No Additions if Cash Deposits Were Made in Joint Bank Account Held With Father Who Duly Offered Interest in His ITR

Case Details: Alok Keswani v. ITO - [2024] 160 taxmann.com 1020 (Raipur - Trib.)

Judiciary and Counsel Details

• Ravish Sood, Judicial Member & Arun Khodpia, Accountant Member
• Sakshi Gopal Aggarwal, CA for the Appellant.
• Satya Prakash Sharma, Sr. DR for the Respondent.

Facts of the Case

The assessee had made cash deposit in his savings bank account but had not filed any return of income. The Assessing Officer (AO) thus initiated proceedings under section 147. However, the assessee had failed to comply with the notice issued under section 148, and the AO passed order under section 144 read with section 147 and made addition of the entire amount of cash deposits along with corresponding interest income in the assessee’s hands.

On appeal, the CIT(A) upheld the additions made by the AO. Aggrieved-assessee filed the instant appeal before the Tribunal.

ITAT Held

The Raipur Tribunal held that the assessee had provided certain documents, such as a copy of the return of income, balance sheet, and capital account of his father, which revealed that the father disclosed the savings bank account in his return of income along with the interest income that had accrued on the same.

Also, the assessee reconciled the amount reflected in his father’s balance sheet against that disclosed in the aforementioned bank account by placing a bank reconciliation statement on record.

Based on the aforesaid facts, there was substance in the assessee’s claim that the bank account and interest income accruing on the same had been accounted for/offered for tax in the hands of his father, i.e., the primary account holder.

Therefore, without any material proving to the contrary, there was no justification for the AO to have added the cash deposits made during the year to the said bank account or the interest income in the hands of the assessee.

However, the assessee adopted a lackadaisical approach and failed to participate in the course of the assessment proceedings, which led to the AO framing the assessment. Accordingly, the matter required to be restored to the AO for the limited purpose of verifying the assessee’s claim correctly.