Credit found in bank a/c belongs to assessee if it was used by him for his investment: HC

Case Details: Pulin Ku. Bir v. DCIT - [2022] 138 taxmann.com 228 (Orissa)

Judiciary and Counsel Details

• • Dr S. Muralidhar, CJ.
  • B. Panda, Sr. Adv. for the Appellant.
  • R.S. Chimanka, Sr. Standing Counsel for the Respondent.

Facts of the Case

During the assessment, the Assessing Officer (AO) found that there was an unexplained cash deposit in the sum of Rs. 41 lakh in the assessee’s bank account. The assessee explained that the sum had been received from his married daughter residing in the USA for the purchase by him of a house in Bhubaneswar.

In support of his contention, the assessee also produced a declaration from his daughter certifying that the sum was paid for constructing/purchasing land and building. However, AO was not satisfied with the explanation and added said sum to the taxable income of the assessee.

CIT(A) and ITAT agreed with the conclusion reached by the AO. Aggrieved-assessee filed the instant appeal before the High Court.

High Court Held

The High Court held that there was no factual or legal error committed by tax authorities in sustaining additions under section 68. On studying the bank account carefully, it was found that while Rs. 41 lakhs was deposited on 12th June 2010, within two days thereafter there was a debit with the narration “TRF to LIC MF Liquid Fund”.

This meant that said sum had been invested by the assessee in the liquid fund and not used for any investment in land or building on behalf of the assessee’s daughter.

The CIT(A) rightly disbelieved that the assessee was appointed as the general power of attorney holder for his daughter for entering into land/building transactions on behalf of his daughter. Since the funds were used by the assessee for his own investment, it strongly indicated that the source of investment i.e. the cash deposit of Rs. 41 lakhs also belong to him.

Thus, additions made by AO and sustained by the lower authority were to be upheld.

List of Cases Referred to

• • Durga Prasad More v. CIT [1971] 82 ITR 540 (SC) (para 11)
  • CIT v. R.S. Sibal [2004] 135 Taxman 492/269 ITR 429 (Delhi) (para 12).