BIMAL CHANDRA HAZRA,KOLKATA vs. ITO, WD-52(2), KOLKATA, KOLKATA

O R D E R

Per Dr.Arjun Lal Saini, AM:

On 01.07.2005 Rs.9,00,000 On 04.07.2005 Rs.9,00,000 On 04.07.2005 Rs.2,00,000 Total Rs.20,00,000 The assessee failed to explain the source of such cash deposits of Rs.20,00,000/- in his bank account during the F.Y.2005-06. In view of the assessee`s inability to substantiate the claim of cash deposits by producing the actual source of such deposits, the same is treated as unexplained cash credit U/s 68 of the I.T. Act,1961. Aggrieved from the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who has also confirmed the addition made by Assessing Officer observing the followings:

Hence, while the appellant`s contention regarding the bank account and deposits belonging to Smt. Pritilata Hazra is found to be incorrect, the sources of funds including the nature and source of the aforesaid advances refunded by received from M/s Surniman and Shri Durlab Ch.Mal in her hands can also not be considered to be properly explained. Hence, I hold that the addition of Rs. 20,00,000/- was rightly made by the Assessing Officer, as the nature and source of the deposits made in appellant`s bank account were not satisfactorily explained by the appellant during the assessment proceedings as well as appellate proceedings. The addition of Rs.20,00,000/- is confirmed.

1. That on the facts and in the circumstances of the case, the addition of Rs.20,00,000/- on account of unexplained cash credit factual premises. 2.That the assessee crave, leave to add, alter and amend any ground of grounds of appeal before or at the time of hearing”.

3.1 The Ld AR for the assessee has vehemently submitted that first of all the money of Rs.20,00,000/- does not belong to him but it belong to his wife. The Assessing Officer did not summon his wife to explain the said money. Assessee and his wife are joint bank holders and money belonged to his wife only. Assessee`s wife name was added to the bank account as joint holder after some time, does not mean that money does not belong to her. Assessee had explained before the ld.CIT(A), that the bank account with HSBC, Ultadanga Branch & Ekadlia Branch was belong to Smt. Pritilata Hazara spouse of assessee and was duly shown in her Income Tax Return. Assessee also submitted affidavit in his contention stating the fact. The Ld AR also submitted that Assessing Officer did not consider the assessee`s affidavit (stating the fact) and totally ignored the fact that the bank account was not belonged to the assessee. The ld AR further submitted that wife of the assessee Smt.

Pritilata Hazara having Pan No. ABRPH6514L assessed u/s 143(3) by ITO ward 52(4) for A.Y. 2006-07. She had filed the HSBC Bank account before the Assessing Officer, in her own assessment U/s 143(3) of the Act and the Assessing Officer accepted the same in his order dated 31/12/2008 stating the followings:

“ In course of hearing the A/R of the assessee filed details of investments made in different mutual funds and copy of bank statement” The Ld. AR pointed out that where the said bank statement had been accepted by the Assessing Officer in Assessee`s wife assessment U/s 143(3) then the same should not be included in assessee`s assessment.

Apart from the merits of the case, the ld AR also put before us an alternative argument stating that the said addition made by the Assessing Officer under section 68 is not justified. That is, the said addition made by AO does not fit in the ambit of section 68 of the I.T.Act, because the bank pass book is not books of accounts of the assessee. In order to make addition U/s 68 of the Act, the amount should be credited in the books of the assessee. Bank Passbook is not books of accounts of the assessee hence the addition made by the Assessing Officer is not justified. To support his plea the ld AR has relied on the following judgments:-

(1).124 ITR 94 ( Pat.HC) Laxmi Narain Gupta Vs. CIT: “We will first clarify a mistake which has been committed by the department while adding the income from undisclosed sources. An income from undisclosed sources, if credited in the books maintained by the assessee, is liable to be assessed under s.68 of the Act, but if such income from undisclosed sources, though invested, has not been recorded in the assesses books of accounts, such investment is liable to be assessed in terms of section 69 of the Act. Now, in the instant case, the income from undisclosed sources, which is said to have been earned by the assessee, was admittedly not credited in the books of account maintained by him, but part of it had been invested in the firm in which he is a partner and it was not known where its other part was lying. Thus,if at all, so far as the invested part is concerned, it could have been assessed in terms of s.69 of the Act, but in no case under s. 68 of the Act.”

(2.) 143 ITD 686: ITO V. Kamal Kumar Mishra (Luck-Trib)

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 explanations offered by him is not in the opinion of the Income Tax Officer,satisfactory…….

9 In the instant case it is an undisputed fact that the assessee has not maintained any books of accounts and whatever credit entries found by which deposits were made at different point of time. Even the passbook issued by the bank cannot be termed to be the books of the assessee as per the judgment of the Hon`ble Bombay High Court Bhaichnad N Gandhi (supra). Therefore, the provisions of section 68 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.” (3) 171 ITR 532 ( P & H-HC)Shanta Devi V. CIT “Perusal of section 68 of the Income Tax Act would show that in relation to the expression “books” the emphasis is on the word “assessee”. In other words, such books have to be the books of the assessee himself and not of any other assessee. In the present case, admittedly, the assessee maintained no books of account. The cash credit entry of which the sum in question forms part, was found in the books the account of the partnership firm which in its own right is an assessee. In the above view of the matter, the books of account of the partnership firm herein cannot be considered as those of the individual assessee herein and therefore, section 68 of the Income Tax Act would not be attracted to the present case. The above view receives support from Laxmi Narain Gupta V.CIT [1980] 124 ITR 94 (pat). No decision taking a contrary view has been brought to our notice at the Bar. For the reason aforementioned, we answer the question in the negative, i.e. in favour of the assessee and against the Revenue and dispose of the reference accordingly. No costs.”

(4) 223 ITR 544 ( Gau-HC): Anand Ram Raitani Vs. CIT “In this connection, Mr.Bhattachrjee has drawn our attention to a decision of a Punjab and Haryana High Court in Smt. Shanta Devi V. CIT [1988] 171 ITR 532 (P &H). In the said decision, the Panjab & Haryana High Court had the occasion to consider a similar point. While deciding the point the court observed that a perusal of section 68 of the Act shows that in relation to the 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. A partnership firm is an assessable entity distinct from the individual partner. The books of accounts of a partnership cannot be treated as those of the individual partner. We are in respectful agreement with the decision and conclusion arrived at by the Punjab and Haryana High Court. In view of the above, we answer the question in negative i.e. in favour of the assessee and against the Revenue.”

(5) 141 ITR 67 (Bom-HC) CIT, Poona Vs. Bhaichand H Gandhi “In view of this, the Tribunal was, with respect, justified in holding that the passbook supplied by the bank to the assessee in the present case could not be regarded as a books 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”. 3.4. On the other Hand, the Ld. Departmental Representative (DR) has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para No.2 and is not being repeated for the sake of brevity.

3.5 Having heard the rival submissions, pursed the material available on record, view are of the view that there is merit in the submissions of the assessee, as the proposition canvassed by the ld.AR for the assessee are supported by the above cited judgments/ Precedents and the facts explained by him. Assessee and his wife is joint bank holder and money belonged to his wife only. Assessee`s wife name was added to the bank account as joint holder after some time, does not mean that money does not belong to her. The Ld AR stated that the Assessee had explained before the ld.CIT(A), that the bank account with HSBC, Ultadanga Branch & Ekadlia Branch was belong to Smt. Pritilata Hazara spouse of assessee and was duly shown in her Income Tax Return. Assessee also submitted affidavit in his contention stating the fact. The Ld AR also submitted that Assessing Officer did not consider the assessee affidavit stating the fact and totally ignore the fact that the bank account was not belonged to the assessee. The ld AR further submitted that wife of the assessee Smt.