SH. SHAMSHER SINGH GILL,HARIDWAR vs. ITO, HARIDWAR

ORDER The Assessee has filed the Appeal against the impugned Order dated 27.3.2015 of Ld. CIT(A), Dehradun pertaining to assessment year 2004-05. The assessee has raised as many as 06 grounds, but the Ld. Counsel of the assessee has only pressed the following 02 grounds which read as under:- “That the provisions of Sec. 68 under which the amount has been added by the AO are not applicable. Moreover, the ld. CIT(A) is not justified to mention the applicability of provisions of Section 69 of the Act which was not under the Grounds of appeal or cause of action.

That the provisions of Section 292B of the I.T. Act, 1961 are also not applicable because there is no mistake, the AO has made the addition u/s. 68 with the clear mind.” 2. The brief facts of the case are that the AO obtained information that the assessee had an account in the Oriental Bank of Commerce, Ranipur More, Haridwar with the deposit of Rs.500/- on 26.6.2003. On 28.6.2003, Rs.30,75,000/- were deposited through transfer and on the same date an amount of Rs.30,00,000/- were withdrawn through cheque. On 4.7.2003 an amount of Rs.3 lakh was further deposited through clearing. The assessee was asked to show cause as to why the above sums deposited in his bank a/c no. 2405 were not reflected in his return of income for the relevant Asstt. Year. In response the assessee submitted that he had filed an affidavit dated 13.9.2004 in which he had submitted that the purchaser of his land had deposited the above sums in his bank account no. 2405 with Oriental Bank of Commerce, Jwalapur through bank transfers, out of which Rs. 30 lakhs was withdrawn by him under pressure mounted upon him by the purchasers. The A.O. conducted a enquiry which reveal that two TPOs for Rs.29,25,000/- and Rs.1,50,000/- totaling Rs.30,75,000/- were issued by Oriental Bank of Commerce, Clock Tower Branch, Dehradun on 26.6.2003which were transferred to his Bank Ale No. 2405 with Oriental Bank of Commerce, Jwalapur, Haridwar. Subsequent enquiries revealed that the TPOs were issued in favour of the assessee by making application and issuing cheque of Rs.58,25,000/- dated 25.6.2003 in favour of OBC, Clock Tower, Dehradun by Urban Cooperative Bank Ltd., 10 Gandhi Road, Dehradun. The Branch Manager, Urban Cooperative Bank was asked to explain the source of receiving the sum and crediting to the Bank and then transferring the sum to the credit of the assessee's account no. 2405. In compliance, the Branch Manger submitted that the transaction had taken place on the request of the account holder from the account of Shri Pyare Lal and Shri Pradeep Kumar Garg (account no. 4758), residence of 274 Rajpur Road, Dehradun.

Subsequently, the Inspector of the Ward was deputed to conduct enquiry and he reported back that House No. 274 did not exist anywhere in the Rajpur Road area. Efforts were also made to trace out the said persons without success. Thus, the AO concluded that a forged account had been opened in the name of forged persons by the assessee himself. On further perusal of the assessee's record, the AO. observed that the assessee had sold some land to joint purchasers namely Smt. Urmila Rani, W/o Shri Ashwani Mittal, and Smt. Hemlata Walia, W/o Shri Pradeep Walia.

Summons u/s 131 of the I.T. Act, 1961 were issued to both purchasers and their statement on oath, were recorded. In the statement on oath, these purchasers totally denied the fact that any amount was transferred by them by TPO to the bank, a/c no. 2405 of Shri Shamsher Singh Gill. Thus the AO observed that the assessee had failed to discharge his onus regarding proving the source of the deposit in his Bank A/c. The AO ascertained during the course of investigation that then Branch Manager of Oriental of Commerce, Ranipur More, Haridwar, Shri Praveen Kumar Khanna, had given his statement on oath before the District & Session Judge, Haridwar. The AO obtained a certified copy of the same. In his statement on oath Sh. Khanna had stated that both the TPOs were carried by Sh. Shamsher Sing Gill himself for deposit and Rs. 30 lakhs were withdrawn by him through cheque. In view of these facts, the AO had concluded that the version of the assessee that his bank account no. 2405 was credited by the purchasers was totally baseless and untenable. He also held that the assessee had admitted withdrawing before the District & Session Judge, Haridwar. The AO obtained a certified copy of the same.

In his statement on oath Sh. Khanna had stated that both the TPOs were carried by Shri Shamsher Singh Gill himself for deposit and Rs.30 lakhs were withdrawn by him through cheque. In view of these facts, the A.O. had concluded that the version of the assessee that his Bank A/c No. 2405 was credited by the purchasers was totally baseless and untenable. He also held that the assessee had admitted withdrawing this money and had thus utilized it. He concluded that since the sources of the money had not been satisfactorily explained by the assessee, it was nothing but an attempt to bring his unaccounted money into the main stream without paying any tax. He, therefore, added back the amount of Rs. 30,75,000/- to the income of the assessee uls 68 of the I.T. Act, 1961 and completed the assessment at Rs. 34,48,870/- vide his order dated 18.2.2015 passed u/s. 143(3) of the I.T. Act, 1961. Aggrieved with the assessment order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated

In the present case the addition has been 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 would apply in the circumstances mentioned therein. Notably, section 68 of the Act would come into play only in a situation "where any sum is found credited in the books of an assessee. 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 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.

9.1 Even otherwise, I find that the explanation rendered by the assessee has been merely disbelieved without establishing any credible infirmity or fallacy in the same. Ostensibly, the circumstances in which the cash deposits have been made and the purpose for which such monies have been utilized is emerging from record and in any case, there is no material found by the Assessing Officer to disprove the same. Of course, the assessee could not produce any formal corroborative evidence of having received respective amounts from friends and relatives, so however, it is to be appreciated that section 68 is a rule of evidence; and, the Assessing Officer is expected to consider the explanation rendered in the context of the circumstances of each case. Be that as it may, since I have already held that the addition is unsustainable following the ratio of the judgment in the case of Shri

Bhaichand N Gandhi (supra), I do not deal with the instant aspect any further. In the result, the order of the CIT (A) is set-aside and the Assessing Officer is directed to delete the addition of Rs. 27,36,500/- made under section. 68 of the Act.

9.2 Resultantly, appeal of the assessee in is allowed.”

Manasi Mahendra Pitkar vs. ITO, Thane, the addition in dispute is deleted and accordingly, the ground no. 3 appeal of the assessee is allowed. Even otherwise, the Ld. CIT(A) vide para no. 14 at page no. 10 of the impugned order has stated that the assessee is right when he says that the provisions of section 68 cannot be applied to amount credited in the bank account. I further note from the same para that Ld. CIT(A) was wrong in observing that the provisions of section 69 would quite clearly apply to amounts deposited into the assessee’s bank account, which was not under the grounds of appeal or cause of action. I further find that the provisions of Section 292B of the I.T. Act, 1961 are also not applicable because there is no mistake, the AO has made the addition u/s. 68 with the clear mind and after satisfaction. Accordingly, the ground no. 4 is also allowed.