2021 (10) TMI 159 - AT - Income Tax

Unexplained investment - transaction in joint bank account with his father - HELD THAT - Assessee's father is in receipt of rental income and the same are deposited in the joint account of the assessee and his father with Vijaya Bank. The assessee's father is also had deposited the proceeds of sale of agricultural property in Vijay Bank. There has been bank transfer from Vijaya Bank to Citi Bank and the assessee has withdrawn a sum from Citi Bank on 09.03.2006. Therefore, it cannot be stated there was no sufficient money available with the assessee's father for making a gift of sum - Hence delete the addition made by the A.O. For savings and drawing from Citi Bank withdrawals are for meeting the specific expenditure such as credit card payments and cheque payments to specified entities. The cash withdrawals in the Citi Bank account is not much. The few cash withdrawals, in all probabilities, would have been only for the purpose of meeting the personal expenses of the assessee. thus we confirm the addition. Sales proceeds of HUF property sum cannot be given credit because agricultural property was sold in June 2004 and the same in all likelihood would not have been available for making a purchase of the site much subsequently, i.e., on 09.03.2006. In this context, it is important to mention that the A.O. has already given a credit out of the sale proceeds of agricultural land of HUF towards the purchase of the site (since the initial installment towards payment for the purchase of site was made by the assessee in August 2004). Therefore, confirm the addition made by the A.O. Unexplained credit - addition of credits in two bank accounts of the assessee - HELD THAT - As credits are transactions which pertains to loan availed or receipts of interest either from FD or SB accounts. The remaining amount of ₹ 4,86,500, the assessee has explained by stating that Vijaya Bank account is a joint bank account of assessee and his father and this fact has been accepted by the A.O. in the remand report submitted. The Chief Manager, Vijaya Bank has confirmed that the impugned account is joint account of the assessee and his father (Refer page 25 of the paper book). Hence, the observation of the A.O. that Vijaya Bank account is in the single name of assessee, is erroneous. Assessee's father had made deposits of the rental income received by him in the Vijaya Bank account. The assessee has also deposited money from withdrawals from other bank accounts. Therefore, in the facts and circumstances of this case, the addition made by the A.O. on account of credits to the Vijaya Bank account amounting to ₹ 3,16,760 is uncalled for and I delete the same. Hence, the issue relating to unexplained credits in the bank account is partly allowed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Addition in respect of unexplained investment of ?5,62,854.
3. Addition in respect of unexplained credit of ?4,46,086.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The assessee filed the appeal with a delay of 57 days, justifying it by stating that he resides outside India and his father, the Power of Attorney (POA) holder, is a senior citizen with severe diabetes, which led to complications including gangrene and amputation. The Chartered Accountant was also unable to visit due to Covid-19 fears. The Tribunal found sufficient reason for the delay and condoned it, proceeding to dispose of the appeal on merits.

2. Addition of ?5,62,854 (Unexplained Investment):
The assessee purchased a site for ?41,89,654 and explained the sources as a bank loan of ?26,75,000, amount received from HUF ?10,25,505, and savings of ?4,89,149. The Assessing Officer (A.O.) accepted the bank loan but questioned the remaining sources, allowing credit of only ?9,51,800 from HUF proceeds, leaving ?5,62,854 unexplained.

The CIT(A) confirmed the addition, finding the assessee's explanations and evidence insufficient. The Tribunal reviewed the evidence, including bank statements and sale deeds, and found that the gift from the father of ?1,18,354 was explained, but savings of ?1,44,500 and ?3,00,000 from HUF proceeds were not sufficiently justified. Thus, the addition was partly allowed, reducing the unexplained investment to ?4,44,500.

3. Addition of ?4,46,086 (Unexplained Credit):
The A.O. added unexplained credits in two bank accounts: ?1,29,326 in Citi Bank and ?3,16,760 in Vijaya Bank. The assessee explained part of the credits as salary, loans, and other specific transactions, but the A.O. found ?1,29,326 in Citi Bank and ?3,16,760 in Vijaya Bank unexplained.

The CIT(A) partly allowed the appeal, accepting some explanations but confirming most of the A.O.'s findings. The Tribunal reviewed the evidence, including bank statements and employer confirmations, and found that certain credits like marriage and vehicle loans were explained, reducing the unexplained credits in Citi Bank to ?24,011. For Vijaya Bank, the Tribunal found the account was joint with the father, who deposited rental income, and deleted the addition of ?3,16,760.

Conclusion:
The appeal was partly allowed, with the Tribunal condoning the delay, reducing the unexplained investment to ?4,44,500, and reducing the unexplained credits in Citi Bank to ?24,011 while deleting the addition in Vijaya Bank.