Father cannot be Taxed for Cash Deposit in Bank Account opened in the Name of Son once he attained Majority: ITAT

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Father cannot be Taxed for Cash Deposit in Bank Account opened in the Name of Son once he attained Majority: ITAT
Cash transaction is a matter if various dispute and litigation in the Income Tax Act 1961. Here is an interesting issue before Pune ITAT as under:

Vijay Vasantrao Mahadik (ITA No.603/PUN/2019)

Facts:

  1. 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 on 25.11.2014 declaring total income of Rs.2,15,94,190/-.
  1. As per the AIR information, an amount of Rs.28,00,000/- was deposited in cash in the Bank account No.6092500100477601 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.
  1. 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.
  1. The assessee claimed that the bank account in Karnataka Bank belongs to his son and who is a regular tax payer and the said bank account is also reflected on the balance sheet and return of income for AY 2014- 15.
  1. It was further submitted that the said account was open on 20.10.2010 when the son was a minor and he acted as a guardian for the son and the account. It was claimed that the son became major on 23.05.2011. Since his major son has source of income the same should have been assessed in his hands.

ITAT Pune held as below:

  1. The assesse’s son became a major and so the income is assessable in his independent capacity.
  1. As per section 64(1A) of the Income Tax Act, clubbing of income is provided in case of a minor child only.
  1. 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.

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