The Indore bench of the Income Tax Appellate Tribunal (ITAT), last week held that the addition under section 68 of the Income Tax Act, 1961 cannot be made against the assessee in respect of the deposit of business of wife in their joint bank account.
Facts of the case:
The assessee maintains a joint bank account with his wife to deposit the rental income of the assessee and his wife. During the relevant assessment year, the Assessing Officer treated the deposit of cash in Vijaya Bank Account, as undisclosed income under section 68 of the Income Tax Act, 1961.
Interpretation of law:
Objecting to the addition, the assessee contended that the said bank account is a joint account of the assessee with his wife and his wife runs a Coaching Institute and as a proof of business the assessee submitted copy of service tax registration. The assessee also submitted that his wife is a taxpayer having a source of income from Coaching Institute, rental income, and bank interest and regularly files an income tax return. Copy of ITR, Balance sheet, and profit and loss account was also enclosed.
Allowing the above contentions, the Tribunal that the rental income of the assessee and his wife is deposited in this savings account and his wife is at liberty to withdraw or deposit from her bank as per her requirement.
“On consideration of these facts and circumstances, I, am of the view, that it is wrong to assume that the assessee is the sole owner of funds in the said bank account. The evidence as narrated above clearly establishes that Rs.1,00,000/- related to her wife but the revenue authorities failed to consider the same. Therefore, I direct the AO to delete the addition of Rs.1,00,000/-,” the Tribunal observed.