TaxTMI 
TaxTMI 
2017 (12) TMI 1057
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....eerji in his individual capacity and ITA Nos. 831 & 832/Hyd/2017 in the capacity of Kartha (HUF) for AYs. 2006-07 & 2007-08. 2. Against the orders of CIT(A), all these appeals filed raising similar grounds of appeal i.e. whether the income offered by the assessee on behalf of HUF is assessable in the hands of individual or not. As issues in all these appeals are materially identical, the same were clubbed and heard together and, therefore, we find it convenient to dispose of these appeals by way of a common order. 3. The other three appeals filed by Smt. T. Jayashree, Smt. Swaroopa Rani and T. Kalpana Rani are directed against orders of CIT(A) - 10, Hyderabad. These appeals are against 143(3) assessments and since issues are common, these appeals were heard together and a common order is passed for the sake of convenience. 4. First we deal with the issue of HUF and to decide the issue, the facts are culled out from T. Mahaveerji for the AY 2007-08 in the case of individual as well as HUF. Briefly the facts of the case are, a survey u/s 133A of the Act was conducted in the case of M/s Mahaveerji and Brothers, commission agents in sheep and goats on 17/01/2007 and certain do....
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....come of members was always and continuously in successions assessed in the hands of individual member only. 5) The existence of HUF is not real, baseless and is artificially created after the survey and after the declaration is made only to lessen the income tax liability and against the provisions of LT. Act. 6) There is no verifiable and independent evidence. 7) There is no verifiable and independent evidence in the form of maintenance of separate books of accounts for business of assesseeHUF and bank account of business of assessee-HUF in support of business carried on in the status of HUF. 8) In the statement recorded during the course of survey uj s 133A on 17 -01-2007 it was stated that business was carried on in individual status and also as partner of the firm, Mj s Mahaveerji & Brothers. There was no mention of business carried on in HUF status. 9) The assets admitted in HU~ balance sheet as at 31-03-2006 were stated as owned by assessee-individual. 10) There is no evidence of existence of initial capital belonging to HUF which was invested in business and in acquisition of other movable & immovable assets. 11)....
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.... HUF in existence by observing as under: "As could be seen from the information brought on record, the AO has summarily rejected the claim of the appellant that HUF status was alive, with various activities undertaken by the appellant in HUF status, apart from carrying on the similar activities in individual capacities. The appellant on the other hand enumerated the details, for substantiating the existence of HUF, for past many years. But the fact remains that no returns were filed in the status of HUF, before 31.03.2008, with the returns of income for AY 2006*07, filed only on 31.03.2008, and during the course of survey taken place in this group on 1701.2007, there was no reference made to the HUF status. Thus, as could be seen from the facts of the case, there is no evidence to show that there was a HUF status existing for the appellant and all the activities are held to be taken place in individual capacity. No information was brought on the record that the appellant have the HUF status existence, during the year under reference, with special reference to the assets held and income generated in the hands of HUF of the appellant. Under the circumstances, it is held that....
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..... He also carried on business in the capacity of HUF. It is humbly submitted that the Assessing Officer during survey did not question about the existence of HUF or the activities carried on in the status of HUF. In the circumstances, it is not correct for the Assessing Officer to mention that the information with regard to HUF was not mentioned in the statement. Further, he submitted that it is incorrect to state that the assets admitted in the HUF balance sheet as on 31-03-2007 were stated as owned by the assessee in his individual capacity. The assets are owned by the assessee both in his individual capacity and also as Kartha of the HUF. In such circumstances, it is incorrect to state that the assets are held by the individual alone. Ld. AR submitted that the Assessing Officer mentioned that there is no evidence of the existence of initial capital belonging to the HUF. It is humbly submitted that the returns of income were filed first time for the assessment year 2005-06 and on onwards. In this regard, the ld. AR submitted that there was a partition of the business of the HUF on 15.2.1991 and as all the properties partitioned were movables, no registered document was executed. ....
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....O but filed the same only before the ld. CIT(A). 9.1 HUF is a creature of law and it cannot be created by the act of parties. There should be ancestral nucleus, which should either be thrown in to a common hotchpot or it should be passed on the next generation, in whose hands it becomes HUF property/income; in which event, it can be claimed that such properties and income generated therefrom would belong to HUF. No such material could be placed before us to accept the plea of the assessee; it is merely based on the strength of an unregistered partition deed. In fact, HUF, if any, has never maintained a separate bank account, filed returns of income or at least maintained separate books of account prior to making a claim for the first time before the revenue authorities; as has been stated earlier, even the so far partition deed was placed on record for the first time before the ld. CIT(A). Such being the case, the claim of the assessee that there was a HUF in existence and the properties/income derived by the HUF has been passed on to the next generation cannot be accepted. 9.2 Section 171 of the Income-tax Act refers to the assessment in the status of HUF after partition whe....
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....AO is, therefore, directed accordingly. ITA No. 1424/H/16 in the case T. Jayashree for AY 2007-08 ITA No. 1425/H/16 in the case of T. Swaroopa for AY 2007-08 ITA No. 830/Hyd/2017 in the case of T. Kalpana Rani for AY 2007-08 14. In all the said appeals, common grounds were raised which are as follows, except the quantum of addition: "1. The order of the learned Commissioner of Income-Tax (Appeals) is erroneous both on facts and in law. 2. The learned Commissioner of Income-Tax (Appeals) erred in confirming the addition made by the Assessing Officer representing the deposits made into the bank account, as the income of the assessee without appreciating the explanations submitted. 3. The learned Commissioner of Income-Tax (Appeals) erred in confirming levy of interest u/s 234A and 234B of the I.T. Act." 15. Ground No. 1 is general in nature and ground No. 3 is regarding charging of interest u/s 234A, 234B & 234C, which is consequential in nature. 16. As regards ground No. 2, the facts, as taken from Smt. T. Jayashree, are that the assessee filed return of income for AY 2007- 08 on 31/03/2008 admitting total income of Rs. ....
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....h balance on hand, loan taken on fixed deposit, pre-closure & maturity proceeds of fixed deposits, amounts received from asessee's HUF & stock broker. 07. As the assessee has not complied with the letter & notice u/ s.142( 1) issued to explain the sources for credits of Rs. 1 0,09,413/ - and Rs. 1, 53,160/ - appearing in assessee's bank accounts with SBI, Puranapul and Andhra Bank, Karwan with necessary evidence, it is deemed that the assessee has no explanation to offer in support of assessee's claim of sources for deposits in above mentioned bank accounts. Therefore, the total deposits of Rs. 11, 62,573/ - appearing in two bank accounts mentioned above are treated as unexplained credits appearing in these bank accounts." 16.4 Before the CIT(A), the assessee filed written submissions, wherein the assessee reiterated the stand taken before the Assessing Officer suggesting that the sources were explained by the HUF of Shri T.Sai Baba and return of income was filed by the HUF. It was also mentioned that the deposits made are through banking channels and they do not represent cash deposits. The written submissions were forwarded to the Assessing Officer for fac....
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....ugh, the assessee claimed that the Transactions were explained by HUF of Shri T.Sai Saba, no such details/ evidences/explanations were given. Though, the assessee admitted that the assessment year 2007-08 no cash flow statement was filed by the assessee, cash flow statement of the HUF of Sri Sai Baba were also not filed. Though the returns were filed by the HUF no details were given with regard to the sources for deposits in bank accounts. Even though, the Karta of HUF i.e., Shri T.Sai Baba has bank account in his name as to why, these deposits were not made in his bank account has not been explained. Since, the assessee did not explain the sources for deposits made in the bank accounts with State Bank of Hyderabad and Andhra Bank, the Assessing Officer has added these amounts as unexplained credits in bank accounts as the existence of HUF has not been established, the question of treating them as belonging to the HUF does not arise. In view of the above, the addition made by the Assessing Officer is confirmed and these two grounds of appeal are dismissed." 17. Aggrieved by the order of CIT(A), the assessee is in appeal before us. 18. Considered the rival submissions and peru....