TaxTMI 
TaxTMI 
2024 (6) TMI 320
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.... were duly served on the assessee. During the course of assessment proceedings the assessing officer noticed that assessee has deposited an amount of Rs. 1,96,87,000 in the bank account with Axis Bank. The assessee submitted before the assessing officer the cash deposits are arising out of cash income generated from his trading activity. The assessee also submitted various details with regard to his trading activity such as sales register, stock statement, purchase register etc. The assessing officer after perusing the details furnished by the assessee treated the trading activity of the assessee as non-genuine and accordingly made an addition of the entire turnover of the assessee from trading activity to the tune of Rs. 1,88,98,744 under section 68 of the Act. 3. Aggrieved the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal in favour of the assessee by holding that the additions under section 68 cannot be made in the case where the assessee has declared income under section 44AD of the Act. 4. The Revenue is in appeal before the Tribunal raising the following grounds: "1. On the facts and circumstances of the case, Id. CIT(A) has erred in del....
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....nder section 44AD of the Act with regard to the trading activity in grey clothes. During the course of assessment the assessee submitted certain documentary evidences in support of the trading activities carried on by the assessee. However the assessing officer held that the trading activity of the assessee to be non-genuine for the reason that the documentary evidences submitted by the assessee do not properly substantiate the genuineness of the activity. The CIT(A) allowed the appeal in favour of the assessee stating that when the assessee has declared income under section 44AD of the act no addition can be made under section 68 of the act by relying on various judicial pronouncements. 8. Before proceeding further we will look at the provisions of section 68 of the act which reads as under: "68. 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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....ose the earlier withdrawals would have been spent. As per the cash book maintained by the assessee, a sum of Rs. 10,000 was being spent for household expenses every month and the assessee has withdrawn from bank a sum of Rs. 2 lakhs on December 4, 2000 and there was no material with the Department that this money was not available with the assessee. It has been held by the Tribunal that in the instant case the withdrawals shown by the assessee are far in excess of the cash found during the course of search proceedings. No material has been relied upon by the Assessing Officer or the Commissioner of Income-tax (Appeals) to support their view that the entire cash withdrawals must have been spent by the assessee and accordingly, the Tribunal rightly held that the assessment of Rs. 2.5 lakhs is legally not sustainable under section 158BC of the Act and the same was rightly ordered to be deleted." 7. As regards, the amount belonging to Narender Kumar Gupta and Sons HUF is concerned, we note that 44AD return has been submitted which has been accepted. The income, therefore, therein has been accepted. In such circumstances, there is no reason why the cash due of the income disclo....
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....y sum is found credited in the books maintained by the assessee. That is the books should be that of the assessee. 9. The "books or books of account" have been defined in section 2(12A) of the Act. The same reads as under:- "2(12A) books or books of account" includes ledgers, day-books, cash books, account-books and other books, whether kept in the written form or as print- outs of data stored in a floppy, disc, tape or any other form of electro- magnetic data storage device;" The definition of books under the Act is inclusive. A perusal of the definition shows that the same does not include bank passbook or bank statement. A conjoint reading of above provisions would thus lead to the conclusion that the addition u/s 68 can be made only where any amount is found credit in the books as defined u/s 2(12A) of the Act maintained by the assessee. 10. The Hon'ble Bombay High Court in the case of CIT vs. Bhaichand N. Gandhi (supra) upholding the decision of Tribunal concluded that bank passbook does not constitute books as envisaged under u/s 68 of the Act. The relevant extract of the judgement reads as under: "........... the pass book sup....
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....Act. The Assessing Officer before invoking the power under section 68 of the Act must be satisfied that there are books of account maintained by the assessee and the cash credit is recorded in the said books of account and if the assessee fails to satisfy the Assessing Officer, the said sum so credited has to be charged to income-tax as the income of the assessee of that previous year. The existence of books of account is a condition precedent for invoking of the power. Discharging of burden is a subsequent condition. If the first point is not fulfilled the question of burden of proof does not arise. The Assessing Officer made the assessment by making addition of the amount for which disallowance was claimed Mr. Bhuyan very candidly admits that addition was made in exercise of the power under-section 68 of the Act, therefore, the first condition necessary for invocation of the power is the existence of the books of account." [Emphasised] 14. The Tribunal in the case of Madhu Raitani vs. ACIT (supra) following the decision rendered in the case of CIT vs. Bhaichand N. Gandhi (supra) and Anand Ram Raitani (supra) held that if books of account are not maintained by the assesse....