ITAT dismisses Revenue Dept.'s appeal, bank passbook not considered as books of accounts

The ITAT dismissed the Revenue Department's appeal, ruling that no addition could be made under section 68 of the Income Tax Act as the assessee did not maintain any books of accounts, and the bank passbook could not be considered as the assessee's books of accounts. The decision was based on precedents emphasizing that section 68 applies only when sums are found credited in the assessee's books, which do not include a bank passbook.

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Issues:
- Whether an addition u/s 68 of the Income Tax Act can be made when the assessee does not maintain any books of accounts.

Analysis:
The appeal was filed against the order of the Ld.CIT(A) for the Assessment Year 2007-08. The assessee, a property dealer, declared income along with agricultural income in the return filed. The AO observed credit entries in the bank account of the assessee, which were added u/s 68 of the Income Tax Act. The Ld.CIT(A) granted partial relief, leading to the appeal. The main issue was whether an addition u/s 68 could be made when no books of accounts were maintained by the assessee.

The ITAT considered the legal issue in detail. Referring to the case of ITO vs. Kamal Kumar Mishra, it was highlighted that the provisions of section 68 can only be invoked when sums are found credited in the books of the assessee. The passbook provided by the bank to the assessee was not considered as the books of the assessee. The Tribunal also referred to the case of Anand Ram Ratiani vs. CIT, emphasizing that the books must belong to the assessee himself. Additionally, the Delhi High Court's decision in the case of CIT vs. Ms. Mayawati was cited, stating that section 68 does not apply when the assessee does not maintain books of accounts, and a bank passbook cannot be equated to books of accounts. The relationship between the bank and the customer was clarified as that of debtor and creditor. Therefore, the ITAT concluded that no addition could be made u/s 68 as the assessee did not maintain any books of accounts, and the bank passbook could not be considered as the assessee's books of accounts.

The ITAT dismissed the appeal of the Revenue Department based on the legal issue discussed. The judgment was pronounced in the Open Court on 11th August 2016.

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