TaxTMI 
TaxTMI 
2020 (12) TMI 13
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....ght to have admitted the additional evidence filed by the appellant and called for remand report. 3. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs. 33,34,000/- out of total addition of Rs. 37,34,000/- made by the assessing officer u/s 68 of the Act towards alleged unexplained cash credits. 4. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the interest charged u/s 234A and u/s 234B of the Act. 5. Any other grounds may be urged at the time of hearing 2.1. During the appeal hearing the assessee filed petition for admission of additional grounds as under: 1. Whether on the facts and in the circumstances of the case, the assessing officer is justified in making addition u/s 68 of the Income Tax Act) 1961 in respect of deposits in bank accounts of the appellant as the provisions of S.68 are not applicable to credits in a bank account which cannot be regarded as a book of account of the appellant? 2. Without prejudice to the above, whether the assessing officer is justified in making addition towards unexplained deposits in the two bank accounts that were a....
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....rees, neem and other trees Rs. 2,00,000/- 27.03.2014 The assessee submitted that the cash deposits are sourced from loans from friends and relatives to the tune of was Rs. 23.35 lakhs, the sum of Rs. 11 lakhs was from the drawings of assessee's capital account and the balance sum of Rs. 4 lakhs was sourced from agricultural income. The AO did not believe the contention of the assessee with regard to loans of Rs. 23.35 lakhs, drawings of Rs. 11 lakhs and agricultural income of Rs. 4 lakhs and treated the entire sum of Rs. 37,34,000/- as unexplained cash credit and accordingly assessed the same as income u/s 68 of the Act. 4. Against which the assessee went on appeal before the CIT(A) and the Ld.CIT(A) allowed the relief of Rs. 4,00,000/- as agricultural income and the balance amount of Rs. 33.34 lakhs was confirmed as unexplained cash credit u/s 68 of the Act. 5. Against which the assessee is in appeal before us. During the appeal hearing, the Ld.AR submitted that the assessee has taken loans and gifts from the family members and the details of which were mentioned in para 3 of this order. The Ld.AR further stated that the assessee had the capital balance of Rs. 26 la....
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....isfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10. From plain reading of section 68, what is to be made addition and what is to be brought to tax u/s 68 is the credits made in the books of accounts, for which the a....
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....e will first deal with the objection raised by the Id. A.R as regards the addition of Rs. 10,53,000/- which was made by the A.O under Section 68 of the 'Act', in respect of the cash deposit in the bank account of the assessee We find substantial force in the contention of the Id. A.R that an addition under Section 68 can only be made where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee either offers no explanation about the nature and source as regards the same, or the explanation offered by him in the opinion of the assessing officer is not found to be satisfactory. That before adverting further, we herein reproduce the relevant extract of the aforesaid statutory provision, viz. Section 68, which reads as under: - "Cash Credits. 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 explanation offered by him is not, in the opinion of the [Assessing] officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year............
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....ry. 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." We find that the aforesaid view of the Hon'ble jurisdictional High Court had thereafter been followed by a 'SMC of the ITAT Mumbai bench in the case of Smt. Manshi Mahendra Pitkar Vs. ITO 1(2), Thane (2016) 73 taxmann.com 68 (Mumbai Trib.) wherein it was held as under: - I have carefully considered the rival submissions. 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 unexplai....
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.... any previous year, as understood for the purpose of Section 68 of the Act. Therefore, on this count itself the impugned addition Rs. 10,53,000/- deserves to be deleted. 10.1. While delivering the decision, the Coordinate Bench relied on the decision of Hon'ble Bombay High Court in the case of CIT Vs. Bhaichand N.Gandhi (supra). Similar view was taken by the coordinate Bench of ITAT, Delhi in the case of Smt Babbal Bhatia in TS-306-ITAT- 2018. In the instant case, though the assessee has maintained the books of accounts, the cash deposits made in the bank account were not found credited in the books of accounts. The entire transactions were made outside the books of accounts. In the absence of any finding with regard to cash deposits recorded in the books of accounts of the assessee, the addition made by the AO u/s 68 in respect of cash deposits made in the bank account are unsustainable. During the appeal hearing, the Ld.DR did not bring any other decision to support the revenue's contention that the cash deposits made in the bank account to be brought into the purview of section 68 of the Act. The case law relied upon by the Ld.DR in the case of Sachdeva (supra)....