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TMI Blog2017 (12) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... assets were held by the major HUF. In the instant case, there was no such evidence on record. It was only subsequent to the survey operations, assessees came out with a plea that they were maintaining sheeps and goats in the status of main HUF, which were passed on to the separated HUFs. In our considered opinion, assessees miserably failed to bring on record any proof of existence of HUF and it’s ancestral nucleus. Under the above circumstances, we are of the view that finding of the AO as well as ld. CIT(A) with regard to non-existence of HUF deserves acceptance. Accordingly, we hold that the income declared by the HUFs are assessable in the hands of individuals. Since AO had assessed the income of HUFs in the hands of the individuals, which in turn, were accepted by ld. CIT(A), we uphold the orders of AO on this count. However, the income of the HUF is clubbed and assessed in the individual hands, the assessment of HUF and the HUF income was assessed to tax protectively. Accordingly, the assessment made in the hands of HUF is quashed and the tax collected in the hands of HUF may be adjusted against the tax demands of individuals. In the result, both the appeals in the individua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals filed by Smt. T. Jayashree, Smt. Swaroopa Rani and T. Kalpana Rani are directed against orders of CIT(A) - 10, Hyderabad. These appeals are against 143(3) assessments and since issues are common, these appeals were heard together and a common order is passed for the sake of convenience. 4. First we deal with the issue of HUF and to decide the issue, the facts are culled out from T. Mahaveerji for the AY 2007-08 in the case of individual as well as HUF. Briefly the facts of the case are, a survey u/s 133A of the Act was conducted in the case of M/s Mahaveerji and Brothers, commission agents in sheep and goats on 17/01/2007 and certain documents and books of account were impounded. The assessee, HUF, filed its return of income for the first time for the AYs 2005-06, 2006-07 and 2007-08 on 31/03/2008 after survey. During the course of survey, the claim of HUF status was not claimed but the return of income was filed for HUF. The return filed for AY 2007-08 was processed u/s 143(1) and later it was converted into scrutiny and accordingly, notice u/s 143(2) was issued. In order to verify the claim of the assessee, with regard to HUF, AO issued a letter dated 02/12/2009 to furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess carried on in the status of HUF. 8) In the statement recorded during the course of survey uj s 133A on 17 -01-2007 it was stated that business was carried on in individual status and also as partner of the firm, Mj s Mahaveerji & Brothers. There was no mention of business carried on in HUF status. 9) The assets admitted in HU~ balance sheet as at 31-03-2006 were stated as owned by assessee-individual. 10) There is no evidence of existence of initial capital belonging to HUF which was invested in business and in acquisition of other movable & immovable assets. 11) When the property is enjoyed all these days by the members of family collectively, they should have filed only one HUF return for the entire property of Late T. Niranjanji. However, there is no such return filed. There is no evidence of partition in the family at any point of time. The property devolved to the assessee is his individual capacity. 4.2 After rejecting the above claims of the assessee, the income of the HUF was assessed protectively and income of the assessee was clubbed in the hands of T. Mahaveerji along with his individual income, who filed the return of income subsequent to survey on 31/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of survey taken place in this group on 1701.2007, there was no reference made to the HUF status. Thus, as could be seen from the facts of the case, there is no evidence to show that there was a HUF status existing for the appellant and all the activities are held to be taken place in individual capacity. No information was brought on the record that the appellant have the HUF status existence, during the year under reference, with special reference to the assets held and income generated in the hands of HUF of the appellant. Under the circumstances, it is held that the AO has rightly brought the amounts of income admitted in HUF status, to tax, in the hands of individual status of the appellant." 6. Aggrieved with the above order, assessee preferred an appeal before us raising the following grounds of appeal: 6.1 In the case of HUF "1. The order of the learned Commissioner of Income-Tax (Appeals) is erroneous both on facts and in law 2. The learned Commissioner of Income-Tax (Appeals) erred in holding that no HUF was in existence and that the income of the HUF of ₹ 9.71,110/- is taxable in the assessment of individual and not in the assessment of HUF. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances, it is incorrect to state that the assets are held by the individual alone. Ld. AR submitted that the Assessing Officer mentioned that there is no evidence of the existence of initial capital belonging to the HUF. It is humbly submitted that the returns of income were filed first time for the assessment year 2005-06 and on onwards. In this regard, the ld. AR submitted that there was a partition of the business of the HUF on 15.2.1991 and as all the properties partitioned were movables, no registered document was executed. A document was, however, executed on 15.2.1991 between the members of the HUF mentioning the movable assets received from the family. The same is available as a deduction as on 01-04- 2004 and thereafter the assessee filed the return of income as HUF admitting the income derived from that year onwards. In the circumstances, it is submitted that the existence of the HUF should not have been doubted by the Assessing Officer and the assessment of the HUF should have been separately made. 8. On the other hand, ld. DR submitted that assessee has claimed the HUF status subsequent to survey because during the course of survey, assessee and his brothers combinely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... east maintained separate books of account prior to making a claim for the first time before the revenue authorities; as has been stated earlier, even the so far partition deed was placed on record for the first time before the ld. CIT(A). Such being the case, the claim of the assessee that there was a HUF in existence and the properties/income derived by the HUF has been passed on to the next generation cannot be accepted. 9.2 Section 171 of the Income-tax Act refers to the assessment in the status of HUF after partition wherein it is stated that a HUF, hitherto assessed as undivided shall be deemed for the purposes of this Act to continue to be a HUF unless there is a finding of partition is recorded . Similarly, with regard to partial/total partition, any claim made by the assessee requires to be verified by the AO upon giving due notice to the members of the family. Moreover, with regard to fresh claim of existence of HUF, without there being any assessment in the earlier years or proof of holding assets by a major HUF, the burden is heavy upon assessees to satisfy the AO that assets were held by the major HUF. In the instant case, there was no such evidence on record. It was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanations submitted. 3. The learned Commissioner of Income-Tax (Appeals) erred in confirming levy of interest u/s 234A and 234B of the I.T. Act." 15. Ground No. 1 is general in nature and ground No. 3 is regarding charging of interest u/s 234A, 234B & 234C, which is consequential in nature. 16. As regards ground No. 2, the facts, as taken from Smt. T. Jayashree, are that the assessee filed return of income for AY 2007- 08 on 31/03/2008 admitting total income of ₹ 1,57,003/-. A survey u/s 133A was conducted in the case of M/s Mahaveerji & Brothers on 17/01/2007. During the course of survey books of account and documents were impounded. The AO noticed that the assessee is having a bank account with SBH (A/c No. 52021889634) and Andhra Bank (A/c No. SB/01/00010878) 16.1 The following credits were noticed from the SBH, Puranapul Branch: Date mount credited Nature of credit 20/06/06 ₹ 3,00,000 By cash 31/07/06 ₹ 2,40,000 By transfer 01/08/06 ₹ 59,961 By credit 20/12/06 ₹ 45,000 By transfer 12/02/07 ₹ 3,07,545 By transfer 21/02/07 ₹ 56,907 By cheque ₹ 10,09,413 deposit 16.2 From Andhra Bank, Karwan Branch the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed written submissions, wherein the assessee reiterated the stand taken before the Assessing Officer suggesting that the sources were explained by the HUF of Shri T.Sai Baba and return of income was filed by the HUF. It was also mentioned that the deposits made are through banking channels and they do not represent cash deposits. The written submissions were forwarded to the Assessing Officer for factual report. The Assessing Officer vide letter dated 04.02.2016 submitted that neither the assessee nor the so called HUF maintained any books of account and whatever reasons given for creation of HUF is only an afterthought subsequent to survey conducted u/ s.133A in January, 2007. With regard to the sources for deposits in the bank accounts, the Assessing Officer mentioned that except giving narration to the entries, no contra entries are produced through bank account of other party. 16.5 The CIT(A) forwarded the remand report to the assessee for further comments. In response to that the assessee filed letter dated 22.02.2016 as under: "During the remand proceedings, the assessee submitted the details required by the Assessing Officer vide letter dated 28.01.2016 filed before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the existence of HUF has not been established, the question of treating them as belonging to the HUF does not arise. In view of the above, the addition made by the Assessing Officer is confirmed and these two grounds of appeal are dismissed." 17. Aggrieved by the order of CIT(A), the assessee is in appeal before us. 18. Considered the rival submissions and perused the material facts on record. It is noted from the records that the assessee has no independent sources of income. The deposits in the bank are the income of the family. We find that there is only two cash deposits and all other entries are transfers from the other accounts or credits for closure of deposits accounts. Since the transfers and credits are internal transfers, these deposits cannot be questioned as these are verifiable and established sources. AO could have verified from the bank itself, but chose not to do. With regard to cash deposits of ₹ 3,25,000/-, the husband of assessee has submitted that these are out of family fund. Since, we have adjudicated the income of the HUF belongs to the individual, there is sufficient funds available with the family to make such deposits. It is pertinent to note t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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