AJAY KUMAR MITTAL,J. - (1.) THIS appeal has been filed by the Revenue under S. 260A of the IT Act, 1961 (in short "the Act") against the order dt. 19th Oct., 2010 passed by the Income-tax Appellate Tribunal, Chandigarh Bench "B", Chandigarh (hereinafter referred to as "the Tribunal") in ITA No. 1180/Chd/2009, for the asst. yr. 2006-07 claiming the following substantial questions of law : "(i) Whether on the facts and circumstances of the case, the Hon'ble Tribunal was right in law in deleting the addition of Rs. 37,25,491 without co-relating the deposits and withdrawals made in the bank account with the sale/purchases transactions of the HUF ? (ii) Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal was right in law on facts in accepting the contention of the assessee that the transactions in the bank account of the assessee with Punjab State Co-operative Bank pertained to the property business of the HUF and not the assessee an individual although the copy of the bank account showed that it was opened in individual capacity showing income by way of 'Service' and not business ?"
(2.) PUT shortly, the facts of the case are that the assessee being an employee of the Haryana Government derived salary and filed his return on 19th July, 2006 for the asst. yr. 2006-07 declaring an income of Rs. 84,518. During the course of assessment proceedings, the statement of the assessee was recorded in which he is stated to have owned a saving bank account with State Bank of India, Main Secretariat Branch, Chandigarh. The AO had received information that during the year in question, the assessee had made deposits of Rs. 20.40 lacs in the Punjab State Co-operative Bank Ltd. The assessee was asked to explain the source of deposit of total of Rs. 37,27,491 in the said bank account. It was pleaded by the assessee that he had been making purchase and sale of property in his HUF capacity and filed certain copies of the sale and purchase agreements. It was noticed that the agreements for sale of properties were made by the assessee in his individual name and the bank account was also maintained in the individual capacity, therefore, all the deposits were the income of the assessee as an individual. Accordingly, the AO made an addition of Rs. 37,25,491 in the returned income of the assessee. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income-tax (Appeal) [in short the "CIT(A)"]. The CIT(A) vide order dt. 1st Oct., 2009 deleted the said addition of Rs. 37,25,491 holding that the deposits made by the assessee had been separately assessed to tax and relates to HUF of the assessee and the same had been duly shown in the return filed in the status of HUF. Against the order of the CIT(A), the Revenue approached the Tribunal by filing an appeal. The Tribunal vide order dt. 19th Oct., 2010 upheld the order of the CIT(A) and dismissed the appeal. Hence, the present appeal by the Revenue. We have heard learned counsel for the appellant.
(3.) THE point for determination in this case is whether the CIT(A) and the Tribunal were justified in holding that the income declared by the assessee was income of HUF and not his individual income. The CIT(A) while reversing the findings of the AO on appreciation of evidence came to the conclusion that the deposits made in cash in Punjab State Co-operative Bank related to the HUF of the assessee. The CIT(A) while recording a finding that it was HUF and not individual income had concluded as under : "On careful consideration of the above facts and arguments, I find force in the arguments of the counsel for the appellant. The AO did not accept the contention of the appellant that the transactions in the bank account with Punjab State Co-op. Bank, sector 34A, Chandigarh relate to the HUF of the appellant as the agreements are in the individual name of the appellant and the amounts are not relatable to the creditors in the bank account, several amounts are credited to the bank account on a single day the bank account is not maintained in HUF capacity. There is force in the arguments of the counsel that not mentioning of the status does not alter the character of the property especially the source of funds and that the status of HUF is governed by the investments which were made out of HUF funds and the HUF can purchase property in the name of any member of family. The counsel produced books of account of the HUF and also copy of the return filed with ITO, Ward-5, Chandigarh in which the income from sale/purchase of properties has been shown. The counsel also filed narration of all the entries in the bank account. The AO has not brought any material on record to rebut this contention of the appellant and has not found any fault with the books of account. In view of the arguments of the counsel and the evidence produced by him, it is held that the transactions in the bank account with Punjab State Co-op. Bank, Sector 34A, Chandigarh relate to the HUF of the appellant, the income from which has been declared in the return of the HUF. The addition of Rs. 37,25,491 made by the AO is ordered to be deleted." ;