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2017 (12) TMI 1057 - AT - Income TaxAssessment of income of HUF - proof of existence of HUF - Held that:- Section 171 of the Income-tax Act refers to the assessment in the status of HUF after partition wherein it is stated that a HUF, hitherto assessed as undivided shall be deemed for the purposes of this Act to continue to be a HUF unless there is a finding of partition is recorded . Similarly, with regard to partial/total partition, any claim made by the assessee requires to be verified by the AO upon giving due notice to the members of the family. Moreover, with regard to fresh claim of existence of HUF, without there being any assessment in the earlier years or proof of holding assets by a major HUF, the burden is heavy upon assessees to satisfy the AO that assets were held by the major HUF. In the instant case, there was no such evidence on record. It was only subsequent to the survey operations, assessees came out with a plea that they were maintaining sheeps and goats in the status of main HUF, which were passed on to the separated HUFs. In our considered opinion, assessees miserably failed to bring on record any proof of existence of HUF and it’s ancestral nucleus. Under the above circumstances, we are of the view that finding of the AO as well as ld. CIT(A) with regard to non-existence of HUF deserves acceptance. Accordingly, we hold that the income declared by the HUFs are assessable in the hands of individuals. Since AO had assessed the income of HUFs in the hands of the individuals, which in turn, were accepted by ld. CIT(A), we uphold the orders of AO on this count. However, the income of the HUF is clubbed and assessed in the individual hands, the assessment of HUF and the HUF income was assessed to tax protectively. Accordingly, the assessment made in the hands of HUF is quashed and the tax collected in the hands of HUF may be adjusted against the tax demands of individuals. In the result, both the appeals in the individual capacity as well as in the capacity of HUF are dismissed. Unexplained cash deposits - collective income of family - Held that:- It is noted from the records that the assessee has no independent sources of income. The deposits in the bank are the income of the family. We find that there is only two cash deposits and all other entries are transfers from the other accounts or credits for closure of deposits accounts. Since the transfers and credits are internal transfers, these deposits cannot be questioned as these are verifiable and established sources. AO could have verified from the bank itself, but chose not to do. With regard to cash deposits of ₹ 3,25,000/-, the husband of assessee has submitted that these are out of family fund. Since, we have adjudicated the income of the HUF belongs to the individual, there is sufficient funds available with the family to make such deposits. It is pertinent to note that assessee does not have any independent source of income, source is only from the family income. As there is enough funds available in the family to make such deposits, we accept the contention of the assessee and delete the addition made.
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