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Facts
The assessee deposited cash of Rs. 29 lakhs into their savings bank account. The AO treated this deposit as unexplained cash credit under Section 68 of the Income Tax Act, 1961, and made an addition. The assessee claimed the cash was a gift from their mother, who had received it from the sale of her assets.
Held
The Tribunal held that the pass book supplied by the bank to the assessee is a copy of the bank's records and not a book maintained by the assessee. Therefore, Section 68 of the Income Tax Act, 1961, is not applicable in this case as the assessee did not maintain any books of account.
Key Issues
Whether Section 68 of the Income Tax Act, 1961, is applicable to cash deposits in a bank account when the assessee has not maintained any books of account.
Sections Cited
68
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Income Tax Appellate Tribunal, “K(SMC
Before: SHRI NARENDRA KUMAR BILLAIYA, HON’BLE & SHRI SUNIL KUMAR SINGH, HON’BLE
| आयकरअपीऱीयअधिकरणन्यायपीठ,म ुंबई| IN THE INCOME TAX APPELLATE TRIBUNAL “K(SMC)” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER & SHRI SUNIL KUMAR SINGH, HON’BLE JUDICIAL MEMBER I.T.A. No.3087/Mum/2024 (Assessment Year:2011-12) Shri Gurtejpal Singh Somal, Income Tax Officer, 1A/11 Takshila, Mahakali caves Vs Ward-20(3)(4), Mumbai Road, Andheri East, Mumbai [PAN: BRWPS1626N] अपीऱार्थी/ (Appellant) प्रत्य्र्र्थी/ (Respondent) Assessee by : Ms. Sanjukta Samantara Revenue by : Shri P. Sudhakar Naik, Sr. DR सुनवाई की तारीख/Date of Hearing :05.09.2024 घोषणा की तारीख /Date of Pronouncement:09.09.2024 आदेश/O R D E R PERNARENDRA KUMAR BILLAIYA, AM This appeal by the assessee is preferred against the order of ld. NFAC, Delhidated 08.05.2024 pertaining to Assessment Year 2011-12. 2. The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the addition of Rs. 29 lakhs made u/s 68 of the Act in respect of cash deposited in the bank account. 3. Briefly stated the facts of the case are that as per the information gathered by the Office of the AO it came to his knowledge that the assessee has deposited cash more than 10 lakhs in the savings bank account. The assessee was asked to explain the source of the cash deposited in the bank account. The assessee explained that he has received gift from his motherwho got the money out of sale proceeds
I.T.A. No. 3087/Mum/2024 Shri Gurtejpal Singh Somal 2 of bungalow and antiques paintings etc amounting to Rs. 2.33 crores. On perusal of the details the AO found that M/s. Pammi Somal, mother of the assessee had already deposited the sale proceeds in her bank account and therefore, she left with no cash to be given to the assessee. The AO accordingly treated the cash deposit as unexplained cash credit u/s 68 of the Act and made the addition of Rs. 29 lakhs.
The assessee carried the matter before the ld. CIT(A) but without any success. Before us, the counsel vehemently stated that the cash deposited in the bank account is not credit in the books of the assessee and therefore, provisions of Section 68 of the Act are not applicable. Per contra the ld DR strongly supported the findings of the AO.
We have carefully considered the orders of the authorities below. The transactions from 11.01.2011 to 31.03.2011 in the Axis Bank Account is as under:-
Train of date Nature of train Debit (withdrawal) Credit (deposits) 11.01.2011 BY CASH - 500000.00 08.02.2011 PARAMJIT 500000.00 - SOMAL 15.02.2011 BY CASH 500000.00 22-02-2011 BY CASH 400000.00 22-02-2011 PAMMI SOMAL 500000.00 22-02-2011 GURPREET 600000.00 SOMAL 24-02-2011 TRF TO FD 2000000.00 01-03-2011 BY CASH 400000.00 TOTAL 2500000.00 2900000.00
I.T.A. No. 3087/Mum/2024 Shri Gurtejpal Singh Somal 3 6. The Hon’ble Jurisdictional High Court of Bombay in the case of Bhaichand N. Gandhi 141 ITR 67 was seized with the following substantial question of law:- "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that a cash credit for theprevious year shown in the assessee's bank pass book 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 Income-tax Act, 1961, and as such the sum so credited is not chargeable to income-tax as the income of the assessee of that previous year? (2) Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that the deposit of Rs. 10,000 made by the assessee on January 20, 1961, in the bank was not includible under section 68 of the Income-tax Act, 1961, in computing the income of the assessee for the assessment year 1962-637" 7. 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.”
Similar view was taken by the coordinate bench in the case of Mehul V. Vyas Vs. ITO 164 ITD 296 (Mumbai), Smt Manshi Mahendra Pitkar Vs. ITO 160 ITD 605 (Mumbai), Asha Soni Vs. DCIT in ITA No.
I.T.A. No. 3087/Mum/2024 Shri Gurtejpal Singh Somal 4 99/RPR/22 and Jaipur Bench decision in the case of Dr. Vishan Swaroop Gupta Vs. ITO in ITA No. 13/JP/2020. 9. It would be pertinent to refer to SOP issued by CBDT vide order dated 10.01.2018 for applying the provision of Section 68 of the Act and in the background note appended to the said SOP at point 1.1 from the reading of Section 68 following conditions can be stated to be met for the applicability of Section 68(1) of the Act (i) assessee has maintained ‘books’; (ii) there has to be credit of amounts in the books maintained by the taxpayer of s sum during the year and for the meaning of the term books – the term ‘books of account’ was inserted by the Finance Act, 2001 w.e.f. 01.05.2001- book/ books of account includes ledgers, day-books, cash books, account books and other books whether kept in the written form or as print-outs of data stored in a floppy disc, tape or any other form of electro-magnetic data storage device. 10. Considering the fact that the cash was found to be deposited in the bank and since the assessee has not maintained any books of account therefore, in our considered opinion and in the light of the judicial decisions discussed hereinabove provisions of Section 68 are not applicable and therefore no addition could have been made by the AO u/s 68 of the Act which deserves to be deleted
I.T.A. No. 3087/Mum/2024 Shri Gurtejpal Singh Somal 5 11. In our considered opinion the cash deposited in the bank account even assuming that it is not explained cannot be a subject matter for the addition u/s 68 of the Act.
We accordingly direct the AO to delete the impugned additions.
Appeal of the assessee is allowed. Order pronounced in the Court on 9th September, 2024 at Mumbai. (SUNIL KUMAR SINGH) ACCOUNTANT MEMBER Mumbai, Dated: 09/09/2024 *AK KEOT, Sr. PS
आदेश की प्रततलऱपऩ अग्रेपषत/Copy of the Order forwarded to : अऩीऱाथी / The Appellant 1. प्रत्यथी / The Respondent 2. 3. संफंधधत आयकर आयुक्त / Concerned Pr. CIT आयकर आयुक्त ) अऩीऱ ( 4. / The CIT(A)- पवबागीयप्रतततनधध ,आयकरअपीलीयअधिकरण,म ुंबई/DR,ITAT, Mumbai, 5. गार्ड पाई/Guard file. 6. आदेशानुसार/ BY ORDER,