ASST CIT 27(2), NAVI MUMBAI vs. USHA J DUTTA, MUMBAI

On facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs.29,76,365/-, by ignoring the fact that the peak credit pertains to A.Y. 2006-07 and not A.Y. 2011-12 as per HSBC Bank statement of the assessee.

On facts and circumstances of the case and in law, the Ld.CIT(A) erred by ignoring Section 5 and Section 69A of the I T Act, whereby the unaccounted and unexplained peak credit amount was rightly taxed in A.Y. 2006-07.

The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary.

At the very outset, Ld. AR appearing on behalf of the assessee submitted before us that this ground is covered by the order of Hon’ble ITAT in & 4068/Mum/2016 for AY 1996-97 & 1997-98 in assessee’s own case, wherein the identical ground raised in the present appeal has already been decided on merits.

On the other hand, Ld. DR fairly agreed to the contention of Ld. AR that the issue is covered in favour of assessee.

We have heard both the parties and we have also perused the material placed on record as well as the orders passed by revenue authorities. We find that the identical ground has already been decided by the Coordinate Bench of Hon’ble ITAT in & 4068/Mum/2016 for AY 1996-97 & 1997-98 in assessee’s own case. The operative portion of the order of Hon’ble ITAT passed in ITA No. contained in para no. 11 & 12, which is reproduced below:-

The brief facts of the case are that the Assessing officer on the basis of the information received from Addl .DIT(inv), Unit-II, Mumbai, that the assessee had bank account in HSBC Bank, Geneva, Switzerland and the peak balance was US$ 64,242 reopened the assessment by recording the reasons dated 22.03.2013 and the notice u/s 148 of the Act was issued on 25.03.2013 which was duly served on 28.03.2013. The Assessing Officer noted as per the statement of the foreign bank account that the account was opened on 21.05.1984 and the peak balance as on December, 2005 is US$ 63,874/ The Assessing Officer has also noted that there is no deposit further except the bank statement and the peak deposit during the FY 2005-06 was US$ 64,242/-. The Assessing Officer, therefore, assessed Rs. 23,03,037/- equivalent to US$ 64,242.77 as the income of the assessee earned out of undisclosed sources. The assessee came in appeal before the CIT(A) which was confirmed by the CIT(A). Before us, during the course of the submissions, the assessee did not press the ground no. 1 relating to the validity of the reopening. The Grounds No. 2 and 3 are taken on merit challenging the addition being made in the impugned assessment year.

I have heard the rival submissions and carefully considered the same along with the orders of Usha J. Dutia the tax authorities below. While deciding the issue in the preceding paragraph in Assessment Year 1996-97 under para 6, I have already held that no addition can take place in respect of the US$ 64,242.77 equivalent to Rs. 31,56,247/- during the impugned assessment year, as the said amount has already been surrendered by the assessee during the Assessment Year 2010-11 and the assessee has paid tax thereon. This peak amount was in Financial Year 2005-06. In respect of the same amount the Assessing Officer has made the addition in the Assessment year 1996-97. Respectfully following the finding given in the preceding paragraph for the Assessment Year 1996-97, I delete the addition of Rs. 23,03,037/- but sustain the addition in respect of interest being earned by the assessee at US$ 662.85, US$ 700.54, US$ 700.98 and US$ 690.63. Accordingly the Assessing Officer is directed to convert US$ 662.85, US$ 700.54, US$ 700.98 and US$ 690.63 in the Indian rupee and treated to be the income of the assessee under the head income from other sources being the interest from Bank. Thus, the addition of Rs. 23,03,037/- be reduced to that extent.

After having gone through the aforementioned order passed by ITAT and considering the facts of the present case, we upheld the deletion of addition of Rs. 31,56,247/-, but for limited purpose of verifying the interest being earned by the assessee, we remit the matter back to the file of AO with a direction to verify the same and in case the interest is found to be earned by the assessee, then in that eventuality, the same be treated as income of assessee under the head ‘income from other sources’ being the interest from bank. With these directions, these grounds of appeal raised by the revenue are partly allowed for statistical purposes.

In the net result, the appeal filed by the revenue is partly allowed for statistical purposes.