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2018 (11) TMI 126 - AT - Income TaxAddition u/s. 69A on account of deposit in HSBC Bank, Geneva - income added in the hand of beneficiary of trust - Discretionary trust - Distribution of money by trust - Held that:- In the present case admittedly both the appellants namely Deepak B. Shah and Kunal N. Shah are discretionary beneficiaries of the “Balsun trust” created by Mr. Dipendu Bapalal Shah and the two appellants have not made any contribution nor done any transaction with said trust at all. In our opinion in the case of discretionary trust, the income of the trust could not only be added in the hand of beneficiary but the trustees are the representative assessee who are liable to be taxed for the income of the trust. If the discretionary trust has made some distribution of income during the year in favour of the discretionary beneficiaries only then the distributed income is taxable in the hands of the beneficiaries but nothing of the sort has happened nor two appellants have received any money as distribution of income by the discretionary trust. So long as the money is not distributed by the discretionary trust, the same cannot taxed be in the hands of the beneficiaries. Similarly, the present case for us, the deposits held in HSBC, Geneva account cannot be taxed in the hand of beneficiaries/ appellants at all. Additions cannot be made and sustained in the hands of the appellants as the Balsun trust is a discretionary trust created by the Mr. Dipendu Bapalal Shah and said trust has neither made any distribution of income nor did the two beneficiaries/appellants receive any money by way of distribution. While the department has failed to bring any conclusive evidence to establish nexus between these two appellants and bank account in HSBC, Geneva and more so when the Mr. Dipendu Bapalal Shah has owned the balance in the HSBC, Geneva bank account, we are not in agreement with the conclusions of the CIT(A) in sustaining the additions equal to fifty percent of the peak balance in the hands of both the appellants. CIT(A) is wrong in assuming that the said money may belongs these two appellants and such conclusion is against the facts on record and based on surmises and presumptions - direct the AO to delete the additions made u/s 69A in respect of HSBC Bank account for assessment years 2006-07 and 2007-08 in the case of both the appellants before us. - decided in favour of assessee.
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