Delhi High Court upholds Tribunal decision on foreign bank deposit addition to income

The High Court of Delhi dismissed the revenue's appeal challenging the addition of a deposit in a foreign bank account to the assessee's income under section 68 of the Income Tax Act. The Court held that the revenue lacked substantial material to support adding the amount to the income, especially considering the report from American authorities confirming the transaction's legitimacy. The Court found no substantial question of law due to the established genuineness of the transaction and upheld the Tribunal's decision in favor of the assessee.

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Issues involved: Interpretation of income tax provisions regarding addition of unexplained income u/s 68 of the Income Tax Act, 1961 based on a deposit in a foreign bank account.

In the judgment, the High Court of Delhi considered an appeal by the revenue challenging an order by the Tribunal regarding the addition of a deposit of US $1,00,000 in the assessee's Wells Fargo Bank account to her income for the assessment year 1997-98. The Foreign Tax Division of the CBDT conducted an enquiry and obtained a report from American authorities confirming the source of the deposit. Despite this report, the assessing officer added an equivalent amount in Indian rupees to the assessee's income. The Commissioner (Appeals)3, after considering the report, concluded that the transaction was genuine. The revenue appealed to the Tribunal, which upheld the Commissioner's decision. The High Court, in an appeal u/s 260A of the Income Tax Act, held that the revenue cannot add the amount to the assessee's income without substantial material, especially considering the inter-Governmental exchange resulting in a report confirming the transaction's legitimacy. The Court found no substantial question of law due to the concurrent finding of fact regarding the genuineness of the transaction, and thus dismissed the appeal.

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