KUSUM LATA MITTAL,NEW DELHI vs. ITO, WARD- 40(4), NEW DELHI

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ITA 3054/DEL/2018Status: DisposedITAT Delhi10 January 2019AY 2009-106 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Section 68 of the Income Tax Act is applicable only when sums are found credited in the 'books of account' maintained by the assessee. A bank passbook/statement is not considered 'books of account' for this purpose. Therefore, the addition under Section 68 was not sustainable.

What were the facts?

Information was received regarding cash deposits of Rs. 8,64,000/- in the assessee's bank account. The Assessing Officer treated this as unexplained cash deposit under Section 68 and made an addition. The CIT(A) upheld this addition.

What were the issues?

Whether reassessment proceedings were validly initiated and whether cash deposits in a bank account can be treated as unexplained cash credits under Section 68 when the assessee does not maintain books of account.

Which sections of the Income-tax Act were involved?

Section 68,Section 148,Section 151,Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

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Before: SHRI H.S. SIDHU

For Appellant: CA & Sh. Satyajeet Goel, CA

This is an appeal by the Assessee against the order dated 28.2.2018 of the Ld. CIT(A)-14, New Delhi relevant to assessment year 2009-10 on the following grounds:-

1(i) That on the facts and circumstances of the case, the Ld. CIT(A) was not justified in upholding the assessment order for assuming jurisdiction u/s. 148 in absence of recording proper satisfaction and approval u/s. 151 of the Income Tax Act, 1961.

(ii) That the reasons recorded are vague and fails to satisfy the requisite conditions in terms of provisions of section 148 and as such the reassessment proceedings are illegal and without jurisdiction.

2(i) That on the facts and circumstances of the case, the Ld. CIT(A) was not justified in confirming addition of Rs. 8,64,000/- on the alleged ground of unexplained cash deposit u/s. 68 of the Income Tax Act, 1961.

(ii) That there being no case of any unexplained cash deposit, the impugned addition is without any basis and not taking into consideration the details submitted by the assessee.

3. That the orders of lower authorities are not justified on facts and the same are bad in law.

4. That the appellant craves leave to add, amend, alter or forgo any of all of the grounds as may be necessary and in the interest of justice.

2.

The brief facts of the case are that in this case information was received from the Investigation Wing, New Delhi that the assessee maintains a bank account with Canara Bank, Tri Nagar, Delhi which reflects cash deposits of RS. 8,64,000/- during the assessment year under consideration. After recording the reason for reopening of the assessment proceedings and obtaining approval from the competent authority, a notice u/s. 148 of the Income Tax Act, 1961 was issued and served upon the assessee. In response, the assessee has stated that earlier return for the AY 2009-10 may please be treated in response to notice u/s. 148 of the Act. The assessee also requested to supply the copy of reasons recorded for reopening of the case. Thereafter, notices u/s. 143(2) of the Act dated 22.8.2016 and u/s. 142(1) of the Act dated 20.10.2016 were issued to the assessee. In response, the A.R. for the assessee appeared and filed reply vide letter dated 3.11.2016. After considering the reply, the AO observed that the assessee has nothing to say in this regard and the cash credited in her bank account under consideration, is nothing but her own unaccounted money, for which she has no explanation, no evidentiary document to support her calim as made by her through the above letter. Therefore, in 2 accordance with the provision of Income Tax as laid under section 68 of the Income Tax Act, 1961, the amount of Rs. 8,64,000/- is being determined as her income from undisclosed sources. Therefore, the AO added the same to the total taxable income of the assessee and assessed the income of the assessee at Rs. 10,12,780/- vide order dated 23.4.2016. Against the order of the AO, the assessee appealed before the ld. CIT(A), who vide his impugned order dated 28.2.2018 has dismissed the appeal of the assessee. Aggrieved with the order of the Ld. CIT(A), assessee appealed before the Tribunal.

3.

During the hearing, Ld. counsel for the Assessee has not pressed the grounds No. 1(i) & (ii), hence, the same are dismissed as not pressed. As regards the ground no. 2(i) & (ii) are concerned, he submitted that this issue is squarely covered by the order of the Tribunal in the case of Vijay Kumar Prop. V.K. Medical Hall vs. ITO, Ward-2, Faridabad for AY 2011-12 dated 27.11.2018 passed in wherein the Tribunal has allowed the similar issue in favour of the assessee. Hence, he requested to follow the same ratio and this appeal of the assessee may be allowed.

4.

On the contrary, Ld. DR relied upon the orders of the authorities below.

5.

I have heard both the parties and perused the records, especially the impugned order as well as the order of the Tribunal in the case of Vijay Kumar Prop. V.K. Medical Hall vs. ITO, Ward-2, Faridabad for AY 2011-12 dated 27.11.2018 passed in ITA No. 2483/Del/2015. I find considerable cogency in the contention of the Assessee’s counsel that the issue in dispute is squarely covered by the aforesaid Tribunal’s order dated 27.11.2018 wherein, the Tribunal has held as under:-

“10. We have heard both the sides in light of records placed before us. 3

11.

Admittedly, assessee has not maintained any books of accounts, and it is also an undisputed fact that cash has been deposited in saving bank account of assessee, which he explains to be sale proceeds received on sale of agricultural plot. Ld. AO applied provisions of section 68 of the Act to cash found deposited in bank account, since assessee could not explain source to satisfaction to Ld. AO, and by holding that, assessee has not discharged identity, credibility and most importantly genuineness of transaction.

12.

It has been vehemently canvassed by Ld.AR that passbook/bank statement obtained from a bank do not construe “books of account” of assessee, as defined under section 2(12A) of the Act. It is also been proposed by Ld.AR that section 68 of the Act is not applicable, when assessee does not maintain any books of accounts. He, thus, vehemently argued that, provisions of section 68 is applicable, only when, no explanation and/or explanation offered by assessee is not satisfactory, regarding any amount found credited in “books of account” of assessee.

13.

Be that as it may, we have carefully perused provisions of section 68. This section starts with words, “where any sum is found credited in the books of an assessee maintained for any previous year,……”. Therefore, section 68 can be applied only where, there are sum found credited 4

in “books of account” maintained by assessee. No doubt passbook /bank statement, are maintained by a bank for its customers. Thus in our considered opinion, we agree with proposition advanced by Ld.AR of non applicability of section 68 in case of cash credit found in saving bank account.

14.

It is further observed that Ld. AO applied section 68 and made additions in hands of assessee, as unexplained cash credits, to such amount, which has been found deposited by assessee in his saving bank account. To our mind in present facts of case section 69 should have been initiated by Ld.AO. It is unfortunate that Assessing Officers blindly apply provisions, which can be fatal to the interest of Revenue. However as a Tribunal, we are not competent to make addition u/s 69A of the Act, by virtue of the decision of Hon’ble Allahabad High Court in case of Smt. Sarika Jain vs. CIT reported in 407 ITR 254. Hon’ble High Court observed as under.

“18. In view of the above, when the said income cannot be added u/s 68 of the Act and the Tribunal was not competent to make the said addition under section 69A of the Act, the entire order of the Tribunal stand vitiated in law.”

Respectfully following the above observation by Hon’ble Allahabad High Court, we allow additional ground raised by assessee, only because addition u/s 68 is not sustainable in present facts of case. Accordingly the additional ground raised by assessee stands allowed.”

5.1 Respectfully following the aforesaid precedent, we delete the addition in dispute and allow the ground no. 2(i) & (ii) raised by the assessee.

6.

In the result, appeal of the assessee stands partly allowed.

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