SMT SMT DHEERAJ DEVI KOTHARI, RAJNANDGAON V. THE INCOME TAX OFFICER-1, RAJNANDGAON

ITA 15/BIL/2016

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 8582 (ITAT-RAIPUR)
• Duration Of Justice: 6 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 17-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift
• Section: 68; 143(3); 143(1); 73

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र म Ʌ । IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR (Through Virtual Court at Pune) BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI JAMLAPPA D BATTULL, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 15/RPR/2016 Ǔनधा[रण वष[ / Assessment Year : 2011-12 Smt. Dheeraj Devi Kothari, Near Prakash Medicos, Balgovind Chowk, Rajnandgaon (C.G) PAN : AEZPK9549K .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer-1, Rajnandgaon (C.G.) ......Ĥ×यथȸ / Respondent Assessee by : Shri G.S. Agarwal, AR Revenue by : Shri G.N Singh, DR स ु नवाई कȧ तारȣख / Date of Hearing : 02.02.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 21.02.2022 2 ITA No. 15/RPR/2016 A.Y.2011-12 आदेश / ORDER PER RAVISH SOOD, JM : The present appeal filed by the assessee is directed against the order passed by the CIT (Appeals)-II, Raipur dated 27.11.2015, which in turn arises from the order dated 19.03.2014 passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) for assessment year 2011-12. Before us the assessee has assailed the impugned order on the following grounds of appeal: “1. That under the facts and law, the learned Commissioner of Income Tax (Appeals) erred in maintaining the addition made by the learned Assessing Officer amounting to Rs.44,25,000/- on account of cash deposit of aforesaid sum on various dates in her savings bank account with Axis Bank by not considering and not appreciating various explanations and supporting filed. Prayed that the addition is unjustified and be deleted. 2. That under the facts and the law, the learned Commissioner of Income Tax (Appeals) erred in not considering the cash flow chart filed explaining that the sum of Rs.44,25,000/- added u/s.68 was by withdrawing from the bank account and depositing into bank account from time to time and as such there was no fresh cash deposit into bank. Prayed to delete the addition of Rs.44,25,000/- 3. That under the facts and the law, the learned Commissioner of Income Tax (Appeals) further erred in not appreciating the fact that the appellant was regularly filing her return of income and was having sufficient savings to deposit into the bank account. Prayed to delete the addition of Rs.44,25,000/-” 3 ITA No. 15/RPR/2016 A.Y.2011-12 2. Succinctly stated, the assessee had filed her return of income for the assessment year 2011-12 on 31.03.2012, declaring a total income of Rs.1,89,670/-. The return of income filed by the assessee was initially processed as such u/s 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. During the course of assessment proceedings, it was observed by the Assessing Officer that the assessee had over the year deposited cash aggregating to Rs.44,25,000/- in her saving bank account with Axis Bank, Branch: Tagore Nagar, Raipur. Backed by the aforesaid fact, the Assessing Officer called upon the assessee to explain the nature and source of the cash deposits. As the assessee failed to come forward with any explanation as regards the nature and source of the aforesaid cash deposits therefore, the Assessing Officer treated the same as an unexplained cash credit and made an addition of Rs.44.25 lac to the returned income of the assessee. Accordingly, the Assessing Officer vide his order u/s 143(3) of the Act, dated 19.03.2014 assessed the total income of the assessee at Rs.46,14,670/-. 3. Being aggrieved, the assessee carried the matter in appeal before the CIT(Appeals). Before the CIT(Appeal) the assessee tried to relate the cash deposit of Rs.44.25 lacs (supra.) to various sources, viz. (i) gift received from father Late Shri. Tikamchand Ji Burad, Raipur: Rs. 2 Lac; (ii) gift 4 ITA No. 15/RPR/2016 A.Y.2011-12 received from father-in-law Late Shri. Balchand Ji Kothari of Rajnandgaon; Rs.1 lacs; (iii) interest income received from loans and advances given to various parties by investing the aforementioned amounts; and (iv) marriage gifts of Rs. 3 lacs. Backed by her aforesaid contention, it was submitted by the assessee that after accumulating the aforesaid principal amount a/w interest income for over 14 years i.e. from 1987-88 to 2001-02 the total estimated savings in her hand was Rs. 6 lacs (approx). It was further submitted by her that though she had been filing her returns of income way back from assessment year 2002-03, however, during the assessment years 2004-05, 2005-06 and 2008-09 her income was below the basic exemption limit, thus, no return of income for the said years was filed. It was claimed by the assessee that considering the aforesaid facts the savings in her hands during the aforesaid period i.e assessment year 2002-03 onwards could safely be taken at Rs.9 lacs. Accordingly, the assessee on the basis of her aforesaid submissions claimed that the accumulated savings of Rs. 15 lacs (Rs.6 lacs + Rs.9 lacs) was duly available with her at the start of the year under consideration. However, the CIT(A) was not inclined to accept the aforesaid explanation of the assessee. Observing, that the assessee had failed to place on record any gift deed etc. to substantiate her claim of having received the aforementioned gifts the CIT(A) declined to accept her claim of having received the aforesaid amounts in question as gifts. Also, it was observed 5 ITA No. 15/RPR/2016 A.Y.2011-12 by the CIT(A) that the assessee could not place on record the requisite details as regards the interest bearing loans which were claimed to have been advanced by her to certain persons, viz. names and addresses of the loanee’s, rate of interest, period of loans, date of repayments, mode of payments/repayments etc. Accordingly, the CIT(A) neither finding favour with the claim of the assessee of having an accumulated savings of Rs.15 lac (supra) with her at the start of the year under consideration; nor with her claim of having redeposited the cash that was withdrawn by her from bank account, thus, rejected the same. Observing that the Assessing Officer rightly had rightly held the amount of Rs.44.25 lac (supra) as an unexplained cash credit within the meaning of Section 68 of the Act, the CIT(A) confirmed the addition so made by the Assessing Officer. 4. The assessee being aggrieved with the order of the CIT(A) has carried the matter before us. 5. We have heard the Ld. Authorized Representative of both the parties, perused the orders of the lower authorities a/w the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. Before us, the Ld. AR had both assailed the validity of the jurisdiction assumed by the Assessing Officer for making the impugned addition of Rs.44.25 lacs (supra) u/s.68 of the Act; as well as had thrown a challenge to the 6 ITA No. 15/RPR/2016 A.Y.2011-12 impugned addition on merits. As the validity of the jurisdiction assumed by the Assessing Officer for making the impugned addition has been challenged before us, therefore, we shall first deal with the same. As observed by us herein above, the Assessing Officer had made impugned addition of the cash deposits of Rs.44.25 lacs (supra) in the assessee’s savings bank account with Axis Bank, Branch: Tagore Nagar, Raipur by treating the same as an unexplained cash credit. On appeal, the CIT(A) had categorically upheld the addition of Rs.44.25 lacs (supra) as an unexplained cash credit u/s.68 of the Act. It is in the backdrop of the aforesaid facts that the Ld. AR has assailed the validity of the jurisdiction assumed by the A.O for making an addition of Rs.44.25 lacs (supra) u/s.68 of the Act. It was also claimed by the Ld. AR that as the bank account or bank passbook of an assessee cannot be held as the latters “books of accounts”, therefore, no addition could have validly been made in her hands u/s 68 of the Act. In support of his aforesaid contention the Ld. AR had relied on the judgment of the Hon’ble High Court of Bombay in the case of CIT Vs. BhaichandN. Gandhi (1983) 143 ITR 67 (Bom). Backed by his aforesaid contention, it was submitted by the Ld. AR that the addition of Rs.44.25 lacs (supra) so made/upheld by the Assessing Officer/CIT(A) u/s.68 of the Act could not be sustained in the eyes of law and was liable to be vacated. 7 ITA No. 15/RPR/2016 A.Y.2011-12 6. We have given a thoughtful consideration to the issue in hand before us and are persuaded to subscribe to the contention advanced by the ld. A.R that as the bank account or bank passbook of an assessee cannot be held as his 'books of account', therefore, no addition in respect of a simpliciter cash deposit made in the said bank account could be validly made under Sec.68 to the I.T. Act. Our aforesaid observations is duly fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand N. Gandhi (1983) 143 ITR 67 (Bom). Apart from that, we find that a similar view had been arrived at by a coordinate bench of the Tribunal viz. ITAT, Mumbai in the case of Mehul V. Vyas Vs. ITO (2017) 764 ITD 296 (Mum), wherein following the judgment of the Hon’ble High Court in the case of Bhaichand N. Gandhi (supra) it was observed 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 P a g e |5 ITA No.105/Asr./2017 A.Y. 2008-09 Shri Satish Kumar Vs. Income Tax Officer by the Id. 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 Id. 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. 8 ITA No. 15/RPR/2016 A.Y.2011-12 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 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 9 ITA No. 15/RPR/2016 A.Y.2011-12 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 further 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). Also 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.). Accordingly, 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 as the bank account of an assessee cannot be held to be the 'books' of an assessee maintained for any previous year, thus, no addition under Sec. 68 of the Act could have validly been made in respect of a simpliciter deposit made by the assessee before us in her bank account. We, thus, respectfully following the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand N. Gandhi (1983) 143 ITR 67 (Bom) and being in agreement with the view taken by the coordinate bench of the Tribunal i.e. ITAT, Mumbai in case of Mehul V. Vyas Vs. ITO (2017) 764 ITD 296 (Mum), thus, are of the considered view that the addition of Rs.44.25 lac (supra) made by the A.O under Sec.68 cannot be sustained, 10 ITA No. 15/RPR/2016 A.Y.2011-12 and is liable to be vacated. Accordingly, we herein set-aside the order of the CIT(A) and delete the addition of Rs.44.25 lac (supra) made by the A.O under Sec. 68 of the Act. 7. Resultantly, the appeal of the assessee is allowed in terms of our aforesaid observations. Order pronounced in the open court on 21 st day of February, 2022. Sd/- Sd/- JAMLAPPA D BATTULL RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 21 st February, 2022 **SB आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-II, Raipur (C.G) 4. The CIT, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायप ु रबɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur. 11 ITA No. 15/RPR/2016 A.Y.2011-12 Date 1 Draft dictated on 02.02.2022 Sr.PS/PS 2 Draft placed before author 03.02.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order