TaxTMI 
TaxTMI 
2018 (4) TMI 1866
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....nds that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer in making the impugned addition of Rs. 8,51,400/-. 2. The Assessing Officer erred in charging interest under section 234B of the Act. The appellant contends that the Assessing Officer ought not to have charged the impugned interest under section 234B inasmuch as:- (a) the Assessing Officer has not given an opportunity to the appellant before charging the said interest as required by the principles of nature justice, (b) the charging of interest is not in accordance with law. The appellant craves leave to add to, alter or amend the aforesaid grounds of appeal." 2. Briefly stated, the facts of the case are that the assessee who is engaged in the business of trading in textiles fabrics had filed his return of income on 30.08.2007, declaring total income of Rs. 88,930/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. The case of the assessee was thereafter taken up for scrutiny assessment under Sec. 143(2) on the basis of AIR information that the assessee had during the year under ....
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...., out of which an amount of Rs. 2,50,000/- was gifted to him, placed on record her copy of the bank pass book and a chart showing withdrawals made from her bank account during the calendar year 2004-05 to January, 2006. (C) Cash deposit in bank account on 03.02.2007 : Rs. 8,00,000/- It was stated by the assessee that the source of the aforesaid cash deposit were the time to time cash withdrawals made by him from his bank account, which thereafter were re-deposited in the bank. 5. However, the A.O after deliberating on the explanation of the assessee did not find favour with the same for the following reasons: (A) Opening cash balance of Rs. 2,50,000/- The A.O observed that the assessee had shown a closing cash balance on 31.03.2006 of Rs. 29,247/- in the 'balance sheet' of his proprietary concern, viz. M/s G.B. Sawant & Sons. The A.O was of the view that the claim of the assessee as regards accumulation of the balance cash of Rs. 2,20,753/- [Rs. 2,50,000/-(-)Rs. 29,247/-] out of the cash withdrawals made by him from his business did not merit acceptance, as the same were barely sufficient to meet out the day to day expenses of the assessee and his wife. However, the A.O ob....
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....fore, worked out the same at Rs. 75,000/-. The A.O on the basis of his aforesaid observations restricted the availability of cash with the assessee out of the cash withdrawals made by him from his bank accounts at Rs. 6,80,000/- [Rs. 7,55,000/- (-) Rs. 75,000/-] and worked out the unexplained cash deposit in his bank accounts during the year under consideration at Rs. 5,51,000/- [Rs. 12,31,400/-(-) Rs. 6,80,000/-]. The A.O on the basis of his aforesaid observations made an addition of Rs. 5,51,400/- as unexplained cash credit under Sec. 68 of the Act. 6. Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, the CIT(A) after deliberating on the contentions of the assessee did not find favour with the same and dismissed the appeal. 7. The assessee being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. The ld. Authorized Representative (for short, 'A.R') for the assessee, at the very outset of the hearing of the appeal submitted that the total cash deposits made by the assessee in his bank accounts during the year under consideration aggregated to Rs. 12,31,400/-. It was submitted by the ld. A.R that the assessee had claim....
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....y of opening cash balance of Rs. 2,50,000/- submitted that as the assessee had no children and was suffering from certain medical problems, therefore, as a safeguard he was keeping accumulated cash savings at home. It was submitted by the ld. A.R that the lower authorities had most arbitrarily rejected the availability of cash of Rs. 2,50,000/- with the assessee by way of his accumulated savings. It was averred by the ld. A.R that the accumulated savings to the said extent in the hands of a 64 years old person who had been working for the last 45 years was totally justified, and as such had wrongly been rejected by the A.O. The ld. A.R further submitted that keeping in view the fact that the wife of the assessee had retired from a government job, therefore, there was no reason for the A.O to have scrapped the availability of cash in hand of Rs. 2,50,000/- with her. It was submitted by the ld. A.R that the assessee in order to justify the availability of cash in hand with his wife had substantiated the same by placing on record the copy of her bank account, which revealed cash withdrawals of Rs. 2,44,000/- made by her during the period May, 2005 to February 2006. The ld. A.R further....
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....itself the same was liable to be vacated. The Id. A.R in order to drive home his aforesaid contention relied on a host of judicial pronouncements including that of the Hon'ble jurisdictional High Court in the case of CIT Vs. Bhai Chand N. Gandhi (1983) 141 ITR 67 (Bom). Thus, in the backdrop of his aforesaid submissions it was averred by the Id. A.R that now when the additions of Rs. 8,51,400/- made by the A.O under Sec. 68 did not fall within the four corners of the additions which could be made under the said statutory provision, therefore, the same being absolutely devoid of any force of law, thus, could not be sustained and were liable to be struck down . 10. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities as well as the material placed on record. We will first deal with the objection raised by the Id. A.R as regards the validity of the additions aggregating to Rs. 8,51,400/- made by the A.O under Section 68 of the 'Act', in respect of the cash deposits 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....
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....e considered view that an addition made in respect of a cash deposit in the 'bank account' of an assessee, in the absence of the same found credited in the 'books' of the assessee maintained for the previous year, cannot be brought to tax by invoking the provisions of Section 68. That our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand N. Gandhi (1983) 141 ITR 67 (Bombay) wherein the High Court has held as under: - "As the Tribunal has pointed out, it is fairly well settled that when moneys are deposited in a bank, the relationship that is constituted between the banker and the customer is one of debtor and creditor and not of trustee and beneficiary. 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....