2021 (6) TMI 201 - AT - Income Tax

Rectification application u/s 254 - Interest income earned from joint bank account - undisclosed foreign a/c of the assessee - assessee submitted that the CIT (A) has granted relief to the assessee on the ground that the assessee is only a housewife and did not have any independent source of income and that the estimated interest income from HSBC A/c needs to be considered in the hands of the assessee s husband and as he had admitted that the a/c was opened by his employer to credit his salary income - HELD THAT - Having regard to the rival contentions and the material on record, we find that the Assessing Officer has made the addition in the hands of the assessee of interest income from an A/c with HSBC held by the assessee jointly with her husband which was opened by his employer to deposit his salary income. Therefore, it is not an undisclosed foreign a/c of the assessee and therefore, the exception (d) to the circular will not apply. Therefore, this M.A is dismissed.

Summary

Issues:
1. Appeal dismissal on account of low tax effect.
2. Application for recall of order under section 254(2) of the Income Tax Act.
3. Interpretation of CBDT Circulars on tax limit for filing appeals.
4. Assessment of interest income from a joint bank account.
5. Applicability of exception (d) in Circular No.3 of 2018.

Analysis:
1. The Appellate Tribunal ITAT Hyderabad received a Miscellaneous Application (M.A.) from the Revenue seeking the recall of an order dismissing the Revenue's appeal due to low tax effect. The appeal was initially dismissed as the tax effect was below the prescribed limit of ?50 lakhs as per CBDT Circulars. The Revenue contended that despite the tax effect being below the limit, the case fell under exception (d) of the Circular, warranting reconsideration.

2. The assessee's representative argued that the Circular clause invoked by the Revenue was not applicable to the case. It was highlighted that the joint bank account with HSBC, from which interest income was assessed, belonged to the assessee's husband, opened by his employer for salary deposits. The representative emphasized that the interest income should be attributed to the husband, not the assessee, as she was a housewife without independent income sources.

3. The Tribunal analyzed the contentions and evidence presented. It was established that the interest income in question stemmed from a joint account with HSBC, opened by the husband's employer for his salary. Consequently, the Tribunal concluded that the account was not undisclosed foreign income of the assessee, negating the applicability of exception (d) in the Circular. Therefore, the M.A. seeking a recall of the order was dismissed.

4. The Tribunal's decision was based on the specific circumstances of the case, highlighting the importance of accurate interpretation and application of tax laws and Circular provisions. The judgment emphasized the need for a clear nexus between the facts of the case and the exceptions outlined in the Circulars to warrant a recall of the order. Ultimately, the M.A. filed by the Revenue was dismissed, affirming the initial order's decision on the appeal's dismissal due to low tax effect.

5. The detailed analysis and interpretation of the CBDT Circulars, coupled with a thorough examination of the facts and contentions presented by both parties, underscored the Tribunal's commitment to upholding the integrity and consistency of tax appeal procedures. The judgment exemplified the significance of adherence to legal provisions and the necessity of establishing a direct correlation between the case specifics and the exceptions outlined in the Circulars to justify a recall of the order.