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Income Tax Appellate Tribunal, Camp Bench at Jalandhar
Before: Shri N.K. Saini & Shri Ravish Sood
PER RAVISH SOOD, JM The present appeal filed by the assessee is directed against the order passed by the CIT(A)-2, Jalandhar, dated 08.09.2016, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income Tax Act, 1961 (for short ‘I.T. Act’), dated 22.12.2010. The assessee assailing the order of the CIT(A) has raised before us the following grounds of appeal:
“1. That the order passed by the worthy CIT(A), Jalandhar dated 08.09.2016 is against the law and facts of the case.
That the worthy CIT(A), Jalandhar without appreciating the fact that cash deposit in bank belong to the other person, name & addresses of the said person was also furnished during the course of assessment proceeding by ignoring this the worthy CIT(A), Jalandhar wrongly upheld the addition made by teh Ld. Assessing Officer.
That assessee request to add or amend any ground of appeal before the appeal is finally heard and disposed off.”
P a g e | 2 ITA No.105/Asr./2017 A.Y. 2008-09
Apart therefrom, the assessee has raised before us the following additional ground of appeal:
“That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O in making addition u/s 68 of the Act without considering the submissions of the assessee and without complying with the mandatory conditions u/s 68 as envisaged under the Income Tax Act, 1961.”
That as the aforementioned additional ground of appeal involves purely a question of law based on the facts available on record, therefore keeping in view the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC) the same is admitted.
We find that the present appeal before us involves a delay of 80 days. The assessee had filed an application along with an ‘affidavit’ therein explaining the reasons leading to the aforementioned delay. It is stated by the assessee that the order passed by the CIT(A), Jalandhar, was served on his aged mother on 03.10.2016. It is stated by the assessee that his mother being an old lady forgot to deliver the order to him, which resultantly had led to the delay in filing of the present appeal before us. The assessee has claimed that he learnt about the fact that his appeal had been disposed off by the CIT(A)-2, Jalandhar, only when a notice for recovery of demand for the year under consideration was received by him from the A.O. The assessee had stated that as the delay in filing of the appeal had arisen not on account of any lapses or laches on his part, but on account of an inadvertent omission on the part of his aged mother, therefore, the delay of 80 days involved in filing of the appeal may be condoned.
We have deliberated at length on the reasons leading to the delay in filing of the present appeal, and are persuaded to accept the claim of the assessee that the same had occurred on account of an inadvertent omission on the part of his mother to deliver the order to him. We find that the aforesaid claim of the assessee is duly supported by the affidavit, dated 17.02.2017 that has been filed by him along with the aforementioned
P a g e | 3 ITA No.105/Asr./2017 A.Y. 2008-09 2008-09 on 11.07.2008, declaring total income at Rs.1,05,520/-. The case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the I.T Act. In the course of the assessment proceedings the A.O observed that the assessee had during the period relevant to the year under consideration made a cash deposits of Rs.11,47,660/- in his saving bank account No. 0045-680574-001 maintained with Indusind bank, Jalandhar. In the absence of any explanation on the part of the assessee as regards the ‘nature’ and ‘source’ of the aforesaid cash deposit in the aforesaid bank account, the A.O made an addition of the peak amount of cash deposit of Rs.11,47,660/- under Sec.68 of the I.T. Act. On the basis of his aforesaid deliberations the A.O assessed the income of the assessee at Rs.12,53,180/-
Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) not being persuaded to subscribe to the contentions advanced by the assessee, upheld the addition of Rs.11,47,660/- made by the A.O and dismissed the appeal.
The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short ‘A.R’) for the assessee at the very outset of the hearing of the appeal assailed the validity of the addition made by the A.O under Sec.68 in the hands of the assessee. It was averred by the ld. A.R. that the A.O had wrongly assumed juri iction and assessed the cash deposits made in the bank account under Sec. 68 of I.T. Act. It was the claim of the ld. A.R that as bank account or bank passbook cannot be construed as the ‘books of account’ of the assessee, hence no addition could have validly been made in the hands of the assessee under Sec. 68 of the I.T Act. In support of his aforesaid contention the ld. A.R relied on the judgment of the Hon’ble High
P a g e | 4 ITA No.105/Asr./2017 A.Y. 2008-09 Further, it was submitted by the ld. A.R that the Hon’ble High Court of Punjab & Haryana in the case of Smt. Shanti Devi Vs. CIT (1988) 171 ITR 532 (P&H) has held that addition in respect of cash credit entry in the books of account of a partnership firm in which the assessee was a partner, cannot be made in the hands of the assessee. On the basis of his aforesaid contentions it was submitted by the ld. A.R that the addition of Rs.11,47,660/- made by the A.O under Sec. 68 of the I.T Act could not be sustained in the eyes of law and was liable to be vacated.
Per contra, the ld. Departmental Representative (for short ‘D.R’) relied on the orders of the lower authorities. The ld. D.R. rebutting the aforesaid contention so advanced by the counsel for the assessee submitted that a ‘bank passbook’ could safely be construed as the ‘books of accounts’ of the assessee.
We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We have given a thoughtful consideration to the issue before us and find substantial force in the contentions advanced by the ld. A.R. We are persuaded to subscribe to the contention advanced by the ld. A.R that as the bank account or bank passbook of an assessee cannot be held as the latters ‘books of account’, hence no addition in respect of a cash deposit made in the said account could be validly made under Sec.68 to the I.T. Act. Our aforesaid observations is duly fortified by the judgment of the Hon’ble 143 ITR 67 (Bom.). Apart therefrom, we find that a similar view had been arrived at by a coordinate bench of the Tribunal viz. ITAT, Mumbai in the case of Mehul V. Vyas Vs. ITO (2017) 764 ITD 296 (Mum), wherein it was observed as under:
“8. We have heard the ld. Authorized representatives of both the parties, perused the orders of the lower authorities as well as the material produced before us. We will first deal with the objection raised
P a g e | 5 ITA No.105/Asr./2017 A.Y. 2008-09 by the Id. A.R as regards the addition of Rs.10,53,000/- which was made by the A.O under Section 68 of the 'Act', in respect of the cash deposit in the bank account of the assessee. We find substantial force in the \contention of the Id. A.R that an addition under Section 68 can only be made where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee either offers no explanation about the nature and source as regards the same, or the explanation offered by him in the opinion of the assessing officer is not found to be satisfactory. That before adverting further, we herein reproduce the relevant extract of the aforesaid statutory provision, viz. Section 68, which reads as under:
"Cash Credits. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year……….." That a bare perusal of the aforesaid deeming section therein reveals that an addition under the said statutory provision can only be made where any sum is found credited in the books of an assessee maintained for any previous year. Thus, the very sine qua non for making of an addition under Section 68 presupposes a credit of the aforesaid amount in the 'books of an assessee' maintained for the previous year. We not being oblivious of the settled position of law that a statutory provision has to be strictly construed and interpreted as per its plain literal interpretation, and no word howsoever meaningful it may so appear can be allowed to be read into a statutory provision in the garb of giving effect to the underlying intent of the legislature, thus confining ourselves within the realm of our juri iction, therein construe the scope and gamut of the aforesaid statutory provision by according a plain meaning to the language used in Sec.
We are of the considered view that a credit in the 'bank account' of an assessee cannot be construed as a credit in the 'books of the assessee', for the very reason that the bank account cannot be held to be the 'books' of the assessee. Though it remains as a matter of fact that the 'bank account' of an assessee is the account of the assessee with the bank, or in other words the account of the assessee in the books of the bank, but the same in no way can be held to be the 'books' of the assessee. We have given a thoughtful consideration to the scope and gamut of the aforesaid statutory provision, viz. Sec. 68, and are of the considered view that an addition made in respect of a cash deposit in the 'bank account' of an assessee, in the absence of the same found credited in the 'books of the assessee' maintained for the previous year, cannot be brought to tax by invoking the provisions of Section 68. That our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand'N. Gandhi (1983) 141 ITR 67 (Bombay) wherein the Hon'ble High Court has held as under: - "As the Tribunal has pointed out, it is fairly well settled that when moneys are deposited in a bank, the relationship that is constituted between the banker and the customer is one of debtor and creditor and not of trustee and beneficiary. Applying this principle, the pass book supplied by the bank to its constituent is only a copy of the constituent's account in the books maintained by the bank. It is not as if the pass book is maintained by the bank as the agent of the constituent, nor can it be said that the pass book is maintained by the bank under the instructions of the constituent. In view of this, the Tribunal was, with respect, justified in holding that the pass book supplied by the bank to the assessee in the present case could not be regarded as a book of the assessee, that is, a book maintained by the assessee or under his instructions. In our view, the Tribunal was justified in the conclusions at which it arrived." We find that the aforesaid view of the Hon'ble juri ictional High Court had thereafter been followed by a 'SMC' of the ITAT Mumbai bench in the case of Smt. Manshi Mahendra Pitkar Vs. ITO 1(2), Thane (2016) 73 taxmann.com 68 (Mumbai Trib.) wherein it was held as under: - 'I have carefully considered the rival submissions. In the present case the addition has been I made by the income tax authorities by treating the cash deposits in the bank account as an unexplained cash credit within the meaning of section 68 of the Act. The legal point raised by the assessee is to the effect that the bank Pass book is not an account book maintained by the assessee so as to fall Within the ambit of section 68 of the Act. Under section 68 of the Act, it is only when an amount is found credited in the account books of the assessee for any previous year that the deeming provisions of section 68 of the Act……… circumstances mentioned therein. Notably, section 68 of the Atfrwo'Om conmTinccl^lay^mly in* a situation "Where any sum is found credited in the books of an assesse............The Hon'ble Bombay High Court in the case of Shri Bhaichand Gandhi (supra) has approved the proposition that a bank Pass Book maintained by the bank cannot be regarded as a book of the assessee for the purposes of section 68 of the Act. Factually speaking, in the present case, assessee is not maintaining any books of account and section 68 of the Act has been invoked by the Assessing Officer only on the basis of the bank Pass Book. The invoking of section 68 of the Act has to fail
P a g e | 6 ITA No.105/Asr./2017 A.Y. 2008-09 because as per the judgment of the Hon'ble Bombay High Court in the case of Shri Bhaichand N. Gandhi (supra), the bank Pass Book or bank statement cannot be construed to be a book maintained by the assessee for any previous year as understood for the purposes of section 68 of the Act. Therefore, on this account itself the impugned addition deserves to be deleted. I hold so." We further find that a similar view had also been arrived at in a 'third member' decision of the Tribunal in the case of Smt. Madhu Raitani Vs. ACIT (2011) 10 taxmann.com 206 (Gauhati) (TM), as well as by a coordinate bench of the Tribunal in the case of ITO, Barabanki Vs. Kamal Kumar Mishra (2013) 33 taxamann.com 610 (Lucknow Trib.). Thus in the backdrop of the aforesaid facts of the case read in light of the settled position of law, we are of the considered view that the addition made by the A.O in respect of the cash deposit of Rs.l0,53,000/-(supra) in the bank account of the assessee by invoking Section 68 has to fail for the very reason that as per the judgment of the Hon'ble Bombay High Court in the case of Shri Bhaichand N. Gandhi (supra), a bank pass book or bank statement cannot be considered to be a 'book' maintained by the assessee for any previous year, as understood for the purpose of Section 68 of the Act. Therefore, on this count itself the impugned addition Rs.10,53,000/- deserves to be deleted.” We are of the considered view that as the bank account of an assessee cannot be held to be the ‘books’ of an assessee maintained for any previous year, thus no addition under Sec. 68 of the I.T Act can be made in respect of a simpliciter deposit in the bank account. We thus respectfully following the judgment of the Hon’ble High Court of Bombay in the case of CIT Vs. Bhaichand H. Gandhi (1983) 143 ITR 67 (Bom.) and being in agreement with the view taken by the coordinate bench of the Tribunal i.e. ITAT, Mumbai in case of Mehul V. Vyas Vs. ITO (2017) 764 ITD 296 (Mum), thus are of the considered view that the addition of Rs.11,47,660/- made by the A.O under Sec.68 cannot be sustained, and as such is liable to be vacated. We thus set aside the order of the CIT(A) and delete the addition of Rs.11,47,660/- made by the A.O under Sec.68 of the Act.
The appeal of the assessee is allowed.
Order pronounced in the open court on 15.01.2019 (N.K. Saini) (Ravish Sood) Vice President Judicial Member Place: Jalandhar; Date: 15.01.2019 Ps. Rohit
P a g e | 7 ITA No.105/Asr./2017 A.Y. 2008-09 आदेशक"""त"ल"पअ"े"षत/Copy of the Order forwarded to : अपीलाथ"/ The Appellant
""यथ"/ The Respondent. 2. आयकरआयु"त(अपील) / The CIT(A)- 3. आयकरआयु"त/ CIT
"वभागीय""त"न"ध, आयकरअपील"यअ"धकरण/ DR,
ITAT, Camp Bench, Jalandhar गाड"फाईल / Guard file. 6. स"या"पत""त //// आदेशानुसार/ BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.