2011 (11) TMI 435 - HC - Income Tax

Deposits in saving bank accounts transfer of funds inter se between the family members - Revenue contemplating Income from undisclosed sources - Held that - The amount transferred is within the family and from joint accounts of the father, mother, grand mother, son and daughter-in-law. Amount was withdrawn from one account and deposited in the account of the assessee solely to facilitate assessee immigration to Canada which is confirmed through proof of the permanent resident produced. - Decided in favor of assessee.

Summary

Issues:
Appeal by revenue under Section 260A of the Income Tax Act against order dismissing appeal by Commissioner of Income Tax (Appeals)-II, Ludhiana for assessment year 2006-07. The substantial questions of law raised relate to the deletion of addition made under Section 69A of the Act.

Analysis:
1. The Assessing Officer concluded that the assessee deposited significant amounts in two bank accounts between April 2005 and February 2006 from undisclosed sources. The assessee claimed the deposits were from selling a house on behalf of others. The Assessing Officer treated a portion of the deposits as income from undisclosed sources under Section 69A of the Act.

2. The CIT(A) examined bank account entries and found withdrawals from joint accounts of the father and mother of the appellant. It was noted that the assessee's father transferred funds to show sufficient cash for going abroad. Additional evidence, including a certificate from HDFC bank, was considered. The CIT(A) allowed the appeal and deleted a substantial portion of the addition.

3. The Tribunal upheld the CIT(A)'s decision, stating that the deposits were explained as coming from the joint saving account of the father and mother. The Tribunal accepted the explanation that funds were withdrawn for a land purchase that did not materialize, leading to deposits in the son's accounts for immigration purposes.

4. The High Court found that the transfers were within the family and from joint accounts, with the purpose of facilitating the son's immigration to Canada. The court noted the lack of evidence contradicting the explanation provided by the family members. The court emphasized that the lower authorities had correctly assessed the situation and no legal question arose for determination.

In conclusion, the High Court dismissed the appeal, affirming the decisions of the lower authorities regarding the deletion of additions made under Section 69A of the Income Tax Act. The court found that the transfers between family members were adequately explained and served the purpose of facilitating the son's immigration, leading to no legal question for determination in this case.