ACIT, NEW DELHI vs. LEGAL HEIR OF LATE SH. SURINDER KAPUR, NEW DELHI

We have heard the Learned Representative of both the parties and perused the findings of the authorities below.

The record reveal that earlier Departmental Appeal were dismissed considering it to have low tax effect. However, the Revenue moved an application for rectification of the Order as the case involved is of foreign bank account and as such falls within the exception to the Board Circular. The M.A. of the Revenue was allowed and Departmental Appeal was re-fixed for hearing on merits.

In this case, A.O. made addition of Rs.4,00,008/- on account of interest on money lying in HSBC Bank at Geneva, Switzerland which was held as undisclosed bank account of the assessee. The addition has been made by the A.O. considering that there must have been a component of interest earned on the said deposit and he has taken 4% interest which is interest rate generally given by the Banks. 4.1. The Ld. CIT(A) considering the explanation of assessee, deleted the addition. The findings of the Ld. CIT(A) in para 15.1 of the impugned order is reproduced as under:

3 ITA.No.49/Del./2017 Legal Heir of Sh. Surinder Singh, New Delhi. “15.1. It has been observed that the addition has been made on the basis of presumption that the deposit found in the bank account is provided with the interest @ 4%. As per the document, based on which it is found that the appellant has made unexplained deposits in the said bank accounts of HSBC Bank at Geneva, Switzerland, has no mention about such interest credited in those bank accounts. There is no further evidence brought out by the AO or submission/any admission made by the appellant during assessment proceedings to substantiate that the appellant has actually earned that interest. Therefore, in the absence of any corroborative evidence or any further information received from any source with regard to the interest earned by appellant on such bank account, the addition made by the AO deserves to be deleted, as it is seen from the assessment order that the same is added on the basis of presumptions only. Accordingly, this addition is 4 ITA.No.49/Del./2017 Legal Heir of Sh. Surinder Singh, New Delhi. directed to be deleted. Here it is to be clarified that this finding only relates to the addition towards undisclosed interest income and the findings with respect to the deposits in the said bank account as mentioned in the appellate order of the AY 2006-07 in the case of appellant shall have no consequence on it.”

After considering the rival submissions, we do not find any merit in the Departmental Appeal. The Ld. D.R. relied upon the Order of the A.O. and contended that assessee maintained bank account with HSBC Bank at Geneva, Switzerland and assessee has offered additional income in A.Y. 2006-2007 which was added and the same was the basis for computing the interest in assessment year under appeal. On the other hand, Learned Counsel for the Assessee submitted that in A.Y. 2006-2007 addition was maintained by the Ld. CIT(A) against which no further appeal have been filed. Learned Counsel for the Assessee submitted that addition is made merely on presumption, therefore, it was rightly deleted by the Ld. CIT(A). In view of 5 ITA.No.49/Del./2017 Legal Heir of Sh. Surinder Singh, New Delhi. the above submissions, it is clear that there were no basis for the A.O. to make any addition of interest on such bank account maintained by the assessee with HSBC Bank at Geneva, Switzerland. The A.O. in the assessment order has specifically mentioned that the bank statement available with the Department contains the peak balance maintained in the bank account of assessee with HSBC Bank at Geneva, Switzerland from November, 2005 to February, 2007. The details of the same are also noted in para-10 of the assessment order. The A.O. further noted that as per the information available with the Department, the last known balance in HSBC Bank account of the assessee was for the month of February, 2007 at $ 24,085.41. In the absence of any bank account statement of the said bank account and information of the status of its existence / closure, the balance as on March, 2007 was required to be worked-out as there must have been component of interest earned for the month of March, 2007 and thereafter. The A.O, therefore, presumed that assessee has earned interest @ 4% per annum and made the addition. These facts clearly 6 ITA.No.49/Del./2017 Legal Heir of Sh. Surinder Singh, New Delhi. show that A.O. was not having any information/material so as to prove that assessee maintained the same HSBC account for the assessment year under appeal. The A.O. in the absence of bank statement and further details presumed that assessee must have earned interest on the same foreign bank account in assessment year under appeal. It was, therefore, clearly support the findings of fact recorded by the Ld. CIT(A) that there were no evidence available with the A.O. to compute the interest earned by the assessee in assessment year under appeal. In the absence of any evidence on record to the effect that assessee maintained any foreign bank account in assessment year under appeal or earned any interest thereon, the Ld. CIT(A) was justified in deleting the addition. We do not find any error in the Order of the Ld. CIT(A) in deleting the addition. The Departmental Appeal fails and is dismissed.

In the result, appeal of the Department dismissed.