Cash deposit in bank of HUF can not be added to income of individual assessee

Cash deposit in bank account belonging to HUF can not be added to the income of individual assessee – ITAT 

In a recent judgment, the ITAT Raipur has deleted addition u/s 69A holding that cash deposit in bank account belonging to HUF and disclosed in the return of income/financial statements of the HUF can not be added to the individual assessee

ABCAUS Case Law Citation:
ABCAUS 4051 (2024) (05) ITAT

In the instant case, the Income Tax Department had challenged the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC) in deleting the addition u/s 69A of the Income Tax Act, 1961 (the Act) on account of cash deposit as unexplained money.

The case of the respondent assessee was selected for scrutiny assessment through CASS for verifying large value of cash deposits in bank during the demonetization period. Notice u/s. 143(2) of the Act was issued and duly served upon the assessee.

The Assessing Officer (AO) issued a Show Cause Notice (SCN) upon the assessee to explain as to why the aforesaid amount may not be added to his total income for the subject year. The assessee in response to the aforesaid show cause notice filed his reply. However, the explanation offered by the assessee about the nature and source of the cash deposits was not substantiated with proper documentary evidence.

The AO, observing that the assessee had failed to substantiate his claim with proper documentary evidence, passed the assessment order u/s 143(3) of the Act by making the impugned addition as his unexplained money u/s 69A of the Act.

Before the CIT(A) the assessee contended that the cash deposits pertained to the HUF of appellant and the cash deposits are reflected in the books of the said concern. The assessee filed additional evidence in the form of copy of bank statement, PAN of HUF, audited accounts of the HUF, certificate from bank, copy of GST registration, IEC registration etc.  and a copy of acknowledgment and ITR of HUF wherein the said bank account was mentioned as belonging to the HUF.

The CIT(Appeals) after considering the submissions of the assessee, and the remand report of the AO and the additional evidence deleted the addition.

The Tribunal observed that the A.O had made the impugned addition as the explanation offered by the assessee about the nature and source of the cash deposits was not substantiated with proper documentary evidence. Before the first appellate authority, the assessee had filed “additional evidence” under Rule 46A of the Income Tax Rules, 1962 along with the reasons for non-submission of the same before the A.O, which were duly considered and admitted by the CIT(Appeals).

Further, as per the remand report filed by the A.O before the CIT(Appeals) it was categorically mentioned that the subject bank account number was not that of the assessee-individual but pertained to the HUF.

The Tribunal further observed that the bank account number was also regularly reported in the returns of the assessee’s HUF in the earlier assessment years. Apart from that the HUF business entity existed for last many years and the subject Cash Credit bank account was that of the HUF.

The Tribunal in totality of facts gathered opined that the subject bank account did not pertain to the assessee individual but belonged to the HUF of the assessee; and that the transactions carried out in the aforesaid bank account did not belong to the assessee individual and had duly been disclosed in the return of income/financial statements of the HUF.

Accordingly, the Tribunal concurred with the finding of the CIT(A) that when ownership of the subject bank account and the transactions therein recorded were proved undoubtedly to be belonging to the HUF of the assessee, no addition of the cash deposits in the said bank account could have been made in the hands of the assessee u/s 69A of the Act.

As a result, the Tribunal dismissed the appeal of the Revenue.

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