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Income Tax Appellate Tribunal, BANGALORE BENCH-SMC “ A ”
Before: SHRI VIJAY PAL RAO
Per Shri Vijay Pal Rao, J.M. : This appeal by the assessee is directed against the order dt.28.10.2016 of Commissioner of Income Tax (Appeals) for the Assessment Year 2012-13.
The assessee has raised the following grounds :
3. The only issue raises in this appeal by the assessee is whether in the facts and circumstances of the case the CIT (Appeals) is erred in confirming the addition made by the Assessing Officer under Section 68 of the Income Tax Act, 1961 (in short 'the Act') on account of cash deposited in the bank account. The Assessing Officer noticed that the bank account of the assessee with SBI show a cash deposit of Rs.12 lakhs which has not been declared by the assessee. The assessee explained before the Assessing Officer that the cash belongs to her husband Sri Surendra Kumar out of his explained source and further submitted that her husband has received this amount from his father Sri Govindappa.
The Assessing Officer did not accept the explanation of the assessee and made an addition under Section 68 of the Act. The assessee challenged the action of of Rs.12 lakhs to Mr. Surendra Kumar has been reflected in the books of accounts of Mr. Govindappa. The assessee filed the details of the advance given by Mr. Govindappa. The said evidence was forwarded by the CIT (Appeals) to Assessing Officer for report in the remand report, the Assessing Officer has again submitted that the evidence and explanation is not sufficient to prove that Mr. Govindappa has lent Rs.12 lakhs to Mr. Surendra Kumar. The Assessing Officer doubted the veracity of the evidence and stated that it is fabricated. The CIT (Appeals) accordingly confirmed the addition made by the Assessing Officer.
Before the Tribunal, the learned Authorised Representative of the assessee has submitted that the assessee has duly shown the source of this cash deposit as the said amount was reflected in the balance sheet of Mr. Govindappa as on 31.3.2008. Thus when the creditor has not disputed this amount then doubting the sufficiency of proof without brining any contrary facts or material on record is not justified. The learned Authorised Representative has then relied upon the decision of the co-ordinate bench of this Tribunal dt.8.9.2016 in the case of Mrs. Farha Kausar Vs. ITO in ITA can be invoked only in the case of cash credit in the books of accounts. The bank passbook cannot be treated as books of accounts and therefore no addition can be made under Section 68 of the Act when there is no credit in the books of accounts. He has also relied upon the decision of Delhi Bench of Tribunal dt8.2.2013 in the case of Vijendra Kumar Jain & Sons (HUF) Vs. ITO in ITA No.1315/Del/2011. Thus the learned Authorised Representative has submitted that the provisions of Section 68 cannot be invoked in the hands of the assessee.
On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below and submitted that the Assessing Officer as well as CIT (Appeals) has duly considered the explanation as well as evidence filed by the assessee and found hat the explanation as well as proof produced by the assessee are not sufficient to show that the father-in-law as assessee has advanced this amount to the husband of the assessee and in turn was deposited in the bank account of the assessee. He has relied upon the decision of Hon'ble High Court of Allahabad in the case of Smt. Renu Aggarwal Vs. ITO 358 ITR 483. In rejoinder the learned Authorised Representative has issue of jurisdiction of the Tribunal under Section 254(2) of the Act and not on the applicability of the provisions of Section 68.
Having considered the rival submissions as well as the relevant material on record, it is noted that the assessee has produced the balance sheet of Mr.Govindappa, father-in-law of the assessee as on 31.3.2008 to show the availability of cash and advance of Rs.12,47,807. The Assessing Officer in the remand report has not disputed the cash available with Mr. Govindappa as per the balance sheet, advanced to 3 persons on 31.3.2008. Thus it was claimed that Mr. Govindappa after receiving back the said amount has given the same to husband of the assessee Mr. Surendra Kumar. The Assessing Officer has taken objection that statement of account of Mr. Govindappa in the books of accounts of Mr. Surendra Kumar was not produced during the scrutiny proceedings. The Assessing Officer instead of conducting further enquiry to verify the genuineness of the transaction has denied the claim and explanation of the assessee on technical reasons. Further since all the parties are related to each other therefore, the authorities below doubted the genuineness of the transaction. Even otherwise, when the accounts in which this cash was found explanation of the assessee that this amount belongs to her husband cannot be brushed aside without proper inquiry. Thus in view of the fact that the creditor though relative of the assessee accepted the transaction of advance of Rs.12 lakhs then in the absence of conducting a proper enquiry of disproving the claim of the assessee the said explanation cannot be rejected on technical reasons.
Further there is no dispute that this is a transaction of deposit in the bank therefore the issue of applicability of Section 68 arises in view of the various decisions of this Tribunal as well as the decision of Hon'ble Bombay High Court in the case of CIT Vs. Bhaichand N Gandhi 141 ITR 67. The co- ordinate bench of this Tribunal dt. 8.9.2016 in the case of Mrs. Farah Kausar Vs. ITO (supra) after considering a series of decisions on this point has held in paras 10 to 12 as under :
“10. We have heard both parties.
10.1 In the present case the Assessing Officer/CIT (Appeals) has acted merely on suspicion and assumption, there was no material on record to suggest that the explanation furnished by the assessee was not satisfactory.
In the case of Kamal Kumar Mishra in it is held as under :
7 The aforesaid provisions of section 68 of the Act can only be invoked 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. In that eventuality, the said sum so credited may be charged to income- tax as the income of the assessee of that previous year. Meaning thereby maintenance of books of the assessee, in which credit entry so found, is a condition precedent for invoking the provisions of section 68 of the Act. Now the question arises whether the passbook issued by the bank with regard to the accounts of the assessee can be termed to be the books of the assessee for the purpose of section 68 of the Act. This issue was examined by the Hon'ble Bombay High Court in the case of CIT vs. Bhaichand N. Gandhi (supra) and while answering the question i.e. whether on the facts and circumstances of the case, the Tribunal was justified in holding that cash credit for the previous year shown in the assessee's bank passbook issued to him by the bank, but not shown in the cash book maintained by him for that year does not fall within the ambit of section 68 of the Act and as such the sum so credited is not chargeable to income tax as the income of the assessee of that previous year, their Lordships of the Hon'ble Bombay High Court categorically held that passbook supplied by the bank to the assessee could not be regarded as book of the assessee, that is, a book maintained by the assessee or under his instruction. The relevant observations of the Hon'ble Bombay High Court are extracted hereunder:- "In 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 s.68 of the said Act it is only when any amount is found credited in the books of the assessee for any previous year that the section will apply and 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, 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."
8 In the case of Anand Ram Ratiani vs. CIT (supra), the Hon'ble Gauhati High Court has also held that perusal of section 68 of the Act shows that in relation to expression "books", the emphasis is on the word "assessee" meaning thereby that such books have to be the books of the assessee himself and not of any other assessee. In that case, the books of account of the partnership firm were not treated as those of the individual partner and accordingly the additions made in the hands of the individual partners on the basis of the books of the partnership firm was deleted. In the instant case, it is an undisputed fact that the assessee has not maintained any books of account and whatever credit entries are found by the Assessing Officer, it was from the bank accounts of the assessee in which deposits were made at different point of time. Even the passbook issued by the bank cannot be termed to be the book of the assessee as per the judgment of the Hon'ble Bombay High Court CIT vs. Bhaichand N. Gandhi (supra). Therefore, provisions of section 68 of the Act cannot be invoked on various deposits/credits found recorded in the bank account of the assessee in the absence of books of the assessee maintained for that previous year. The ld. CIT(A) has adjudicated the issue in the light of the aforesaid judgment and has held that provisions of section 68 of the Act cannot be invoked. Besides, he has also examined the additions made by the Assessing Officer through grounds No.1 to 6 on merit also and has noted that in each and every case the assessee has furnished plausible and reasonable explanations with respect to the deposits found recorded in the bank passbook of the assessee and on merit also the ld. CIT(A) did not find any justification in the additions made by the Assessing Officer. Though we are of the view that provisions of section 68 of the Act cannot be invoked on the deposits made in the bank account of the assessee, yet we have examined the veracity of the additions made by the Assessing Officer on certain deposits by invoking the provisions of section 68 of the Act and we find that before the ld. CIT(A) the assessee has furnished reasonable and plausible explanations along with confirmation with regard to the different deposits. Since the ld. CIT(A) has adjudicated the issue on merit also in the light of the explanations and confirmations placed before him, in a proper perspective and we find no infirmity therein, we confirm the same. Accordingly, finding no merit in the Revenue's appeal, we dismiss the same. In the result, appeal of the Revenue and Cross Objection of the assessee are dismissed.
Respectfully following the decision of the Tribunal in the case of Kamal Kumar mishraa (supra), we allow the appeal of the assessee.” A similar view has been taken by the Delhi Bench of Tribunal in the case of Vijendra Kumar Vs. ITO (supra) in paras 7 & 8 as under :
As regards the decision of Hon'ble Allahabad High Court in the case of Smt.
Renu Aggarwal Vs. ITO (supra) the said decision is on the question of dismissal of the application of the assessee under Section 254(2) and not on applicability of Section 68. Therefore the decision of Hon'ble High Court though made an observation that in case Section 68 is not applicable the provisions of Section 69 would be applicable, however, the question before the Hon'ble High Court is Act in the proceedings of order giving effect to the Third Member forming the majority view.
In view of the above facts and circumstances of the case as well as the decision of co-ordinate bench of this Tribunal, the addition made under Section 68 of the Act is deleted.
In the result, the appeal is allowed. Order pronounced in the open court on 28th April, 2017.