2019 (5) TMI 1113 - AT - Income Tax

Tribunal rules in favor of appellant, clarifies application of section 68

The Tribunal partially allowed the appeal by deleting the addition under section 68, as it held that section 68 applies to sums found credited in the ... Addition u/s 68 - unexplained Cash deposits in bank - HELD THAT:- As decided in VIJAY KUMAR PROP. V.K. MEDICAL HALL C/O KAPIL GOEL, ADV. VERSUS ITO WARD-2 FARIDABAD. [2018 (11) TMI 1550 - ITAT DELHI] Section 68 can be applied only where, there are sum found credited in “books of account” maintained by assessee. No doubt passbook /bank statement, are maintained by a bank for its customers. Thus in our considered opinion, we agree with proposition advanced by AR of non applicability of section 68 in case of cash credit found in saving bank account. AO applied section 68 and made additions in hands of assessee, as unexplained cash credits, to such amount, which has been found deposited by assessee in his saving bank account. To our mind in present facts of case section 69 should have been initiated by Ld.AO. It is unfortunate that Assessing Officers blindly apply provisions, which can be fatal to the interest of Revenue. - Decided in favour of assessee. Issues:1. Jurisdiction of CIT(A) in upholding assessment order under section 1482. Addition of unexplained cash deposit under section 683. Legality of lower authorities' ordersJurisdiction of CIT(A) in upholding assessment order under section 148:The appellant contested the jurisdiction of the Ld. CIT(A) in upholding the assessment order under section 148, citing lack of proper satisfaction and approval under section 151 of the Income Tax Act, 1961. The appellant argued that the reasons recorded were vague and failed to meet the conditions of section 148. However, the AO determined the cash deposits in the bank account as the appellant's undisclosed income under section 68. The Ld. CIT(A) dismissed the appeal, leading the appellant to approach the Tribunal.Addition of unexplained cash deposit under section 68:The appellant challenged the addition of Rs. 8,64,000 as unexplained cash deposit under section 68. The AO found the cash deposited in the bank account to be the appellant's unaccounted money without any supporting documentation. The Ld. CIT(A) upheld the addition. During the hearing, the appellant's counsel referred to a Tribunal order in a similar case, arguing in favor of the appellant. The Tribunal, following the precedent, held that section 68 could only be applied to sums found credited in the books of the assessee, not to cash deposits in a savings account. Consequently, the Tribunal deleted the disputed addition and allowed the appellant's grounds.Legality of lower authorities' orders:The appellant contended that the orders of the lower authorities were not justified on facts and were legally flawed. The Tribunal, after considering the arguments and the precedent cited by the appellant, partially allowed the appeal by deleting the addition under section 68. The Tribunal's decision was based on the interpretation that section 68 applies to sums found credited in the books of the assessee, and not to cash deposits in a savings account. As a result, the Tribunal set aside the addition and allowed the appellant's appeal partially.This detailed analysis of the judgment covers the issues related to the jurisdiction of the CIT(A), addition of unexplained cash deposit under section 68, and the legality of the lower authorities' orders, providing a comprehensive understanding of the case and its outcome.