SHRI ASHIT KUMAR DEY, JAGDALPUR V. INCOME TAX OFFICER, JAGDALPUR

ITA 119/RPR/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8870 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 24-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure; Set aside
• Section: 68; 143(2); 73

Judgement Text

ITA No. 119/RPR/2018 AY: 2009-10 Ashit Kumar Dey V.ITO 1 IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH,RAIPUR BEFORE SHRI RAVISH SOOD (JUDICIAL MEMBER) AND SHRI RATHOD KAMLESH JAYANTBHAI (ACCOUNTANTMEMBER) I.T.A. No. 119/RPR/2018 (Assessment Year: 2009-10) Shri Ashit Kumar Dey Uttam Kumar Dey, Fish Market, Sanjay Market,Jagdalpur, Bastar - 494 001 PAN No. AJXPD4157D Vs. The Income Tax Officer Aayakar Bhawan, Behind Khankar Talkies,Civil Lines, Jagdalpur(C.G.) (Assessee) (Revenue) Assessee by : Shri S. R. Rao, Advocate Revenue by : Shri G. N. Singh, D.R Date of Hearing : 07/06/2022 Date of pronouncement: 09/06/2022 ORDER PER RAVISH SOOD, J.M : The present appeal filed by the assessee is directed against the order passed by the CIT(A)-1, Raipur, dated 30.11.2015, which in turn arises from the order passed by the A.O under Sec.144 of the Income-tax Act, 1961 (for short ‘the Act’) dated 26.12.2011 for Assessment Year 2009-10. The assessee has assailed the impugned order on the following grounds of appeal before us: ITA No. 119/RPR/2018 AY: 2009-10 Ashit Kumar Dey V.ITO 2 “1. In the facts and circumstances of the case, the ld. Commissioner of Income-tax (Appeals)has erred in dismissing the ground of appeal assailing the addition of Rs. 50,000/- to the net profit. 2. In the facts and circumstances of the case and in law, the Ld. Commissioner of Income-tax (Appeals) has erred confirming the addition of Rs.86,74,5000/- u/s 68 of Income Tax Act, 1961. 3. The assessment order is bad in law and on facts.” 2. Succinctly stated, the assessee who is engaged in the business of purchase and sale of fish had filed his return of income for AY 2009-10 on 07.08.2009, declaring an income of Rs.1,50,000/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s 143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the AO that cash amounting to Rs. 86,74,500/- was over the year deposited in the saving bank A/c No. 11566963331 of the assessee held with State Bank of India, Branch: Bastar. As the assessee on being confronted failed to come forth with any explanation as regards the nature and source of the aforesaid cash deposits, therefore, the AO treating the entire amount of Rs.86,74,500/- (supra) as an unexplained cash credit made an addition of the same u/s 68 of the Act. Also, the AO not being satisfied with the amount of income returned by the assessee, therein, after putting him to notice made an addition of Rs. ITA No. 119/RPR/2018 AY: 2009-10 Ashit Kumar Dey V.ITO 3 50,000/- to the same. Accordingly, the AO vide his order passed u/s 144 of the Act, dated 26.12.2011 determined the income of the assessee at Rs.86,74,500/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT (Appeals) but without any success. 5. The assessee being aggrieved with the order of the CIT (Appeals) has carried the matter in appeal before us. 6. We have heard the Ld. Authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. Authorized Representative (for short ‘AR’) for the assessee in support of his contentions. 7. Admittedly, it is a matter of fact borne from the record that cash amounting to Rs. 86,74,500/- (supra) was over the year under consideration i.e from 18.09.2008 to 25.03.2009 deposited in the aforementioned SB A/c No. 11566963331 of the assessee with State Bank of India, Branch: Bastar. Also, we find that the assessee despite sufficient opportunity had failed to come forth with any explanation as regards the nature and source of the ITA No. 119/RPR/2018 AY: 2009-10 Ashit Kumar Dey V.ITO 4 aforesaid cash deposits in question, and thus, failed to discharge the onus that was cast upon him. At the same time, as stated by the Ld. AR, and rightly so, the AO had grossly erred in law and the facts of the case in treating the aforesaid simpliciter cash deposits in the assessee’s bank account as unexplained cash credits under Sec. 68 of the Act. At this stage, we may herein observe, that it is not case of the department that the aforesaid cash deposits in the assessee’s bank account formed part of his books of account. On the contrary, a perusal of the return of income filed by the assessee reveals beyond doubt that no books of account were maintained by him, and even the income therein disclosed by him was on an estimate basis. 8. In the backdrop of the aforesaid facts our indulgence has been sought to adjudicate the sustainability of the addition of the simpliciter cash deposits made in the assessee’s bank account as an unexplained cash credit within the meaning of Sec. 68 of the Act. In our considered view, it is only 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 thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, that the ITA No. 119/RPR/2018 AY: 2009-10 Ashit Kumar Dey V.ITO 5 sum so credited may be held as an unexplained cash credit within the meaning of Sec. 68 of the Act. 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........” (emphasis supplied by us). However, as the bank passbook maintained by a bank cannot be regarded as the books of the assessee, therefore, a simpliciter cash deposit made in the same, de-hors any credit in the books of account cannot be brought within the sweep of the provisions of Sec. 68 of the Act. In sum and substance, as a standalone cash deposit in the bank account of an assessee cannot be construed as a credit in his books of account, therefore, the provisions of Sec. 68 on the said count itself would not stand triggered. Our aforesaid conviction is fortified by the judgment of the Hon’ble High Court of Bombay in the case of CIT v. Bhaichand N. Gandhi (1983) 141 ITR 67 (Bombay). In its aforesaid order the Hon’ble High Court had held, that when monies are deposited in a bank, then, the relationship that is constituted between the banker and the customer is one of a debtor and creditor and not as that of a trustee and a beneficiary. Applying the aforesaid principle, it was therein observed, that a passbook supplied by the bank to the assessee could not be ITA No. 119/RPR/2018 AY: 2009-10 Ashit Kumar Dey V.ITO 6 regarded as the book of the assessee, i.e. a book maintained by the assessee; or under his instructions by the bank. Following the aforesaid judgment of the Hon’ble High Court a coordinate bench of the Tribunal, i.e., ITAT ‘B’ Bench, Mumbai in the case of Sh. Mehul V. Vyas L/heir of Smt. Madhuriben V. Vyas vs. ITO in ITA No. 727/Mum/2013 dated 07.04.2013 (to which one of us, i.e., the JM was a member), had held as under: “8. We have heard the ld. Authorized representatives of both the parties, perused the orders of the lower authorities as well as the material produced before us. We will first deal with the objection raised by the ld. 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 ld. 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.................” That a bare perusal of the aforesaid deeming section therein reveals that an addition under the said statutory provision can only be made where any sum is found credited in the books of an assessee maintained for any previous year. Thus, the very sine qua non for making of an addition under Section 68 presupposes a credit of the aforesaid amount in the ‘books of an assessee’ maintained for the previous year. We not being 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 ITA No. 119/RPR/2018 AY: 2009-10 Ashit Kumar Dey V.ITO 7 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 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. 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 Hon’ble 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 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 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 ITA No. 119/RPR/2018 AY: 2009-10 Ashit Kumar Dey V.ITO 8 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 case of Smt. Madhu Raitani Vs. ACIT (2011) 10 taxmann.com 206 (Gauhati) (TM), as well as by a coordinate bench of the Tribunal in the case of ITO, Barabanki Vs. Kamal Kumar Mishra (2013) 33 taxamann.com 610 (Lucknow Trib.). Thus in the backdrop of the aforesaid facts of the case read in light of the settled position of law, we are of the considered view that the addition made by the A.O in respect of the cash deposit of Rs.10,53,000/-(supra) in the bank account 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 Shri Bhaichand N. Gandhi (supra), a bank pass book or bank statement cannot be considered to be a ‘book’ maintained by the assessee for 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. 9. Even otherwise, we find that the explanation rendered by the assessee in respect of the nature and source of the cash deposit of Rs.10,53,000/-(supra) in her bank account has been disbelieved by the lower authorities without establishing any credible infirmity or fallacy in the substantial material which was made available on record by the assessee. We are of the considered view that the assessee had not only put forth an explanation in respect of the nature and source of the cash deposit of Rs.10,53,000/- (supra) in her bank account, but rather it remains as a matter of fact that substantial material was placed on record by the assessee to fortify the genuineness and veracity of his aforesaid explanation. We find that the explanation of the assessee had been dislodged by the A.O merely on the basis of doubts, surmises and conjectures, which we are afraid cannot form a basis for making an addition in the hands of the assessee. Be that as it may, since we have already held that the addition is unsustainable following the ratio of the judgment of the Hon’ble Jurisdictional High Court in the case of Shri Bhaichand N. Gandhi (supra), therefore we do not deal with instant aspect any further. That as a result of our aforesaid observations, the order of the CIT(A) is set aside and the A.O is directed to delete the addition of Rs.10,53,000/- made under Section 68 in the hands of the assessee. 10. Resultantly, the appeal of the assessee is allowed.” ITA No. 119/RPR/2018 AY: 2009-10 Ashit Kumar Dey V.ITO 9 As the facts and the issue involved in the present case remains the same as were there in the aforesaid judicial pronouncements, therefore, respectfully following the same, we herein conclude that the simpliciter cash deposit of Rs.86,74,500/- (supra) in the saving bank account of the assessee could not have been assessed by the AO as an unexplained cash credit u/s 68 of the Act. We, thus, in terms of our aforesaid observations set-aside the order of CIT(A) and vacate the addition of Rs. 86,74,500/- (supra) that was made by the AO u/s 68 of the Act. The Ground of appeal No. 2 is allowed in terms of our aforesaid observations. 9. The Ground of appeal No. 1 as per the concession of the ld. AR is dismissed as not pressed. 10. Ground of appeal No. 3 being general is dismissed as not pressed. 11. Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations. Order pronounced in the open court on 09/06/2022. Sd/- Sd/- (Rathod Kamlesh Jayantbhai) (Ravish Sood) ACCOUNTANT MEMBER JUDICIAL MEMBER Raipur Dated: 09.06.2022 *GP/Sr.PS* ITA No. 119/RPR/2018 AY: 2009-10 Ashit Kumar Dey V.ITO 10 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Raipur 6. Guard file. BY ORDER, //True Copy// (Sr. Private Secretary)