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Facts
The assessee deposited Rs.14,05,000/- in a bank account during the demonetization period, which the Assessing Officer added under Section 69A, treating it as unexplained. The assessee contended the account was individual, not HUF as reported by the bank, and sources included business, rental receipts, and a Rs.7 lakh gift from his mother. The CIT(A) allowed the gift amount but sustained the balance addition of Rs.7,05,000/-.
Held
The Tribunal noted conflicting bank records regarding account ownership (individual vs. HUF) and that the assessee had disclosed the account in his individual return before the Section 148 notice. Therefore, the case was remitted to the Assessing Officer to verify the bank account ownership. If proven to be an individual account, the entire addition should be deleted; otherwise, the assessee must explain the source for the sustained addition.
Key Issues
Verification of bank account ownership (individual vs. HUF) for cash deposits made during demonetization and the source of such deposits.
Sections Cited
69A, 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, HYDERABAD “SM-B” BENCH: HYDERABAD
Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G
ORDER PER MANJUNATHA G. : This appeal has been filed by the Assessee against the order dated 13.02.2025 of the learned CIT(A)- National Faceless Appeal Centre [in short the “NFAC”] Delhi, relating to the assessment year 2017-2018.
Brief facts of the case are that, the assessee filed it’s return of income for the assessment year 2017-2018 on 31.03.2018 admitting taxable income at Rs.5,48,230/-. The 2 ITA.No.668/Hyd./2025 case was selected for limited scrutiny to verify the 'cash deposit’ during demonetization period. During the course of assessment proceedings, the Assessing Officer noticed that, the appellant has made cash deposit of Rs.14,05,000/- in it’s bank A/c held with Central Bank of India. The Assessing Officer called-upon the assessee to explain it’s source for cash deposit. In response, the assessee submitted that, the bank account reported in the name of Appellant-HUF is in fact belong to the assessee-individual and it is opened and operated by assessee in his individual capacity. Further, in the bank a/c held in the name of HUF during the demonetization period there are only Rs.6000/- cash deposits. The assessee further submitted that, the source for cash deposited into Central Bank account held in the name of the individual is, out of business receipts and rental receipts. The Assessing Officer after considering the relevant submissions of the assessee and also taking note of bank a/c held in the name of Appellant-HUF observed that, the assessee could not able to explain source for the cash deposited into bank account during demonetization period.
3 ITA.No.668/Hyd./2025 Therefore, made addition of Rs.14,05,000/- u/sec.69A of the Income Tax Act, 1961 [in short “the Act”].
Aggrieved by the assessment order passed by the Assessing Officer, the assessee preferred an appeal before the learned CIT(A) and reiterated the submissions made before the Assessing Officer. The assessee further submitted that, the source for cash deposit into bank account is out of gift received from his mother of Rs.7 lakhs, for which, relevant details has been submitted. The learned CIT(A) after considering the relevant submissions of the assessee, rejected the arguments of the assessee that, the said bank account belongs to individual and not the Appellant-HUF, on the basis of bank account statement where the account is clearly in the name of the Appellant-HUF. Further, the learned CIT(A) allowed relief in respect of source for cash deposit by considering the gift of Rs.7 lakhs received from his mother. Thus, directed the Assessing Officer to accept the source to the extent of Rs.7 lakhs out of addition of Rs.14,05,000/- and sustained the balance addition of 4 ITA.No.668/Hyd./2025 Rs.7,05,000/- because, the assessee could not explain the source for the same.
Aggrieved by the order of the learned CIT(A), the assessee is now, in appeal before the Tribunal.
Mr. S. Venkateswarlu, Tax Consultant-Learned Counsel for the Assessee referring to various evidences including the return of income filed by the assessee viz., Manchala Krishna in his individual capacity on 30.03.2018 submitted that, even before the Assessing Officer issued notice u/sec.148 of the Act, the assessee has filed return of income in his individual capacity and disclosed bank a/c held with Central Bank of India in the return of income and, therefore, the Assessing Officer is erred in considering the said bank account in the name of the Appellant-HUF, even though, the assessee has furnished a letter from the Bank where the Banker certified that the said bank a/c is opened and operated in the individual capacity. Learned Counsel for the Assessee further, referring to additions made by the Assessing Officer towards cash deposit submitted that, the assessee has already explained the source for cash deposit
5 ITA.No.668/Hyd./2025 out of known source of income i.e., rental income and business income of M/s. Virupakshmi Gardens and drawing from petrol bunk viz., M/s. Manchala Krishna & Sons. Although, these evidences are filed before the learned CIT(A), but, the learned CIT(A) sustained the addition made by the Assessing Officer and, therefore, he submitted that, the order of the learned CIT(A) should be set-aside and the addition made by the Assessing Officer should be deleted.
Shri Pavitran Kumar J, learned Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, the bank a/c has been reported in the name of the Appellant-HUF and it’s PAN. Further, the bank a/c was opened in the name of Appellant- HUF which is evident from the statement of account submitted by the assessee. Although, the assessee claimed that, said bank a/c belongs to individual, but, no credible evidence has been submitted, except filing a letter from the bank. Further, on verification of relevant evidences received from the bank, they are contradicting each other. Therefore, the learned CIT(A) has rightly rejected the arguments of the 6 ITA.No.668/Hyd./2025 assessee and sustained the addition to the tune of Rs.7,05,000/- because, the assessee could not explain the source. Therefore, he submitted that, the order of the learned CIT(A) should be upheld.
We have heard both the parties, perused the material on record and the orders of the authorities below. There is no dispute with regard to the fact that, Assessing Officer has made additions towards cash deposit into bank a/c held with Central Bank of India on the basis of report submitted by the bank as per reporting requirement where the bank a/c has been reported in the name of the Appellant-HUF and it’s PAN. It is the contention of the assessee that, the said bank a/c was by mistakenly reported in the name of Appellant-HUF, even though, the bank a/c is opened and operated in the name of individual. The assessee referred to the letter issued by the Bank dated 26.12.2019 and claimed that, the bank itself has certified that the said bank a/c is operated by appellant-individual, but, not in the capacity of Appellant-HUF. If we go by the letter submitted by the bank, the bank has certified that the 7 ITA.No.668/Hyd./2025 said bank a/c is opened in the name of individual, whereas, the bank statement issued by the bank is in the name of Appellant-HUF. If we go by the two evidences from the bank, they are contradictory to each other. The bank statement clearly shows the account is in the name of Appellant-HUF, whereas, bank clarified that, the said bank a/c is opened by assessee in his individual capacity. Further, this fact has been supported by the assessee by filing return in the individual capacity on 30.03.2018 where the bank a/c held at Central Bank of India has been disclosed in his individual capacity, that too much before the date when the Assessing Officer issued notice u/sec.148 of the Act. When the bank a/c is already considered in individual capacity and reported to the Assessing Officer in the return of income filed on 30.03.2018, the credits in the said bank a/c cannot be considered in the hands of Appellant-HUF. But, the facts are not clear. Further, the appellant claimed that the source for cash deposit is out of known source of income i.e., income from house property, interest income and also drawing from a partnership firm. In so far as drawings from 8 ITA.No.668/Hyd./2025 partnership firm, no evidence has been furnished before us. Therefore, in our considered view, the facts needs to be re- examined by the Assessing Officer in light of the claim of the assessee that, the said bank a/c is opened in the name of assessee in his individual capacity and also declared in the income tax return filed for the relevant assessment year. Thus, we set aside the order of the learned CIT(A) and remit the issue to the file of Assessing Officer to verify the claim of the assessee with regard to ownership of bank a/c. In case, the assessee is able to prove ownership of bank a/c in the name of individual, then, the entire additions made by the Assessing Officer should be deleted. In case, the assessee is not able to prove ownership of the bank a/c in the name of assessee- individual, then, the assessee needs to explain the source for cash deposit into bank account to the extent of addition sustained by the learned CIT(A). The Assessing Officer is directed accordingly.
In the result, appeal of the assessee is allowed for statistical purposes.
9 ITA.No.668/Hyd./2025 Order pronounced in the open Court on 08.07.2025.