Are you careful about money deposited into your saving account ?  Recently Chennai Tax Tribunal passed important decision, wherein the tax tribunal held that any unexplained credits in the saving account can be treated as income of the assessee.

What happened was, the Assessing Officer found huge amount in saving bank account of assessees and accordingly, he made additions to their income , the assessee explained that they had collected money from friends and neighbours as advance for providing them different services of skilled workers for construction /renovation of building and that money was kept in saving bank account just to satisfy demand of their bankers.

However, the assessee, failed to give basic details even in respect of big amounts stated to have been received from whom and for what work they had promised to carry out .

Facts of the Case : 

In tax assessment , the Assessing Officer found that each of the assessees had deposited an amount of Rs. 50.75 lakh each in their respective bank accounts, and they had not produced any evidence in support of their explanation. Therefore, the Assessing Officer made additions of Rs. 50.75 lakh each in the hands of the two assessees. On appeal, the Commissioner (Appeals) upheld the additions.

Further, on appeal the tax tribunal held that : 

The assessees have offered explanations that they are having good relationship with lot of people in constructing buildings or renovating the existing buildings and in such a scenario all those people are entrusting moneys to the assessees so that the assessees could provide services of skilled workers to those friends and neighbours for constructing new buildings and renovating the existing buildings.

These explanations are almost like wild goose chase without any centre point of conviction. The assessees go on explaining that they are collecting moneys from so many people for different purposes and they have kept the money in their savings bank accounts just to satisfy the demand of their bankers.

They should have given certain basic details at least in respect of the big amounts stated to have been received from others to the satisfaction of the Assessing Officers.

They should have stated that this and that amounts were received from “a” and “b” for such and such work and they have promised to carry out such and such work to them. Except going on explaining the same line of defense, the assessees could not produce any piece of evidence before the lower authorities.

All these aspects have been fully explained by the assessing authorities as well as by the Commissioner (Appeals). Accordingly, there was no reason to interfere in the orders passed by those authorities.

To Conclude – You have to be very careful about amount  getting credited to your saving accounts , and should look to document and have back document for these credits, to be produced to tax office, if required. 

Download the full order from here