TaxTMI 
TaxTMI 
2020 (12) TMI 21
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....the Income Tax Act, 1961 (in short 'Act'). In this case, the assessee filed the return of income admitting total income of Rs. 32,53,980/- for the A.Y.2011-12. Subsequently, the assessment was reopened by issue of notice u/s 148 of the Act on 22.03.2018 and completed the assessment u/s 143(3) r.w.s. 147 of the Act on total income of Rs. 2,21,53,980/- and made the addition of Rs. 1,89,00,000/- u/s 68 of the Act. 2.1. During the reassessment proceedings, the AO found that the assessee has made cash deposits in Andhra Bank, Brundavan Gardens Branch, Guntur, during the period 01.10.2010 to 24.12.2010. It was further found that the assessee has shown the receipts from sale of agricultural land over and above the registered value of sale deeds and explained before the AO that his son, Shri G.Kalyan Babu sold the agricultural lands through unregistered sale deeds to M/s Ravichandra Textiles Pvt. Ltd. and the sale proceeds were deposited in the bank account. The AO furnished the relevant details of sale of land in the assessment order as under : Sl.No. Land extent and address The value as per sale deed In the form of cash Through cheques Remarks 1. Vacant land to....
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....) believed that the assessee would have received Rs. 1,14,08,200/- comprising of advances from S.Masthan Rao, employee of M/s Ravi Chandra Textiles and K.Vijaya Bharati. Accordingly, allowed the sum of Rs. 1,14,08,200/-, since the said sum of Rs. 1,14,08,200/- was offered for working out the capital gains as observed by the Ld.CIT(A) in page No.13 of CIT(A)'s order and the balance addition of Rs. 74,91,800/- was confirmed. For the sake of convenience, we extract relevant part of the order of the Ld.CIT(A) which reads as under : "The transaction being a cash transaction only the seller and purchaser will be privy to the said transactions. The buyer may deny the transaction as the same, is beneficial to it. A small time employee entering into an agreement worth crores of rupees is an indicator that he is only a name lender and face provider to hide the real person- behind transaction. In this case, it is the company, which has purchased the properties and got registered. The agreement holder, at the cost of repetition, is still an employee with said company, which lends credence to the belief that the real person behind the transaction is none other than the company. In view....
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....nce the said sum of Rs. 1,14,08,200/- was also offered to capital gains tax. 6.1. The Ld.AR further stated that in the instant case, the assessee has explained the source stating that the deposits were made by his son on sale of agricultural lands and in support, unregistered sale agreements were also produced. The AO did not make out a case that the explanation offered by the assessee was false. Since the source was explained by the assessee, no addition can be made in the hands of the assessee. 6.2. Similarly, the Ld.AR vehemently argued that since there were no entries in the books of accounts, the AO is not permitted to make addition u/s 68 of the Act. Accordingly, argued that the order of the Ld.CIT(A) be set aside and delete the entire addition made by the AO and allow the appeal of the assessee as well as the cross objections. 7. The Ld.DR vehemently placed reliance on the orders of the AO and argued that the AO has conducted enquiries and made out a case that the assessee has no source to explain the deposits on thorough enquiry, therefore argued that the entire addition be confirmed. 8. We have heard both the parties and perused the material placed on record. I....
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.... taxed u/s 69, but not u/s 68 of the Act. This Tribunal in the case of Smt.Asha Sanghavi in ITA No.33/Viz/2019 held that the addition made in respect of bank deposits u/s 68 cannot be sustained and the bank statement or bank passbook cannot be considered to be the books of accounts maintained by the assessee. Accordingly deleted the addition. For the sake of clarity and convenience, we extract relevant part of this Tribunal which reads as under : "10. We have heard both the parties and perused the material placed on record. In the instant case, the AO made the addition of Rs. 1,22,29,000/- representing cash deposits made in the bank account u/s 68 of the Act. Section 68 allows the AO to make addition for the sums credited in the books of accounts maintained by the assessee for which the assessee fails to offer satisfactory explanation with regard to source. In the instant case, the assessee is maintaining the books of accounts but did not make any entry in the books of accounts. The amounts were deposited in the bank accounts, but not made relevant entry. Hence, the Ld.AR argued that since the assessee did not make any entry in the books of accounts, the AO is not....
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.... oblivious of the settled position of law that a statutory provision has to be strictly construed and interpreted as per its plain literal interpretation, and no word howsoever meaningful it may so appear can be allowed to be read into a statutory provision in the garb of giving effect to the underlying intent of the legislature, thus confining ourselves within the realm of our jurisdiction, therein construe the scope and gamut of the aforesaid statutory provision by according a plain meaning to the language used in Sec. 68. We are of the considered view that a credit in the 'bank account' of an assessee cannot be construed as a credit in the 'books of the assessee', for the very reason that the bank account cannot be held to be the 'books' of the assessee. Though it remains as a matter of fact that the 'bank account' of an assessee is the account of the assessee with the bank, or in other words the account of the assessee in the books of the bank, but the same in no way can be held to be the 'books' of the assessee. We have given a thoughtful consideration to the scope and gamut of the aforesaid statutory provision, viz. Sec. 68, and are of ....
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....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" We further find that a similar view had also been arrived at in a 'third member' decision of the Tribunal in the ca....