Father cannot be taxed for cash deposit in bank account of major son

Facts and Issues of the case

Appellant is an Advocate rendering consultancy to various clients and also having income from real estate transaction. The assessee has e-filed return of income declaring total income of Rs.2, 15, 94,190/-. As per the AIR information, an amount of Rs.28, 00,000/- was deposited in cash in the Bank account in Karnataka Bank. This bank account is standing in the name of the appellant’s son Mr. Virendra Mahadik and the appellant is also a joint signatory to the account. The AO verified the books of Shri Virendra Mahadik and found that he had deposited only an amount of Rs. 14, 27,000/- in the said bank account. The AO therefore, held that the balance amount of Rs.13,73,000/- is deposited by the assessee and has also asked the AR to show why it should not be treated as unexplained credit in the hands of the appellant. As there was no explanation from the assessee, the AO has added the same u/s. 68 of the Act.

Observations by the Court

There is hardly any dispute between the parties that the bank account herein belongs to assessee’s son Mr. Virendra Mahadik. It is further an undisputed fact that this bank account had seen cash deposits of Rs.28 lacs which have been assessed in assessee’s hands.

The assessee appears to have opened the foregoing bank account in the name of his erstwhile minor son Mr. Virendra Mahadik long back. He had also furnished his PAN number at the time of his minor son’s bank account opening. He could hardly have rebut the clinching fact that the assessee’s son; who was a minor at the time of account opening, has now become a major who is assessable in his independent capacity. We also wish to quote section 64(1A) of the Act wherein clubbing of income is provided in case of a ‘minor’ child only which is not the case before us. Faced with the situation, we conclude that both the learned lower authorities have erred in law and on facts in adding the impugned cash deposits of Rs.13.73 lacs in assessee’s hands. The same stands deleted.

Conclusion

A bank account of a major son was opened when he was minor by his father. The balance cash deposit in that account cannot be treated as deposit by father and hence cannot be taxed to the father.

Vijay-Vasantrao-Mahadik-Vs-Addl.-CIT-ITAT-Pune

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