SHRI. PALIMAR GOPAL SHETTY,MUMBAI vs. ITO 26 (2)(4), MUMBAI

Per Shamim Yahya, Accountant Member:

“For the assessment year 2011-12 under consideration, details of ITS information available from the ITD systems reflected that the assessee has made transaction during the year under consideration. The details are as under: Sr. Information Value (Rs.) No description . 1 Cash deposited in 20,90,000/- saving bank a/c in Karnataka Bank 2 Time Deposit with 1,06,81,872/ Karnataka Bank -

2. However, it is seen from the data available on the ITD System, no returns of income are filed by the assessee in the assessment year.

“4. The assessee is an individual. During the year the assessee has derived income from Salary and other source. Addition on account of Cash Deposit of Rs 9,69,565/- ”5. As per the ITS information available from ITD systems reflected that the assessee has made cash deposit in a saving bank account during the assessment year 2011-12 under consideration. The details are asunder: Sr No. Information description Value (Rs.) 1 Cash deposit in a saving 20,90,000/- bank a/c Total

ii) Approx Rs 4,00,000 to 5,00,000 given over a period of time by we family members as financial support. iii) As he was short of money for the property, he had sold some of the silver utensils for which he had received Rs 5,69,565/- iv) During the F.Y. 2009-10, jewellery belonging to my mother was sold for which an approx Rs 4,00,000/- v) Apart from this, the money deposited in bank account which he is not able to recollect at this moment may also be taken into consideration. ”

7. The submissions filed by the representative of the assessee have been carefully considered. However, the same are not found to be tenable. During the assessment proceedings, the representative of the assessee stated that the amount of Rs.9,69,565/- has received after sale of utensils and Gold ornaments. However, the representative of the assessee not produced the details of sale and purchase bill of utensils and gold ornaments. Hence, the amount of Rs.9,69,565/- is disallowed for want of proof of sale of jewellery.” From the above, it is amply evident that the assessment was reopened for the information of cash deposit of Rs 20,90,000 and time deposit of Rs 1,06,81,872/-. However, in the assessment order the assessing officer dealt with only the cash deposit of Rs 20,90,000/- in the bank. The assessing officer accepted the reasons given by the assessee for the entire sum except for a sum of Rs 9,69,565/- which was claimed to have been sourced from the sale of silver utensils and jewellery by the mother of the assessee, on the ground that the vouchers were not produced.

3. Upon assessee’s appeal learned CIT (A) upheld the order of assessing officer. He has, inter alia, referred to Hon’ble Bombay High Court decision in the case of Arun Kumar Muchala 399 ITR 256. Aggrieved by the said order, the assessee has filed appeal before us.

6. Upon careful consideration we note that the revenue authorities are convinced about the source of deposit of about a sum of Rs. 11,00,000/- in saving account and Rs 1,06,81,872/- in time deposit account by the assessee without much enquiry, but they are disbelieving the deposit of Rs 9,69,565/-. In our considered opinion, when it can be accepted that the assessee is capable of depositing so much money in the bank without any enquiry, the adverse inference for a small amount is strange. The learned CIT(A)’s reliance upon Hon’ble Bombay High Court decision in the case of Arun Kumar Muchala (supra), is misplaced. In the said decision, the assessee had taken cash deposits and unsecured loan and in that context the Hon’ble Bombay High Court held that when the assessee is doing business he cannot plead that assessee has not maintained books of accounts, and section 68 would not be applicable. In the said case, Hon’ble High Court held that it was the duty of the assessee to maintain books of accounts if it was doing any business.

“Section 68 of the said Act states as follows :

"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 Income- tax Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year."

In the case of Baladin Ram v. CIT [1969] 71 ITR 427, it has been held by the Supreme Court that it is now well settled that the only possible way in which income from an undisclosed source can be assessed or reassessed is to make the assessment on the basis that the previous year for such an income would be the ordinary financial year. Even under the provisions embodied in section 68 of the said Act, it is only when any amount is found credited in the books of the amount so credited may be charged to tax as the income of that previous year, if the assessee offers no explanation or the explanation offered by him is not satisfactory.

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, not 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.”