Q & A: HUF's bank a/c running in karta's name
P.D.RUNGTA
Query: HUF's bank a/c running in karta's name
The Bank a/c of a HUF has been erroneously running in the Karta's Individual
name. Further the PAN on the bank records also is that of the karta.
However, the HUF has diligently recorded and shown this bank account in its balance
sheet.
In a particular year, there were cash transactions exceeding INR 10 lacs in this account. The bank has submitted this detail in its Annual Information return as a result of which the karta's personal file has been selected for scrutiny. The assessing officer is asking for an explanation as to why these transactions have not been reported in the financial statements of the karta.
Under the difficult circumstances which the assessee finds himself in, what would be the most prudent manner to go forward in explaining this matter to the assessing officer?
Suggestions from esteemed members are eagerly awaited on the issue..
Regards
CA.Dinesh K. Agarwal
Agarwal Anil Kr & Co.
Chartered Accountants
33/1 Netaji Subhash Road, 332 Marshall House, Kolkata-700001
Landphone : +91-33-22102227 Fax :
+91-33-22107539
Cellphone : +91-9748780534
Reply:1
In the Investments, PAN of Individal instead of HUF might have been mentioned. That is why, the file of Individual instead of HUF has been selected for scrutiny. However, the fact may be disclosed to the AO and the sources of Investments and origin of Investment may be traced from HUF Bank Account while offering expalantion of Investments.
Jai Narayan Gupta
Reply:2
explain the facts to the AO showing relevant records. There have been similar instances of error by banks and upon due evidence of the same, considered factually by the AO
Reply:3
after all,there has to be some source of cash receipt/deposit into the said
bank a/c.similarly for withdrawals.
the client must have documentary evidence to substantiate these sources like cash
memo for cash sale proceed or withdrawal from. some other account.there could
be withdrawal for cash purchases subject to sec.40A (3).some members of huf could have advanced/withdrawn cash with
huf as these transactions dont attract sec.269SS OR 269T.
AFTER FINDING CONVINCING DOCUMENTARY EVIDENCES LIKE THESE WHICH SHOULD FURTHER BE
CROSS VERIFIABLE WITH COUNTER PARTIES CAN BAIL OUT . and confirm that the transactions
pertain to huf and not to karta.
vinod kr.goyal
Reply:4
as far as hindu law is concerned, the nexus of proving any asset or
liability belonging to the huf is fully based on the nucleus / source from
which the asset has been or created or the liability has been used. In those
days there were no mention of the term HUF even in case of investments held by
the huf. But in modern time, even PAN cards are issued specifying the
name followed by HUF, hence it will be advisable to get the pan data changed
and also to communicate the bank and to specify the correct pan number of the
huf.
even in the given situation, since the matter is of technical nature, and once
the huf can prove that all the transactions have been recorded in the books of
huf, the same can be detailed before the assessing authority.
however it will be proper now to get the name and pan modified in the pan data
as well as bank records.
Reply:5
dear sir,
the assessee should given an affidavit mentioning the fact tht said account is
disclosed in huf account.and the assessee should enclose balance sheet of huf
with annexures showing that this account is properly reflected in huf financial
statements.the ao here will confirm from the ao of huf that this account has
been reflected in the huf or not.the report of ao of huf will
become concluding evidence that there is no suppression of facts and to me, the
issue should be settled.
Regards
CA ARUN PATODIA, FCA, DISA
B A S AND COMPANY
CHARTERED ACCOUNTANTS
SURYADEEP, 2ND FLOOR
1/1E/6,RANI HARSHA MUKHI ROAD,
KOLKATA-700 002
PH:033 25587917
WEB: www.basco.in
Email...@basco.in
Reply:6
Dear mr Dinesh.
The assessee should produce all the details of the bank account of his H.U F.
including the evidence for source of the deposit .He should also furnish an
affidavit to the A.O.
mentioning that the said account belonged to H.U.F. and it does not contain any
transaction related to individual.He should also furnish a letter duly signed
by all the members
of the HUF that the said bank account was being opened and operated by Karta in
his individual capacity on behalf of HUF.If all these details are properly furnished
before the assessee ,even if any addition is made the same shall be deleted in
appeal.
Paras kochar advocate
10.princep street
kolkata
9831024563
www.incometaxparaskochar.com
Best Regards,
Pramod Dayal Rungta
M.Com.,LL.B.,AICWA.,DISA(ICAI).,FCA
Member EIRC ICAI (2010-12)
P.D.Rungta & Co.
Chartered Accountants
Board : +91 33 3028 2500 / 1
Direct Line : +91 33 3028 2502/3
Cell : +91 98310 07253
email: pdru...@gmail.com
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Kolkata-700 001,West Bengal, India
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Raysahab Singh
Dear Dineshji
If the sourse of the fund deposited into bank is explaind and properly shown and disclosed in huf return then ITO is bound to assess the same in the disclosed returrn otherwise double taxation will arrise. Hear karta can open bank account in his own name but PAN no of huf should be mentioned there. This is your apperent mistake and for this you must write a rectification letter to concerning bank authority and make c/c to the ITO for considering the same. Dineshj, for your kind information that if a persion invested, purchaseed, or deposited fund in any name even BENAMI and disclosd in his retun, then as per income tax act it is considerd as the investment of the said person. Only ITO can ask explanation relating the source of fund. If he found that source is also disclosed in the return and cashflow, fundflow is available then ITO is bound to consider it.
Ray Sahab Singh FCA
c/o RAY SINGH & CO
CHARTERED ACCONTANTS
22. RADHA NATH MULLICK LANE KOL-700012
PH-9007884342
Fri, 12/11/10, P.D.RUNGTA <pdru...@gmail.com> wrote:
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rrpr...@gmail.com
Respected Sir,