2024 (9) TMI 193 - AT - Income Tax

Addition on account of notional interest on the alleged bank account with HSBC Bank Account in Geneva - HELD THAT - The said seized document nowhere mentions the name of the assessee or his wife and it only mentions the name of Shri Praveen Sawhney(son of assessee). Considering the aforesaid orders passed in the case of the assessee and also considering the fact that the lower authorities had placed reliance on the orders passed by them for earlier years while making the addition towards notional interest income which stood deleted by the Tribunal vide its order 2021 (6) TMI 99 - ITAT DELHI we hold that there cannot be any addition towards notional interest income that can be made in the hands of the assessee for year under consideration also. Accordingly, the grounds raised by the assessee are allowed.

Summary

Issues:
1. Addition of notional interest income on alleged bank account with HSBC.
2. Charging of interest under sections 234A and 234B of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Addition of notional interest income on alleged bank account with HSBC
The appeal before the ITAT Delhi concerned the addition of notional interest income on an alleged bank account with HSBC for the assessment year 2014-15. The Assessing Officer (AO) had made an addition of Rs. 53,92,649 as notional interest income on the deposit balance maintained with HSBC Bank, Geneva. The AO based this addition on the observation from previous assessment years and the belief that the assessee and his wife were beneficiaries of the account. The CIT(A) upheld the AO's decision. The primary contention of the assessee was the denial of the existence of any foreign bank account with HSBC and the subsequent interest income. The legal heir of the deceased assessee submitted that no such account existed and referred to previous Tribunal orders that had deleted similar additions. The ITAT noted the lack of incriminating material connecting the assessee to the alleged account and the reliance on quashed orders by the lower authorities. Consequently, the ITAT allowed the appeal, holding that no addition towards notional interest income could be made for the year under consideration.

Issue 2: Charging of interest under sections 234A and 234B
The AO had also charged interest under sections 234A and 234B of the Income Tax Act, 1961. However, the ITAT's decision to allow the appeal on the primary issue of notional interest income rendered the charging of interest under these sections moot. As a result, the ITAT did not delve into this issue separately but granted relief to the assessee based on the primary issue's resolution.

In conclusion, the ITAT Delhi allowed the appeal of the assessee, setting aside the addition of notional interest income on the alleged bank account with HSBC for the assessment year 2014-15. The decision was based on the lack of incriminating material, the denial of the account's existence by the assessee, and the previous Tribunal orders that had deleted similar additions for the same assessee. The charging of interest under sections 234A and 234B was not addressed separately due to the primary issue's resolution in favor of the assessee.