2022 (2) TMI 487 - AT - Income Tax

Addition u/s. 69/68 - unexplained source of deposit of cash in a joint bank account maintained by the assessee with his wife in ICICI Bank - assessee repeatedly stated before the AO that his only source of income was salary and no business was carried on - HELD THAT - In support of the source of deposits the assessee submitted that Shri Virendra Khilare late father of his wife gifted certain land to the assessee. Copy of the gift deed was also made available. Wife of the assessee sold the land in plots. She filed her returns for the A.Ys. 2002-03 2003-04 and 2004-05 declaring income from sale of plots. There is nothing on record to suggest that her income was disturbed in any manner by the AO or it was not genuinely declared. Out of the sale proceeds of the plots she transferred 19.69 lakhs to her father through banking channel on various dates including three transactions in the year 2002 and five transactions in the year 2004 as have been set out on page 3 of assessment order. It was out of such deposits in the bank account of Shri Virendra Khilare that he gave back 13 lakhs to his daughter in the year 2004 itself. A sum of 12, 97, 600 was deposited in the joint savings bank account out of this amount. Immediately after the deposit of the amount the same was transferred to his wife s account on 10.12.2004 which was later on utilized by her for purchasing some property. We are unable to comprehend as to how an addition can be made in the hands of assessee towards cash deposits in the joint bank account when not only the source of deposit but also the entire background of facts leading to the receipt of amount in the hands of assessee s wife was also thoroughly explained before the AO. The assessee s wife was separately assessed to tax in support of which her copies of income tax returns were also furnished. We are fully satisfied that the assessee discharged the onus upon him to prove the source of deposit in the joint bank account. Setting aside the impugned order direct to delete the addition - Decided in favour of assessee.

Summary

Issues:
Confirmation of addition of ?12,97,600 made under section 69 of the Income-tax Act, 1961.

Analysis:
The appeal pertains to the assessment year 2005-06 and revolves around the addition of ?12,97,600 made by the Assessing Officer under section 69 of the Income-tax Act. The assessee, a professor, deposited this amount in a joint bank account with his wife. The Assessing Officer raised concerns regarding the source of this deposit during reassessment proceedings. The assessee explained that the funds were received from his wife, who had received them as part of sale proceeds from land transactions. The wife had declared this income in her tax returns for the relevant assessment years. The Assessing Officer disallowed the explanation provided by the assessee, leading to the addition in question, which was upheld in the first appeal.

During the Virtual Court hearing, the source of the deposit was thoroughly examined. The wife of the assessee had received the funds from the sale of land, which were then transferred to her father and subsequently redeposited in the joint bank account. The amount in question was later transferred to the wife's separate account for property purchase. The Tribunal found the explanation and evidence provided by the assessee to be satisfactory, highlighting that the wife's income had been duly declared and assessed separately. The Tribunal concluded that the assessee had successfully proven the source of the deposit in the joint bank account. Therefore, the Tribunal set aside the addition made by the Assessing Officer, directing its deletion.

In the final judgment delivered on 3rd February 2022, the Tribunal allowed the appeal, emphasizing the assessee's fulfillment of the onus to establish the legitimacy of the deposit. The Tribunal's decision was based on the comprehensive explanation and supporting documentation provided by the assessee, which effectively demonstrated the lawful nature of the funds deposited in the joint bank account.