KULDEEP JIWAN MAHANT, RAIPUR V. INCOME TAX OFFICER ,WARD-3(1), RAIPUR

ITA 105/RPR/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5794 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 22-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Set aside
• Section: 68; 73; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं./IT A No.105/RPR/2019 (निर्धारण वर्ा / Assessment Year :2010-2011) Kuldeep Jiwan Mahant, C-7, Anmol Flat, Avanti Vihar, Main Road, Ravigram, Raipur Vs. ITO-3(1), Raipur PAN No. : AJXPM 1432 E (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्ाारिती की ओर से /Assessee by : Shri R.B.Doshi, CA िाजस्व की ओर से /Revenue by : None सुिवाई की तािीख / Date of Hearing : 19/07/2022 घोषणा की तािीख/Date of Pronouncement : 19/07/2022 आदेश / O R D E R Per Bench : The assessee has filed this appeal arising out of the order passed by the ld. CIT(A)-1, Raipur, dated 28.03.2019 for the assessment year 2010-2011. 2. Though the revenue has filed adjournment application, however, looking to the facts of the case, we reject the application of the revenue and proceed to dispose off the appeal of assessee after considering the arguments of the ld. AR and the relevant documents available on record. 3. In this appeal, the assessee has raised the following two effective grounds :- 1. Ld. CIT(A) erred in confirming addition of Rs.4,65,000/- out of the addition of Rs.4,65,000/- out of the addition of Rs.13,37,100/- made by AO u/s.68 on account of cash deposits n bank account of appellant. The addition made by AO and confirmed by Ld. CIT(SA) is arbitrary, baseless & contrary to evidences on record and is not justified. ITA No.105/RPR/2019 2 2. Ld. CIT(A) erred in not adjudicating ground no.2 raised by the appellant regarding non applicability of provisions of sec. 68. In the facts of the case, addition made by the AO and confirmed by CIT(A) is illegal and not justified. 4. Brief facts of the case are that originally the assessee had not filed his return of income, however, when the case of the assessee was reopened on issuance of notice u/s.148 of the Act for the reason that cash of Rs.12,07,100/- was found to be deposited in assessee’s bank account, the assessee filed his return of income electronically on 17.05.2017 declaring total income of Rs.1,36,270/-. Thereafter the AO issued statutory notices to the assessee and in response to which the assessee appeared before the AO. Subsequently, the AO framed the assessment assessing total income of the assessee at Rs.14,73,370/- making addition of Rs.13,37,100/- u/s.68 of the Act on account of cash deposited in the bank account. Against which, the assessee preferred appeal before the CIT(A) and the CIT(A) partly allowed the appeal of the assessee. Now, the assessee is in further appeal before the Tribunal. 5. Before us, ld. AR submitted that the ground No.2 is legal in nature and ground No.1 is on merits. In this regard, he filed his written submission which reads as under:- 1. Source of cash deposit of Rs. 13,37,100/- explained on page no. 1 & 2 of PB. Out of source of Rs. 13,78,000/- explained by assessee, Rs. 9,13,000/- accepted and source of Rs. 4,65,000/- not accepted by ld. CIT(A). 2. Rs. 80,000/-, Rs. 70,000/- & Rs. 3,15,000/- (total Rs. 4,65,000/-) explained to be gifted/given by assessee’s mother Smt. Pushpa J. Mahant, which the ld. CIT(A) did not accept. 3. Assessee’s mother lived at Nagpur. Evidence at PN 16 of PB. ITA No.105/RPR/2019 3 4. These amounts deposited by her at Nagpur directly in the bank account of the assessee. Relevant entry in bank account bears this fact. 5. Fact of the amount having been given supported by affidavit of the mother, PN 15 of PB. 6. Gifts also reflected in the capital account of the assesseee’s mother, at PN 17 of PB. Rs.1,50,000/- includes Rs. 80,000/- and Rs. 70,000/-. 7. Source of Rs. 3,15,000/- i) Gifted by assessee’s mother. Deposited directly by her at Nagpur in the bank account of assessee. Relevant entry in bank account bears this fact. ii) Reference of the gift in para 7 of the affidavit which is at PN 15 of PB. iii) Amount of Rs. 3,15,000/- also reflected in her capital account, PN 17 of PB. 8. Reason for making gift by mother i) Assessee, since the age of 5 years, suffering from Juvenile Rheumatoid Arthritis since past 35 years. Certificate by district hospital certifying the disability at PN 19 of PB. ii) Disease gets aggravated many times and assessee needs expensive treatment which costs around Rs. 3 to 4 lakhs per year. iii) During AY 2010/11, assessee did not have enough source of income and therefore the mother supported him. 9. Source of gift i) Assessee’s mother owns agricultural land. Evidence at PN 18 of PB. Gift given partly out of agricultural income. In her capital account, agricultural income of Rs. 1,91,500/- is shown (PN 17 of PB). ii) Gift of Rs. 3,15,000/- given for repairs/renovation of house on the occasion of marriage of assessee’s brother Pankaj Mahant on 07.03.2009. The amount gifted out of her own capital and borrowings made from different relatives, as mentioned in the affidavit. 10. Conditions of sec. 68 satisfied. Burden discharged by the assessee. Evidences remained un-rebutted. No addition could be made/sustained. ITA No.105/RPR/2019 4 11. Address, PAN & mobile number of donor given to the AO. AO also requested for making direct enquiry or to call the donor personally. Neither AO nor Id. CIT(A) made enquiry nor did they call the donor. Ld. CIT(A) did not require the assessee to produce the donor at any time. Wrong observation in the appellate order. Reliance on: - i) CIT vs Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC). ii) CIT vs Jai Kumar Bakliwal (2014) 366 ITR 217, 223 & 224 (Raj.) iii) Claris Lifesciences Ltd. vs ACIT (2008) 298 ITR (AT) 403 (Ahd.) iv) CIT vs Metachem Industries (2000) 245 ITR 160 (MP) Ground no. 2 Before Id. CIT(A), ground no. 2 taken in the appeal memo to the effect that addition made is not covered by sec. 68. Ld. CIT(A), did not adjudicate this ground. The assessee was not required to maintain books and has also not maintained it. Addition made on account of cash deposit in bank account, invoking sec. 68. Addition is illegal and not sustainable. Reliance on: - i) Dheeraj Devi Kothari in ITA no. 15/RPR/2016 dt. 21.02.2022 at PN 23 to 32 of PB, relevant finding on PN 29 (para no. 6) and 31 of PB. ii) CIT vs Bhaichand H. Gandhi (1983) 141 ITR 67, 69 (Bom.), PN 20 to 22 of PB. 6. Ld. AR of the assessee argued the appeal first on the legal ground raised in ground No.2 regarding applicability of provisions of Section 68 of the Act in the case of the assessee. Thereafter he argued on the ground No.1 which is with regard to merits of the addition. Therefore, first we shall ITA No.105/RPR/2019 5 take into consideration the legal ground raised by the assessee in its grounds of appeal as ground No.2. 7. We have considered the submissions of the ld. AR of the assessee, carefully perused facts of the case and gone through the judgments relied upon by the assessee. In the circumstances of the present case the addition u/s 68 was made by the Ld AO and confirmed by the Ld CIT(A) based on the cash deposit in the bank, which are evident from entries in the bank statement / pass book of the assessee. In this regard, the decision in the case of Dr Vishan Swaroop Gupta Vs. IncomeTax Officer, passed in ITA 13/JP/2020, is relevant wherein the other judgments i.e. CIT Vs. Bhaichand N Gandhi 141 ITR 67 (Bom.), Smt. Manshi Mahendra Pitkar Vs. ITO 1(2), Thane (2016) 73 taxmann.com 68 (Mumbai Trib.), Smt. Madhu Raitani Vs. ACIT (2011) 10 Taxmann.com 206 (Gauhati)(TM), Mehul v. Vyas Vs. ITO(2014) 164 ITD 296(Mum) and ITO, Barabanki Vs. Kamal Jumar Mishra (2013) 33 taxmann.com 610(Lucknow) etc are discussed, and concluded with the following observation: 9. After having gone through the facts and circumstances, we observe that 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 of Section 68, and are of the 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 of the Act. In this respect, we draw strength ITA No.105/RPR/2019 6 from the decision of the Hon’ble Bombay High Court 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 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 Bombay High Court had thereafter been followed by a 'SMC' bench of the ITAT, Mumbai 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 unexplained cash credit within the meaning of section 68 of the Act. The legal point raised by the assessee is to the effect that the bank Pass book is not an account book maintained by the assessee so as to fall within the ambit of section 68 of the Act. Under section 68 of the Act, it is only when an amount is found credited in the account books of the assessee for any previous year that the deeming provisions of section 68 of the Act would apply 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 ITA No.105/RPR/2019 7 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 case of Smt. Madhu Raitani Vs. ACIT (2011) 10 taxmann.com 206 (Gauhati) (TM), as well as by the coordinate Benches of the Tribunal in the case of Mehul V. Vyas Vs. ITO (2017) 16 4 ITD 296 (Mum) and ITO, Barabanki Vs. Kamal Kumar Mishra (2013) 33 taxamann.com 610 (Lucknow). 10. We find that as stands gathered from the records, the addition aggregating to Rs. 4.03 lacs sustained by the ld. CIT(A) is in respect of the cash deposits in the bank accounts of the assessee, and not in any 'books' of the assessee for the year under consideration. We thus are of the considered view that in the backdrop of the aforesaid settled position of law, the addition made by the A.O in respect of the cash deposits of Rs.7,13,000/- in the bank accounts of the assessee by invoking Section 68 has to fail, for the very reason that as per the judgment of the Hon'ble Bombay High Court in the case of CIT Vs. Bhaichand N. Gandhi (1983) 141 ITR 67 (Bombay), a bank pass book or bank statement cannot be considered to be a 'book' maintained by the assessee for any previous year for the purpose of Section 68 of the Act. Therefore, on this count itself the impugned addition made and sustained deserves to be deleted and we direct to delete the same. Since we have quashed the addition on the ground that no such addition could have been validly made U/s 68 of the Act, therefore, we refrain ourselves to decide the other grounds wherein the assessee has assailed on merits the additions sustained by the ld. CIT(A) 8. On the basis of above judicial pronouncements and material available on record, it is an admitted fact that the addition u/s 68 of the IT Act 1961 made by the Ld AO and sustained by Ld CIT(A) was on the basis of deposit entries in the bank statement of the assessee is in contradiction with the settled position of the law as decided in the case of CIT Vs. Bhaichand N. Gandhi (1983) 141 ITR 67 (Bom) wherein it is observed that a bank pass book or bank statement cannot be considered to be a ‘book’ maintained by the assessee for section 68 of the IT Act. Thus, respectfully following the above legal preposition, we are of the considered view that the addition made by Ld AO u/s 68 of the Act is ITA No.105/RPR/2019 8 liable to be deleted. Accordingly, we set aside the order of Ld CIT(A) and direct the AO to delete the addition made in this regard. Thus, ground No.2 of the assessee, which is legal in nature, is allowed. 9. Since, we have allowed the legal ground raised in ground No.2, wherein we have deleted the addition made u/s.68 of the Act by the AO and confirmed by the CIT(A), therefore, further adjudication on merits of the addition as raised by the assessee in Ground No.1, is not necessary, which is academic in nature. 10. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 19/07/ 2022. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) न्यधनयक सदस्य / JUDICIAL MEMBER लेखध सदस्य /ACCOUNTANT MEMBER Raipur; नििाांक Dated 19/07/2022 Prakash Kumar Mishra, Sr.P.S.(on tour) आदेश की प्रनिनलनप अग्रेनर्ि/Copy of the Order forwarded to : आदेशधिुसधर/ BY ORDER, (Assistant Registrar) ITAT Raipur Bench, Raipur 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकि आयुक्त(अपील) / The CIT(A), 4. आयकि आयुक्त / CIT 5. नवभागीय प्रनतनिनर्, आयकि अपीलीय अनर्किण, Raipur / DR, ITAT, Raipur 6. गार्ा फाईल / Guard file. सत्यानपत प्रनत //True Copy//