2018 (2) TMI 262 - AT - Income Tax

Addition being investment in KVP, which is in the name of Smt. Kajal Ghosh, wife of the assessee - Held that - Assessment order passed in the case of Smt. Kajal Ghosh, was a substantive assessment. Even the interest on this investment was adder in her assessment. As already stated Smt. Kajal Ghosh is a Doctor by profession, working with the Government of West Bengal and she has explained the direct source of investment. In case there were some discrepancies, the issue can be only considered in the hands of Dr. Smt. Kajal Ghosh and not in the hands of the assessee. These investments and the interest income thereon, has been considered in the assessment of Dr. Smt. Kajal Ghosh, in a substantive manner, the same addition cannot be made in the hands of the assessee as this would tantamount to double taxation of the same income. Hence, deleted this addition and allow this Ground of the assessee. In the result, appeal of the assessee is allowed. Benamidars - Held that - Assessing Officer has failed to discharge the burden of proof that lay on him to prove that the wife, father-in-law, mother-in-law and sons of the assessee were benamidars of the assessee. In the result, this ground of the assessee is allowed. Addition being interest on KVP, NSC and Savings Bank Account - Held that - There was a joint account in the name of the assessee s wife as the first holder along with the assessee as the second holder. The opening balance on 01/04/2003, was ₹ 49,298/- and the closing balance was ₹ 1,00,080/-. Smt. Kajal Ghosh, has accepted that this account belongs to her and it was considered in the assessment of Smt. Kajal Ghosh. Under these circumstances, the addition of ₹ 1,609/-, being interest in her Savings Bank Account, cannot be added in the hands of the assessee. Accordingly the same is deleted and this ground of the assessee is allowed. Addition of interest on KVP and NSC - Held that - This addition is rightly made by the Assessing Officer and sustained by the ld. CIT(A) as interest has accrued to the assessee on these two investments, which admittedly belonged to the assessee. The claim of the assessee that it is following receipt basis and hence cannot be taxed during the current year, is not accepted for the reason that, no method of accounting is followed by the assessee, who is only a salaried employee. Hence, we set aside this issue to the file of the Assessing Officer to calculate the interest accrued during this year only and bring it to tax. In the result, this ground of the assessee is allowed in part. Addition of unexplained investments - Held that - No addition is called for under the facts and circumstances of the case. When a person receives salary in cash, his claim that the investments were made from such salary, cannot be brushed aside. Thus, this addition is deleted and Ground No. 3 of the assessee is allowed. Addition on account that the assessee has shown low drawings - Held that - Quantum of expenditure disclosed by the assessee towards drawing for household expenses is reasonable. The addition made by the Assessing Officer is on ad-hoc basis. Hence, deleted the same on the ground that this is devoid of merit. Addition being an amount of deposit in Bank Account No. 5178, belonging to Smt. Abha Naug, mother-in-law (of the assessee) - Held that - Smt. Abha Naugh received rental income every month. I find that there is no deposit of ₹ 27,294/- on 28/01/2014 as alleged by the Assessing Officer. The balance is a continuous rental deposit of ₹ 4,200/- p.m. Smt. Abha Naugh passed away on 30th August, 2002 and her husband Shri P K Naug and Smt. Kajal Ghosh, declared 50 per cent each of this income in their return s of income. On these facts, which could not be controverted by the ld. D/R, this addition is of ₹ 74,029/- is hereby deleted Unexplained investments made by the assessee in the name of his son, Sri Abhishek Ghosh - Held that - Smt. Kajal Ghosh, owned up these deposits and has shown the source of the deposits in the assessment year as Smt. Kajal Ghosh s. The said bank account in the name of Sri Abhishek Ghosh, and interest income thereon was considered in her return of income. Sri Abhishek Ghosh, is a major son and has independent sources of income. Under these circumstances, as the deposits in the bank account and the interest income thereon are considered in the assessment of Smt. Kajal Ghosh, making an addition again in the case of the assessee would tantamount to double taxation of the same amount. Thus, this addition is hereby deleted Unexplained investments made in the name of the minor son, Sri Anirban Ghosh - Held that - It was explained that the sources of deposit made by Sri Anirban Ghosh, was out of maturity of fixed deposits. Smt. Kajal Ghosh, as also accounted for this amount. Thus, this addition cannot be made in the name of the assessee for this assessment year, as the sources has been explained as out of maturity of fixed deposits from earlier years. Thus, this ground of the assessee is allowed. Unexplained cash transactions based on two cash memos - Held that - Addition cannot be made in the name of the assessee as Smt. Kajal Ghosh, is a separate assessee and this expenditure incurred by her should be considered in her assessment

Summary

Issues Involved:
1. Allegation of benami investments.
2. Addition of unexplained investments.
3. Addition of interest income.
4. Addition of low household drawings.
5. Addition of unexplained cash transactions.
6. Double taxation concerns.

Detailed Analysis:

1. Allegation of Benami Investments:
The core issue revolves around the allegation by the Assessing Officer (AO) that the investments made in the names of the assessee's wife, sons, father-in-law, and mother-in-law were benami transactions. The AO claimed these were actually the assessee's investments. The Tribunal emphasized that the burden of proof lies on the person making the allegation, citing various case laws, including the Hon’ble Supreme Court in D.S.P., Chennai vs. K. Inbasagaran and Allahabad High Court in Prakash Narain vs. Commissioner Of Income-Tax. The Tribunal concluded that the AO failed to provide sufficient evidence to prove the benami nature of the transactions, and thus, the burden of proof was not discharged.

2. Addition of Unexplained Investments:
The AO added various amounts as unexplained investments in different assessment years. The Tribunal scrutinized each addition:
- For Assessment Year (AY) 2003-04, the addition of ?1,50,000/- in KVPs in the name of the assessee's wife was deleted as it was already assessed in her hands.
- For AY 2004-05, the addition of ?3,00,736/- was deleted after considering the assessee's explanation of investments from salary savings and withdrawals from his wife's bank account.
- For AY 2005-06, the addition of ?503,576/- was deleted as the sources were explained through salary and loans from his wife.
- For AY 2006-07, the addition of ?67,850/- was deleted as the assessee sufficiently explained the sources.
- For AY 2007-08, the addition of ?3,015,003/- for a flat investment by the assessee's wife was deleted as it was admitted by her and sourced from her bank account and housing loan.

3. Addition of Interest Income:
The AO added interest income on various investments, which were contested:
- For AY 2004-05, the Tribunal deleted the interest on KVPs and Savings Bank Account (SBA) in the name of the assessee's wife, as it was already assessed in her hands.
- For AY 2005-06, similar deletions were made for interest on KVPs and SBA.
- For AY 2006-07, the Tribunal partially allowed the appeal, deleting interest on KVPs and SBA.
- For AY 2007-08, the Tribunal set aside the issue of double taxation of interest to the AO for fresh adjudication.

4. Addition of Low Household Drawings:
The AO made additions for low household drawings, estimating higher monthly expenses:
- For AY 2004-05, the addition of ?64,000/- was deleted as the disclosed expenses were reasonable given the rent-free accommodation and car provided by the employer.
- For AY 2005-06, a similar addition was deleted.
- For AY 2006-07, the addition was deleted following the same reasoning.
- For AY 2007-08, the addition of ?208,000/- was deleted for similar reasons.

5. Addition of Unexplained Cash Transactions:
The AO made additions based on unexplained cash transactions:
- For AY 2004-05, the addition of ?42,412/- based on cash memos in the name of the assessee's wife was deleted as it should be considered in her assessment.
- For AY 2006-07, the addition of ?1,78,000/- was deleted as the basis for the addition was unclear.
- For AY 2007-08, the addition of ?1,30,000/- for alleged incremental loan from the minor son was deleted due to lack of discussion and evidence.

6. Double Taxation Concerns:
The Tribunal addressed concerns of double taxation where the same income or investment was taxed in the hands of both the assessee and his wife:
- For AY 2003-04, the Tribunal deleted the addition of ?1,50,000/- in KVPs as it was already assessed in the wife’s hands.
- For AY 2004-05, similar deletions were made for interest income and investments in the name of the assessee's wife and sons.
- For AY 2005-06, deletions were made for interest income and investments in the name of the wife and sons.
- For AY 2006-07, deletions were made for interest income and investments in the name of the wife and sons.
- For AY 2007-08, deletions were made for investments in the name of the wife and sons, and the issue of double taxation of interest was set aside for fresh adjudication.

Conclusion:
The Tribunal consistently held that the AO failed to discharge the burden of proof regarding benami investments and addressed double taxation concerns by deleting additions where the same income or investment was already assessed in the hands of another family member. The Tribunal's detailed analysis and application of legal principles resulted in significant relief for the assessee across multiple assessment years.