Case Law Details
Rammohan Kordale Vs ACIT (ITAT Bangalore)
Introduction: The Income Tax Appellate Tribunal (ITAT) of Bangalore recently made a significant ruling in the case of Rammohan Kordale vs ACIT. The tribunal declared that the money transferred between the assessee’s joint bank accounts cannot be classified as unexplained money under Section 69A of the Income Tax Act.
Analysis: In the proceedings, the AO had initially added an amount of Rs.1,82,952/- to the assessee’s income, categorizing it as unexplained money under Section 69A of the Income Tax Act, 1961. The AO argued that this amount, which had been deposited in a joint account, had no specified source. However, the assessee argued that this was merely an internal transfer between two of his joint accounts. Despite these arguments, the NFAC upheld the AO’s decision, leading the assessee to appeal at the ITAT. The ITAT, after considering the evidence presented, ruled in favor of the assessee. They concluded that as the money was transferred from the assessee’s own account, it couldn’t be considered as unexplained money under Section 69A.
Conclusion: The ruling by ITAT Bangalore provides clarity on the classification of joint account transfers under the Income Tax Act. In a significant decision for assessees with joint accounts, the ITAT has asserted that internal transfers between these accounts cannot be considered unexplained money. This ruling helps in assuring taxpayers that they won’t be wrongfully charged under Section 69A for internal transfers in their joint accounts, which marks a significant development in the realm of income tax legislation.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal by assessee is directed against order of NFAC for the assessment year 2017-18 dated 15.12.2021. The assessee has raised following grounds:
1. The order passed by the authorities below in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant’s case.
2. The appellant denies himself to be assessed at Rs. 1,10,19,330/- as against the returned income of Rs. 1,08,36,380/- for the assessment year 2017-18 on the facts and circumstances of the case.
3. The learned CIT(A) was not justified in confirming the addition of Rs. 1,82,952/-as unexplained money, which was a transfer from the appellants own bank account and within the same bank, on the facts and circumstances of the case.
4. The learned CIT(A) was not justified in appreciating the bank account filed as part of the appeal, was sufficient to demonstrate that the transfer was made – between the bank accounts of the appellant, held in the same sank on the facts and circumstances of the case.
5. The learned CIT(A) failed to appreciate that the balances available in the bank account were sufficient to make the transfer, between the accounts, and no deposits have been made to fund the deposits, on the facts and circumstances oof the case.
6. The authorities below failed to appreciate that the provisions of section 69A of the Act, were not attracted in the instant case, since the money deposited into the bank account was received from the appellant himself, being a transfer from the same link, on the facts and circumstances of the case.
7. The authorities below failed to appreciate that the invocation of the provisions of section 115BBE of the Act, was bad in law, on the facts and circumstances of the case.
8. The learned CIT(A) was not justified in passing a cryptic order and ought to have obtained a remand report from the assessing officer, in respect of the bank accounts filed, on the facts and circumstances of the case.
9. The appellant denies the liability to pay interest under section 234A, 234B and 234C of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice the rate, period and on what quantum the interest has been levied are not in accordance with law and further are not discernible from the order and hence deserves to be cancelled on the facts and circumstances of the case.
10. The appellant craves to add, alter, amend, substitute, change and delete any of the grounds of appeal.
11. For the above and other grounds that may be urged at ‘tie time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered.
2. The crux of above grounds is with regard to addition of Rs.1,82,952/- as unexplained money u/s 69A of the Income-tax Act,1961 [‘the Act’ for short].
3. Facts of the issue are that during assessment proceedings, it was found by the AO that the assessee had a deposit of US $ 2700 into his bank account of Bank of America bearing account No.000144812786 on 17.10.2016. The assessee has not furnished source of the same. The addition was made by AO at Rs.1,82,952/-. The assessee carried the appeal to NFAC. Before the NFAC, the assessee filed submissions that said amount is nothing but interbank transfer from SB account No.000144808401 to Checking Account No.000144812786. However, the NFAC not agreeing with the contention of the assessee sustained the addition and confirmed the order of the AO. Against this, assessee is in appeal before us.
4. We have heard the rival submissions and perused the materials available on record. The assessee filed a copy of account No.000144808401, wherein an amount of US $ 2700 has been transferred on 27.10.2016, thereby said amount has been reduced from this account. This statement has been placed in assessee’s paper book at page 32. This amount was transferred to SB account No.000144812786 into Bank of America on the same day i.e. 27.10.2016. Now the contention of the ld. A.R. is that the amount transferred from the Account No.000144808401 was assessee’s own account with his wife Mrs. Savita Jayaram and it was opening balance as on 1.4.2016. To support this claim, assessee filed the account copy of 000144808401, which reads as follows:
4.1 As seen from the above, this account No.000144808401 is assessee’s joint account with Mrs. Savita Jayaram and the opening balance as on 1.4.2016 was at US $ 9255.96. When this amount of US $ 2700 has been transferred to account bearing No.000144812786, which is also assessee’s joint account with assessee’s wife Mrs. Savita Jayaram, it cannot be considered as an unexplained money u/s 69A of the Act. Being so, in our opinion, assessee explained the sources as the opening balance standing in the assessee’s own account No.000144808401 at US $ 9255.96. Accordingly, we find merit in the argument of ld. A.R. and the addition made u/s 69A of the Act is deleted.
5. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 13th June, 2023
