2012 (12) TMI 95 - AT - Income Tax

Bank accounts belong to individuals, not company. Tax assessments deleted. Fresh assessments ordered for fair hearing.

The Tribunal found that the bank accounts in question belonged to Mr. and Mrs. Bhushan, not NextWave India (P) Ltd. Consequently, the protective additions ... Addition as income from other sources for the credits appearing in the bank account – alleged that bank account not belong to the assessee – Held that:- during the course of assessment proceedings, certain information was gathered u/s 133(6)/131 which is available in the assessment record. - However, in the assessment order, we do not find any whisper about such information. - If the information is against the assessee, he should have been confronted with this information and if the information was in favour of the assessee, then to that extent, addition should not have been made. AO made the addition of entire receipt credited in the assessee’s bank account. The assessee has claimed that most of the receipt is either the loan taken by the assessee or repayment of the loan which was given by the assessee. He also stated that the parties from whom loan was taken or who refunded the loan to the assessee have affirmed those facts to the AO in writing. If it is so, then the addition in respect of that credit should not have been made - matter is restored back to AO for making assessment afresh Issues Involved:1. Addition of income from other sources for credits in the bank account.2. Jurisdiction and validity of CIT(A)'s enhancement on a protective basis.3. Validity of proceedings under Sections 147/148.4. Charging of interest under Section 234A/B/C.5. Disallowance of expenses on account of bank charges and interest.6. Non-allowance of credit for TDS.Detailed Analysis:1. Addition of Income from Other Sources for Credits in the Bank Account:The assessee, NextWave India (P) Ltd., contested the addition of Rs. 74,04,000/- as income from other sources for credits in a bank account not belonging to them, but to Mr. and Mrs. Bhushan. The Tribunal found that the bank accounts were indeed owned by Mr. and Mrs. Bhushan, as evidenced by multiple admissions and an MOU. Consequently, the protective additions made by the AO and CIT(A) were deleted, and the appeals by NextWave India (P) Ltd. were allowed.2. Jurisdiction and Validity of CIT(A)'s Enhancement on a Protective Basis:The CIT(A) enhanced the income of the assessee by considering credits in other bank accounts on a protective basis. The Tribunal held that since the bank accounts belonged to Mr. and Mrs. Bhushan and were assessable in the hands of NextWave India (AOP), the protective additions in the hands of NextWave India (P) Ltd. were not justified and were deleted.3. Validity of Proceedings under Sections 147/148:The assessee contended that the proceedings under Sections 147/148 were unwarranted and unsustainable. However, the Tribunal did not specifically address this issue in detail, focusing instead on the ownership of the bank accounts and the resultant tax implications.4. Charging of Interest under Section 234A/B/C:The assessee argued that no interest under Section 234A/B/C should have been charged and that the calculations were excessive and erroneous. This issue was not specifically addressed in the Tribunal's order, as the primary focus was on the ownership and taxability of the bank accounts.5. Disallowance of Expenses on Account of Bank Charges and Interest:In the case of NextWave India (AOP), the CIT(A) sustained the disallowance of expenses on account of bank charges and interest, stating that no systematic business activity was undertaken. The Tribunal did not specifically address this issue in detail, as the matter was set aside for fresh assessment.6. Non-Allowance of Credit for TDS:The CIT(A) did not allow credit for TDS amounting to Rs. 52,214/- on interest income, as the TDS was deducted in the name of NextWave India Pvt. Ltd. and not NextWave India (AOP). The Tribunal did not specifically address this issue in detail, as the matter was set aside for fresh assessment.Separate Judgments:The Tribunal delivered a common order for all the appeals, without separate judgments for each issue. The appeals by NextWave India (P) Ltd. were allowed, and the appeals by NextWave India (AOP) were set aside for fresh assessment.Conclusion:The Tribunal concluded that the bank accounts belonged to Mr. and Mrs. Bhushan and were assessable in the hands of NextWave India (AOP). The protective additions in the hands of NextWave India (P) Ltd. were deleted, and the matter was set aside for fresh assessment in the case of NextWave India (AOP), directing the AO to supply information gathered under Sections 133(6)/131 to the assessee, allow adequate opportunity of being heard, and make the assessment afresh in accordance with the law.