2024 (3) TMI 200 - AT - Income Tax

Undisclosed deposits in foreign bank account - assessee a joint holder along with her husband - stand of assessee is that she was having dispute with her husband and was disowned from being beneficiary in all assets of her husband - HELD THAT - As there is no dispute that the assessee was co-signatory along with her husband of the foreign bank account maintained with Standard Chartered Trust (Guernsey). However the stand of the assessee from the very beginning is that she was not having any knowledge about the opening of the account and the sum credited into such account and the account was operated and managed by the husband of the assessee; that there was dispute between wife and husband and the assessee was disowned from being beneficiary in all assets of her husband. It is also the stand of the assessee that she had never made any transaction into such account and she had made complaint to Enforcement Directorate on 21.05.2012 much before conducting of search and seizure on 11.02.2014 regarding no connection with the disputed foreign bank account. Therefore to verify the veracity of assessee s claim in order to subserve the ends of natural justice and to be fair to both the parties we restore this issue to the file of the AO for decision afresh - Ground is allowed for statistical purposes. Addition as perquisite u/s 17(2)(iv) - payments towards assessee s credit card bills have been done through assessee s own bank account - whether payment for credit card bills made by the company on her behalf to not be treated as her perquisites ? - HELD THAT - Considering the fact that the assessee has been able to prove that the expenses in question were incurred in connection with the business of the company in which she was director we are of the considered view that the lower authorities were not justified in treating these payments as perquisite of the assessee and no addition thereof could be made in the hands of the assessee. Accordingly orders of the authorities below on the issue in question are set aside and the addition on this account is deleted.

Summary

Issues Involved:
1. Validity of the notice issued under section 143(2) of the Income Tax Act.
2. Barred by limitation of the assessment order.
3. Application of mind by the Assessing Officer (AO).
4. Adequate opportunity of being heard.
5. Additions made without incriminating material.
6. Addition of Rs. 11,77,102/- for foreign bank account deposits.
7. Addition of Rs. 5,17,508/- as perquisites under section 17(2)(iv) of the Income Tax Act.

Summary:

1. Validity of Notice under Section 143(2):
The assessee contended that the notice issued under section 143(2) was beyond the statutory period prescribed under the Act. The Tribunal did not find merit in this argument and upheld the validity of the notice.

2. Barred by Limitation:
The assessee argued that the assessment order was passed beyond the statutory period and hence should be quashed. The Tribunal did not find this contention valid and upheld the assessment order.

3. Application of Mind by AO:
The assessee claimed that the assessment order was passed without the AO applying his own mind. The Tribunal found no evidence to support this claim and upheld the assessment order.

4. Adequate Opportunity of Being Heard:
The assessee argued that the assessment order was passed without affording adequate opportunity of being heard. The Tribunal did not find any procedural lapse and upheld the assessment order.

5. Additions Made Without Incriminating Material:
The assessee contended that the additions were made without any incriminating material found during the search. The Tribunal found that the additions were based on substantial evidence and upheld them.

6. Addition of Rs. 11,77,102/- for Foreign Bank Account Deposits:
The Tribunal noted that the assessee was a co-signatory along with her husband for the foreign bank account. The assessee claimed no knowledge of the account and that it was managed by her husband. The Tribunal restored this issue to the file of the AO for fresh decision after verifying the correctness of the assessee's claim.

7. Addition of Rs. 5,17,508/- as Perquisites:
The AO treated the payments made by M/s Travencore Management Resources Pvt. Ltd. for the assessee's credit card bills as perquisites. The assessee demonstrated that these expenses were business-related. The Tribunal found that the expenses were incurred for business purposes and deleted the addition.

Conclusion:
The appeal was partly allowed for statistical purposes, with the issue of the foreign bank account deposit being remanded back to the AO for fresh consideration, while the addition of Rs. 5,17,508/- as perquisites was deleted.