated in the remand report that all the particulars as shown in the cash flow statement are also found in the assessment record of the HUF. Therefore, when the particulars of the cash flow statements are accepted by the AO then the source as explained by the assessee as fund available with the HUF cannot be denied. In view of the above facts and circumstances of the case the addition made by the AO is not sustainable and the same is deleted. - Decided in favour of assessee.

Summary

Issues involved:
1. Addition of unexplained deposit into bank account for the assessment year 2009-10.
2. Confirmation of levy of interest charged under section 234B of the Income Tax Act.

Detailed Analysis:
Issue 1:
The appeal was against the order of the Commissioner of Income Tax (Appeals) confirming the addition of Rs. 25,52,905 made by the Assessing Authority for the assessment year 2009-10 under unexplained deposit into the bank account. The appellant contended that the deposit related to the Joint Hindu Undivided Family (HUF) of which the appellant was the Kartha. The source of the deposit into the bank was explained as proceeds from the sale of property assessed to capital gains in the HUF's hands. The appellant argued that the cash flow statement of the HUF supported the source of the deposit, which was also accepted in the case of the appellant's wife. The appellant highlighted discrepancies in the CIT(A)'s consideration of the remand report and the AO's acceptance of the fund availability with the HUF. The Tribunal noted that the CIT(A) did not consider the remand report filed by the AO, leading to a violation of natural justice principles. Considering the evidence and cash flow statement, the Tribunal concluded that the addition made by the AO was not sustainable and hence deleted it.

Issue 2:
The Tribunal also addressed the levy of interest charged under section 234B of the Income Tax Act. The appellant contended that the levy was opposed to a decision of the High Court of Karnataka. However, the Tribunal did not provide detailed analysis or reasoning for allowing this ground of appeal. Ultimately, the appeal of the assessee was allowed, and the addition of the unexplained deposit into the bank account was deleted.

In conclusion, the Tribunal's judgment revolved around the explanation and sourcing of a significant deposit into the bank account, highlighting the importance of considering all relevant evidence and reports in tax assessment cases to ensure fairness and compliance with natural justice principles.